Trusts & TIL Requirements -- John M. Floyd and Associates

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Trusts & TIL Requirements
By John M. Floyd

Question: We made a loan to two individuals using property that is their primary residence. The property is titled in the name of a Trust. The individuals signed the note as borrowers and the Mortgage as Trustees for the Trust. Our loan document program did not automatically prepare the ROR. We did prepare the ROR for the individuals. We assumed TIL fell into place as the purpose of the loan was consumer purposes, the Borrowers are natural persons, using primary residence as collateral, but titled in the Trust name. In your opinion are we in compliance? We feel that we are.

Answer: We agree that you are in compliance. The regulations define consumer as a natural person and a trust does not qualify. The most important issue in your case is establishing authority for the trustees to sign under the terms of the trust agreement.

JMF Boilerplate John M. Floyd & Associates (JMFA) is a leading vendor of overdraft privilege programs serving more than 2,000 financial institutions in 49 states and Central America. JMFA is also nationally recognized for training, account acquisition and earnings enhancement programs, as well as product, service, pricing and technology improvement consulting. To learn more about John M. Floyd and Associates and to receive a FREE Overdraft Privilege Analysis, please visit www.JMFA.com or call 800-809-2307.

First published on BankersOnline.com 9/2/03

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