Please explain the mechanics of seller financing to me

[Chris John]

I keep seeing people say that they buy using seller financing.  I totally understand the potential benefits of that.  What I don't understand is the dirty details that they're using to accomplish this.  I have a few questions:

- Are people pretty much exclusively using seller financing on homes that are free and clear?
- If not, I'm assuming the use of wraparound loans.  However, I thought that banks didn't like wrap loans and pretty much killed them in the 80s.
- If wraparound loans are what's mostly being used, how are they structured?  One payment directly to the original lender with a side payment to the seller (I can't imagine sending the entire payment to the seller and just praying that they actually make the monthly payment with it)?
- Again, if wraparound loans are being used, does this impact the seller's debt ratio?
- Is there something else I'm missing besides a free and clear purchase or a wraparound loan?

Thanks!