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#100602 - 07/24/03 11:14 PM Revocable Trust
Cowboys Fan Offline
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Joined: Dec 2002
Posts: 4,601
SC
Equity Line to husband and wife individually. Home is held in a Revocable Living Trust. Our doc prep system says that rescission is not applicable. Our loan reviewers dispute. My thought process is that it's not applicable because the "trust" isn't an individual.

Any help? Thank you.
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#100603 - 07/25/03 05:35 PM Re: Revocable Trust
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,029
Bloomington, IN
I agree with you. The Trust is not a "natural person" and the Trust "owns" the property.
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#100604 - 07/25/03 05:58 PM Re: Revocable Trust
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
For what it's worth, I agree: Not appilcable.
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#100605 - 07/29/03 02:24 AM Re: Revocable Trust
HRH Dawnie Offline
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HRH Dawnie
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
You're entirely correct. We see this all the time in Private Banking. It's sometimes hard to make folks understand the difference between a revocable trust and a person. It's such a close relationship that in many eyes it's just the person. But...the trust is a seperate entity. As long as it owns the home, and the docs reflect the trust as the borrower, you're covered.
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#100606 - 07/30/03 09:49 PM Re: Revocable Trust
SteveG Offline
Member
Joined: Jul 2001
Posts: 58
I don't agree ... revocable trust with husband and wife as grantors and trustees and beneficiaries is really indistinguishable from the individual and can use their social security number. It is in substance a loan to them for personal, family or household purposes. Some trusts, like a land trust, also get treated that way for RoR purposes. I believe the safe thing is to treat these as rescindable.

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#100607 - 03/15/05 11:20 PM Re: Revocable Trust
Cowboys Fan Offline
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SC
Revocable Trusts: do you have the trustees sign a document stating that the trust hasn't been revoked before closing the loan?
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#100608 - 03/15/05 11:35 PM Re: Revocable Trust
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,383
Galveston, TX
Actually, you better have the trustees and/or beneficiaries sign as individuals also. If you make a loan to a revocable trust and it is revoked - you got nothin' baby!!
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#100609 - 03/15/05 11:50 PM Re: Revocable Trust
Cowboys Fan Offline
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Posts: 4,601
SC
Thanks - now I'm even more confused . The trust owns the property so no rescission but the trustees and/or beneficiaries should sign all of the loan docs or only the mortgage?
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#100610 - 03/16/05 12:47 AM Re: Revocable Trust
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,383
Galveston, TX
Only the titled owner (trust) would have to sign the mortgage. Only the obligors have to sign the note. As far as a statement regarding whether the trust has been revoked, I would let the title company worry about that. It's up to them to guarantee that you have a proper lien.

But if you want to collect without forclosing on the property if a revokable trust dissolves - from purely a credit standpoint - I wouldn't make a loan solely to a revokable trust (which it doesn't sound like you are).
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#100611 - 03/28/05 10:59 PM Re: Revocable Trust
Anonymous
Unregistered

Here's a tricky one- If the beneficiaries of the living trust have homestead rights, would they have the right to rescind? (Having an ownership interest in the property)

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#100612 - 03/29/05 03:10 AM Re: Revocable Trust
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,383
Galveston, TX
If the loan was made to the trust, it would not be subject to Reg Z, so there would be no rescission available, regardless of ownership rights.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#100613 - 03/29/05 01:03 PM Re: Revocable Trust
Anonymous
Unregistered

If homestead rights are that they live out their lives there - thats all that is- they do not own the property - the title is not in their names- they don't have the right to rescind.

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#100614 - 03/29/05 03:56 PM Re: Revocable Trust
Anonymous
Unregistered

Why not error on the side of caution and permit rescission? Especially if the individuals are responsible for the Note and they are Grantor/Trustees of their Living Trust. We have been doing this for years and no auditor has ever questioned this procedure.

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