Living Trusts

Borrowers for Reverse Loans have the option of taking the Title of the property in the name of their Living Trust.   Unlike a conventional loan where the borrower is obligated to make mortgage payments every month, they generally don’t provide a copy of their Trust because it’s considered to be too much of a hassle to do  so during the application process. 

Instead a con-current recording of the new loan and the Trust is done at the same time. The new loan is simply done in the name of the borrowers and then the Title is re-recorded back into the Trust right after the initial loan has recorded.

This can be very awkward plus you’re relying on the attorney or Title company to be sure that this happens.  And the danger in this, is that there good be an “oops” moment and the Title is never re-recorded back into the family Trust.   I’ve seen this happen in the past and it can leave a family with a huge problem if someone passes away and the protection of the Trust isn’t in place.

The Reverse mortgage has a different stance on this.   If a borrower has their home in a family Trust, then a copy of the signed and notarized Trust is collected at the time of the loan application and it stays in the Trust during the period of time that the new loan is being processed.

It is sent to the Lender and their attorney will review it to be sure that it meets with HUD”s guidelines ( They always do).   The Trust should always be revocable, meaning that the Trustor’s have the ability to make any changes to it at anytime in the future and they don’t have to worry about putting their property back into it, as it will never be removed during the loan process.

Keeping a property in a Trust when a person applies for a new mortgage, protects them from anyone forgetting to re-record it and the potential danger of having something happen to the estate due to someone having an “oops” moment.