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#2161826 - 01/25/18 03:48 PM Trust - do I have co-applicant
ADN Offline
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Joined: Mar 2007
Posts: 221
I am scrubbing year end HMDA files and can't decide if I have a co-applicant or not.

Loan was made to "Joe Sample, Individually and as Trustee of the Joe Sample Living Trust". "Joe Sample" the natural person was the only applicant on the 1003 application. Our department is at odds as the head of our mortgage division says there is only 1 borrower because our investors won't buy a loan made to a trust, but it seems odd because note language uses the words "individually and as trustee" which makes me think there are two borrowers. Any help is appreciated!

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#2161830 - 01/25/18 04:01 PM Re: Trust - do I have co-applicant ADN
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
You need to talk to your legal counsel and not the head of your mortgage division, because in my opinion, you made the loan to both the individual and the trust based on that language, regardless of any actual intent.
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#2161833 - 01/25/18 04:10 PM Re: Trust - do I have co-applicant ADN
cgorham Offline
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Joined: Sep 2015
Posts: 120
It will probably depend on what you mean by the "loan was made to" and where that language is on the note. The GSEs have very specific requirements for how the note and security instrument must be executed when there is a trust involved. Just because the signature line shows them as a individual and trustee does not necessarily mean the trust or trustee is a borrower.

Super confusing and I'm by no means an expert on it (our legal counsel handles the review of all trust loans), but I at least wanted to point it out in case it helps. Here is Fannie's guidelines on signature requirements.

https://www.fanniemae.com/content/guide/selling/e/2/05.html

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#2161933 - 01/25/18 09:19 PM Re: Trust - do I have co-applicant ADN
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree with Randy about talking to legal counsel. I'm not sure if you made a loan to a person acting in 2 capacities with the wording you used.

If you make a loan to "John Doe, Trustee of the John Doe Trust"; and "John Doe, Individually" you have a joint application.
That's no different than me signing as an individual and as the President of my company. Joint Intent would apply.
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David Dickinson
http://www.bankerscompliance.com

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