Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606

As an attorney and as a lender I've seen more and more people buying and selling in trust. A trust is a great way to own property. It affords ownership, while protecting the individual in many respects.

There are a few things that people need to know when doing a trust and getting a loan.

1) For any lender to allow title to be held in trust, the trust must be revocable. What this means is that the person creating the trust (the trustee) must also have the benefits of the trust as a trustee. This assures the lender that they can enforce the provisions of the loan should the borrower go into default. A trust does not eliminate the borrower's liability, but for estate planning purposes, probate, privacy matters, a trust is a GREAT WAY TO TAKE TITLE. The lender, though, needs to make sure that they can enforce the loan.....so having the creator of the trust as the sole beneficiary, the same person, creates just that.

2) Conversely, irrevocable trusts are not allowed. Often times for estate planning purposes, people will create an irrevocable trust. An irrevocable trust cannot be amended or changed at any point after it's creation except through some protracted legal proceedings. This is a problem if, say, for instance, the lender or the government creates new rules that would affect a trust's ability to own property. A revocable trust can be amended to comport with the guidelines of a lender. An irrevocable trust cannot.

3) Finally, people who own trusts are often so busy that they cannot attend closings.  Or for privacy matters, will not attend closings, and therefore create a power of attorney for the closing. Here's the critical point to be made. A power of attorney can be used to buy and sell properties....provided.....it's in the provisions of the trust document itself. Title companies will insure those transactions. However, they will not allow it if those provisions don't exist within the trust itself.

The bottom line is that taking title through a trust is a great way to take ownership.  But you need to have the trust created, and then from that point on it comes down to working with a lender that knows what they're doing!


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Steve Clarke
Southern Light Realty Group - Woodstock, GA

Excellent information Larry! Thanks!


Dec 12, 2013 09:00 PM #19
Rob Rosa
Berkshire Hathaway - Wethersfield, CT
Personal Real Estate Expert

Very good information we usually do not think much about when buying a property.  Thank you for sharing.

Dec 12, 2013 09:30 PM #20
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

I know someone doing this but, I didn't know the difference between revocable and not. Great info. 

Dec 12, 2013 09:40 PM #21
Richard Strang
Mattapoisett, MA

Good to know,  Thanks

Dec 12, 2013 10:07 PM #22
Pat Braithwaite
Braithwaite Realty - Marietta, GA

I like trusts for family planning but had not thought of it as a good method of purchasing a home. Thank you for the enlightening. I need to learn more so it can be presented as an option to my clients.

Dec 12, 2013 10:08 PM #23
Gordon Crawford
Gordon Crawford Home Selling Team - Morristown, NJ
Your Morris County Specialist!

Indeed good information to have.  I will make sure I keep it in mind for different clients and offer it as an option.  Great post!

Dec 12, 2013 10:25 PM #24
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

I have been procrastinating about putting my rental in a  trust-  any chance you are able to work in Missouri?  Per your phone number it looks like you are in Chicago.

Dec 12, 2013 10:32 PM #25
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

I wasn't aware that I could take title to property in the name of our revocable trust; in the past, I had to take the property out of the trust and then remember to put it back in afterward. Is that just California?

Dec 12, 2013 10:40 PM #26
Jeanne Dufort
Coldwell Banker Lake Country - Madison, GA
Madison and Lake Oconee GA

Thanks for sharing.  Do rules about trusts vary from state to state?

Dec 12, 2013 11:36 PM #27
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Lottie, #26 brings up a good point, so are all the rules and regulations you illustrated comply for all states?

Dec 12, 2013 11:54 PM #28
Terry McCarley
REMAX Realty Team - Cape Coral FL - Cape Coral, FL

I have worked with several clients who have their property is a trust.  I seriously think I should do the same.

Dec 13, 2013 12:17 AM #29
Ric Mills
Keller Williams Southern Az - Tucson, AZ
Integrity, Honesty, and Vast Real Estate Knowledge

Great advise and information.

Dec 13, 2013 12:31 AM #30
Elva Branson-Lee
Solid Source Realty GA - Atlanta, GA
CDPE - Atlanta Real Estate & Short Sale Agent

This is valuable information and something for me to look into further. I've had an Irrevocable Trust as a cash short sale buyer, but not a revocable trust yet.

Dec 13, 2013 01:33 AM #31
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Interesting.  I have seen how trust have been abused or misunderstood.  

Dec 13, 2013 01:55 AM #32
Raymond Denton
Homesmart / Evergreen Realty - Dana Point, CA
Capo Beach Realtor® - www.CapistranoBeachHomes.com

I'm not sure about the irrevocable part, Larry ... I've originated several FHA-insured mortgages involving irrevocable Living Trusts.  One is happening right now, with the Urban Financial Group.  You might want to check them out.

Dec 13, 2013 02:03 AM #33
Christi Farrington
Dagny's Real Estate - Wilton, CT
~ Your representative in Fairfield County, CT

Great information, Larry.  All new to me and think some additional research on my part is needed to fully comprehend this.  

Dec 13, 2013 03:48 AM #34
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

As an investor, I normally try to always buy property in trust whenever possible.  It keeps your name away from the public records and away from nosy people's prying eyes.

Dec 13, 2013 09:24 AM #35
Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

I just got a call about putting a condo in a trust yesterday! This is great information. Not all loan types will allow a trust, nor will all lenders!


Dec 16, 2013 01:13 PM #36
Patricia Beck
RE/MAX Properties, Inc., GRI, CDPE - Colorado Springs, CO
Colorado Springs Realty

Helpful info, thanks!

Dec 16, 2013 11:56 PM #37
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Larry, thanks for providing this helpful information to readers.  Your post is a good starting point for those who want to to explore setting up a trust.

Dec 17, 2013 03:56 PM #38
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Larry Bettag

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