There is a new and disturbing trend in foreclosure cases and short sales. "Experts" are advising distressed home owners to place their home in a revocable trust and appoint themself as trustee. There would be advantages to this, but I am suggesting that such home owners consider some free legal advice - and yes, I understand and appreciate the value of "free" advice!!
This is arguably fraud. It would appear to a lender or a judge, that this is an attempt to cloud title or delay or obstruct the foreclosure process. If the short sale is unsuccessful, there could be serious ramifications to this maneuver. The reasons that many experts suggest to do this are valid, but there are other - less risky methods to achieve the same results. I need to repeat, there is nothing ILLEGAL or unethical in the utilization of revocable trusts in the sale of short sale properties.
At the point in time that a home is in default - more than 30 days past due - anything that a home owner does regarding title, is going to be closely examined by a Court or lender. Even placing the home in a trust just prior to entering default is problematic, so my advice is "DON'T DO IT" and follow my BEST advice...never listen to the advice of someone who has a vested interest in the outcome of the disposition of a home such as a listing or selling agent or anyone else that may benefit from the disposition of the home. Seek the counsel of an attorney and tell them "EVERYTHING". Do not selectively leave out details as the "devil is truly in the details" in such matters. Also, it is important to carefully listen to the attorney that you are counseling with. Do not read into their answers and advice. At all times, realize that a lender or judge will viewing the trust scenario as potentially fraudulent.
Padraic Deighan, Esq
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