Southern Oregon Reverse Mortgage Question - Can I get a reverse mortgage if my property is in a trust?
Most of the time the answer is yes.
The trust must be revocable and all beneficiaries of the trust must be eligible borrowers. The trustee must have the power to encumber real property (get a loan on real estate). You will need to provide your lender with a complete copy of the signed, notarized Declaration of Trust, all amendments and Exhibit’s. The trust will have to be reviewed by the title company and lender to be sure that the proper language is there.
"All beneficiaries of the trust must be eligible HECM borrowers at the time of origination and until the mortgage is released [i.e. borrower/beneficiary must occupy the property as a principal residence and new beneficiaries may not be added to thetrust]. Contingent beneficiaries, that receive no benefit from the trust nor have any control over the trust assets until the beneficiary is deceased, need not be eligibleHECM borrowers.
2) The trustee must sign the mortgage, and the mortgage must be signed by each borrower/beneficiary if necessary to create a valid first mortgage. The borrower/beneficiary must sign the Note and Loan Agreement. The lender may require the signature of the trustee on the Note or the signature of the borrower/beneficiary on the mortgage.
3) The trust shall not be a party to the Loan Agreement. The borrower/beneficiary may issue instructions to the lender to permit the trustee to exercise one or more rights stated in the Loan Agreement on behalf of the beneficiary; i.e. the right to receive loan advances or to request changes in the payment plan.
4) The lender must be satisfied that the trust is valid and enforceable, that it provides the lender with a reasonable means to assure that it is notified of any subsequent change of occupancy or transfer of beneficial interest, and ensures that each borrower/beneficiary has the legal right to occupy the property for the remainder of his or her life."
I hope that you found this information helpful, and as always, I appreciate your comments and feedback.
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