Occupancy when borrower is a trust

Posted By: laf0915

Occupancy when borrower is a trust - 10/30/20 05:56 PM

When the borrower is a trust and the note is executed only by the trustee of the trust, would occupancy be investment? That is what I am thinking since an entity (the trust) cannot occupy a residence. Is that correct?
Posted By: hmdagal

Re: Occupancy when borrower is a trust - 10/30/20 06:33 PM

Was the note signed 'individually and as trustee'?
Posted By: laf0915

Re: Occupancy when borrower is a trust - 10/30/20 06:58 PM

The note was only signed by the trustee - not as an individual
Posted By: David Dickinson

Re: Occupancy when borrower is a trust - 10/30/20 07:47 PM

I agree with Code 3. The Commentary to §1003.4(a)(6) #4 states
"…a property is an investment property if the borrower does not, or the applicant will not, occupy the property."

This is really a catch all and should be labeled as "Other", not "Investment Property." For instance, if I pledge my house as collateral for someone to get a loan (a 3rd party pledge), but I am not a borrower, then the LAR should say this is a Code 3 for occupancy type. My house is not the borrower's primary residence or their secondary residence.
Posted By: rlcarey

Re: Occupancy when borrower is a trust - 10/30/20 07:50 PM

Unusual to only loan to a trust - I assume this trust is not revocable.
Posted By: laf0915

Re: Occupancy when borrower is a trust - 10/30/20 09:06 PM

It is not revocable. Thanks for the opinions.