Situation:

- Mortgage loan application made by A and B.
- A and B want the deed recorded as AB Trust.
- Note is signed by A and B individually and for AB Trust
- CIP / CDD is gathered / conducted on A and B
- CIP information for AB Trust is technically gathered as the name is gathered for deed/note completion and TIN and physical address would match A or B, however CDD is not completed on the Trust

Doesn't this meet the regulatory requirements?

First - Why is AB Trust on the note, if only A & B applied for the loan and AB Trust only pledged the collateral.
Second - AB Trust is not an entity subject to BO CDD.

I've seen this at the various banks that I have worked for. Some banks will require the borrower to be the trust if the property is vested in the trust with the trustees as guarantors. Not saying I agree.

In the situation described, I would perform CIP on the trust and the trustees.

A and B are listed as borrowers on the application, it's just on the note, it gets sticky, as the note has the trust as a borrower too. Could have been in an abundance of caution from a legal standpoint to ensure the bank could get to any trust assets should there be a default.

Agree that there is no BO question here.

There is no question around CIP / CDD for the individuals. The trust would have the identification number of one of the individuals and the same address. The trust document is received for underwriting review, so there is verification. As long as that information is there, there is no regulatory violation. Agree or disagree?

Individuals that create a trust don't typically know that when they apply for a loan that will be secured by trust assets that they should be applying as trustees. All you need to do is document the reason why the borrower was changed to the trust. As I stated above, many banks require the borrower to be the same as the vesting on the property.

I don't see this as a big deal as long as everything is documented in your file.