CODE OF VIRGINIA

SECOND MORTGAGES; WRAP-AROUND MORTGAGES (§ 38.2-1435)

A domestic insurer may invest in obligations secured by second mortgages or
second deeds of trust on real property encumbered only by a first mortgage or
first deed of trust complying with §§ 38.2-1434 and 38.2-1437, subject to
either of the following conditions:

   1.  The insurer also owns the obligation secured by the first mortgage or
   first deed of trust, and the aggregate value of both loans does not exceed the
   applicable loan-to-value ratio specified in § 38.2-1437; or

   2.  The obligation is secured by a wrap-around mortgage where:
               
               
            

      a.  Only one preexisting mortgage or deed of trust encumbers the real
      property;

      b.  The mortgage or deed of trust securing the loan is (i) recorded and (ii)
      insured for at least the total amount of the obligation of the borrower to
      the insurer by title insurance; and

      c.  The insurer agrees to make the payments due under the first mortgage or
      first deed of trust upon receipt of payments due from the borrower under the
      wrap-around mortgage.

HISTORY: 1983, c. 457, § 38.1-217.38; 1986, c. 562.