Package Mortgage Lending Practices...

Normally, we think of real estate mortgage loans as being secured solely by real estate. However, it is possible to include items classed as personal property in a real estate mortgage, thus creating a package mortgage. In residential loans, such items as the refrigerator, clothes washer and dryer can be pledged along with the house and land in a single mortgage. The purpose is to raise the value of the collateral in order to raise the amount a lender is willing to loan. For the borrower, it offers the opportunity of financing major appliances at the same rate of interest as the real estate itself. This rate is usually lower than if the borrower finances the appliances separately. Once an item of personal property is included in a package mortgage, it is a violation of the mortgage to sell it without the prior consent of the lender.

Package Mortgage To Blanket Mortgage