Which of the following describes the nature of a wraparound loan?

A wraparound loan is a financing method typically used in real estate transactions, where a new mortgage wraps around an existing mortgage. The wraparound loan is designed to help buyers purchase property without having to pay off the existing mortgage outright.

The characteristic that makes option C accurate is that the wraparound loan is indeed subordinate to the first mortgage. This means that in the event of a default, the original mortgage gets paid off first before any funds go to the wraparound loan holder in a foreclosure scenario. This subordination is crucial because it allows the wraparound loan to provide financing while the original mortgage still exists, effectively allowing the buyer to make payments towards the wraparound loan while the existing mortgage remains in place.

This structure offers the seller a way to keep their existing financing while benefiting from an additional loan, ultimately allowing the buyer to take over the property with potentially more favorable terms than they might get with a traditional loan. The other options do not accurately describe the nature of a wraparound loan, as it can have fluctuating interest rates, does not necessarily consolidate loans, and does not require immediate repayment upon demand.