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All Inclusive Trust Deed

An All Inclusive Trust Deed is commonly known as an A.I.T.D or a “wraparound” Deed of Trust.

This is a mortgage that includes within it the balance and underlying morgage(s) or debt. Rather than having a distinct and separate first and second mortgage, a wraparound mortgage includes both.

These are often used in a seller carry back when either the buyer cannot qualify for new financing or the interest rate that the seller has is much more appealing than the prevailing rate.

An example would be an exisiting first mortgage of $250,000 at 5.25% interest and a second mortgage of $60,000 at 6% interest. Instead of getting new financing, the buyer arranges a wraparound for a combined loan amount of $315,000 (includes some costs or down payment) at 7%. This rate is paid to give the seller an advantage. This can be structured in many ways.

The first and second mortgages stay intact. The borrower pays the wraparound lender one payment on the $315,000 wraparound, and the wraparound lender pays on the first and second mortgages to the existing mortgage lenders.

One must always be mindful of the possibility of the exisiting financing calling due on acceleration or due on sale clause that exists in their loan documentation.