Anaconda Mortgage
Definition and meaning of Anaconda Mortgage in real estate.
An anaconda mortgage, also known as a dragnet mortgage, is a home loan containing a clause stating that the property secures the current loan as well as any other past or future debts owed to the same lender.
In more detail
Named for its restrictive nature, this type of mortgage effectively traps the borrower by preventing them from releasing the property lien until all obligations to the lender are completely paid off. For example, if a borrower has a credit card, a car loan, and a mortgage with the same bank, default on the credit card could trigger a foreclosure on the home.
Courts often view these clauses with scrutiny, requiring clear language to prove both parties intended to secure all debts. Because of the high risk to consumers, many states place limitations on how these clauses can be enforced in residential lending.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Also known as | Dragnet mortgage or Mother Hubbard clause |
| Watch out for | Cross-collateralization of unrelated personal debts |
| Enforceability | Varies by state and judicial interpretation |
A borrower defaults on a personal loan, and because of an anaconda clause in their mortgage, the bank refuses to release the lien on their house even though the mortgage payments are current.
Frequently asked questions
What is a Mother Hubbard clause in a mortgage?
It is a provision that extends the security of the mortgage to cover all other debts the borrower owes to that specific lender.
Can a bank foreclose on my house if I miss a credit card payment under an anaconda mortgage?
In jurisdictions where these clauses are enforceable, default on any debt secured by the clause can potentially lead to foreclosure actions.