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#2274239 - 08/16/22 04:59 PM Trust as the Borrower
Believing... Offline
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Joined: Apr 2012
Posts: 298
In the mountains
We are making a loan to an irrevocable trust (estate planning) and the bank's LOS will not use/show the name of the trust as borrower on the LE/CD. Instead, the name of the trustee is shown in her capacity on our documents. This doesn't match the trust agreement or the title company docs. Our provider tells us that that is a WK rule. For disclosure purposes, is the trust and trustee recognized as one in the same?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2274244 - 08/16/22 05:24 PM Re: Trust as the Borrower Believing...
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,663
Galveston, TX
I do not believe so, but there is little guidance when dealing with 1026.3(a) - Comment 10. I just have never seen how an irrevocable trust really fits within that comment. An irrevocable trust becomes its own entity.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2274246 - 08/16/22 05:58 PM Re: Trust as the Borrower Believing...
Believing... Offline
Gold Star
Joined: Apr 2012
Posts: 298
In the mountains
Randy, are you questioning whether the loan to the trust is subject to TRID? The original trust was a living trust and the grantor/trustee passed away recently. The new irrevocable trust is purchasing a home for the surviving spouse. I looked at this as being consumer purpose. Do you agree?

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#2274247 - 08/16/22 06:03 PM Re: Trust as the Borrower Believing...
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,663
Galveston, TX
IMHO - The grantor is dead, it is no longer during the grantor's lifetime in this situation.

During their lifetimes, however, such consumers may continue to use the assets and/or income of such trusts as their property. A creditor extending credit to finance the acquisition of, for example, a consumer's dwelling that is held in such a trust, or to refinance existing debt secured by such a dwelling, may prepare the note, security instrument, and similar loan documents for execution by a trustee, rather than the beneficiaries of the trust.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2274259 - 08/16/22 08:00 PM Re: Trust as the Borrower Believing...
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,704
Cape Cod
I'm in Randy's court on this. The loan is to the trust and the trust is an entity, not a consumer. I think you have good reason to treat this as exempt from Regulation Z under 1026.3(a)(2) (extension of credit to other than a natural person).
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John S. Burnett
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#2274260 - 08/16/22 08:01 PM Re: Trust as the Borrower Believing...
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,704
Cape Cod
Don't forget to require the trust to get its own EIN.
Last edited by John Burnett; 08/17/22 03:45 PM.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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