Trusts

Posted By: CMSIngenue

Trusts - 01/20/21 02:15 PM

Credit extended to trusts established for tax or estate planning purposes or to land trusts, as described in comment 3(a)-10, is considered to be extended to a natural person for purposes of the definition of consumer.

All consumers who have the right to rescind must receive a copy of the CD at least 3 business days before consummation. If the property vests in a trust, we require all trustees of the trust to sign the mortgage note.

Would the CD list the Trust as a Borrower on page 1 of the CD? Or would the CD list the trustees as a Borrower on page 1 of the CD?
Posted By: rlcarey

Re: Trusts - 01/20/21 03:42 PM

If the trust is the borrower, then the CD would list the trust as the borrower and copies would be given to the trustees.
Posted By: CMSIngenue

Re: Trusts - 01/20/21 07:27 PM

Thank You. So if the borrower is vesting in a Trust but the borrower is solely on the credit application, then a CD would not be issued to the Trust?
Posted By: CMSIngenue

Re: Trusts - 01/20/21 07:42 PM

For example: Borrower is a credit applicant. Borrower will vest in a trust. All trustees of the trust are required to sign the mortgage note. There are 3 trustees of the trust. In this situation, is the individual listed on the credit application the sole factor in determining whether credit is extended to the trust?
Posted By: rlcarey

Re: Trusts - 01/20/21 08:01 PM

I am an applicant on the loan application.

My friend Joe has a piece of property that I am going to pledge as collateral.

I am a borrower and I get a CD.

Joe signs the deed of trust or mortgage depending on your State and is not a borrower and does not get a CD.

A trust works the same way - you need to figure out who is the actual borrower and who owns the property. If no one applied for the loan on behalf of the trust, they are not a borrower.
Posted By: CMSIngenue

Re: Trusts - 01/20/21 11:13 PM

Thank You