Trust Policy - Inter Vivos Revocable Living Trusts

Overview

An Inter Vivos Revocable Living Trust (“Trust”) is created by individuals when they are still living. The Trust is revocable and can be used as an alternative form of property ownership. The individual or individuals that create the Trust (often referred to as “creators”, “settlors”, “grantors”, or “donors” are usually named as trustees within the Trust and have full control over the property.

If the Trust is revocable, the individual or individuals setting up the Trust have the right to revoke or alter the Trust.

Policy

loanDepot.com, LLC (the “Company”) will permit loans to close that are secured by properties vested in an Inter Vivos Revocable Living Trust, subject to agency/investor guidelines. The following Trusts are ineligible:

·       Blind Trust;

·       Land Trust;

·       Life Estate Trust;

·       Irrevocable Trust; and

·       Split Trust.

Eligibility Requirements/Trust Requirements

To be eligible, the Trust must meet the minimum requirements of each respective Agency/Investor. The following depicts general Trust requirements.  The Trust document must give the Trustee or Trustees the authority to:

·       Mortgage Trust assets or Incur debt of behalf of the Trust;

·       Hold legal title to the collateral;

·       Manage Trust assets;

·       Loan applicant must be a ‘settlor’ or a ‘grantor’ and must also be a Trustee or Co-Trustee;

·       The Trust document must be signed, dated and notarized;

·       The title company must agree to insure the property with no exceptions for the Trust or the Trustees;

·       A copy of the Trust document must be included in the underwriting submission package; and

·       Title to the subject property is vested solely in the trustee(s) of the Trust, jointly in the trustee(s) of the Trust and in the name(s) of the individual borrower(s), or in the trustee(s) of more than one Trust.

Additionally, loans closing in a Trust must meet the following requirements:

·       The Trustee borrower(s) must qualify on an individual basis;

·       The primary beneficiary of the Trust must be the individual(s) establishing the trust and have sole power of direction over the Trust and trustee;

·       If the Trust is created by more than one individual, at least one must be the borrower on the loan (or an institutional trustee that is authorized to act as trustee under the laws of the applicable state); and

·       At least one settlor of the trust must be listed as a borrower on the Note.

Note:  In most cases a power of attorney (POA) may not be used to sign on behalf of a trustee for a transaction closing in a trust. Exceptions may be granted on a case by case basis with prior approval. The trust document must govern successor trustees in the event the original trustee is unable to sign. A POA may only be used for an individual signing in their own capacity.

Note: In the event the originally named trustee is unable or unwilling to serve, and the trust instrument has a mechanism for appointment of a successor trustee, the trust can properly act through the successor trustee.

Vesting Requirements

The name of the Trust must appear on the security instrument when required to create a valid lien under state law. The owner-occupant and any other borrowers must also appear on the note. The individual borrower is not required to be listed on the property deed or title.

Notification of Changes

The terms in the Note must require that the borrower must notify the servicer in the case of:

·       Beneficiary changes; and

·       Occupancy changes.

Required Documentation

A complete copy of the Trust, certified by an attorney or the settlor is required, unless otherwise allowed by title and agency/investor guidelines. See individual agency/investor guidelines for minimum requirements.

If a portion of the Trust becomes irrevocable, the event describing irrevocability must be submitted with supported documentation (e.g., death certificate).

Trusts originated in certain states may allow a trust certification stating facts listed above with signatures of all trustees. This is accepted in lieu of entire trust document.

Note: Agency/investor guidelines should be followed as they pertain to utilizing a trust certification in lieu of copies of the trust documents

States That Permit Trust Certifications

States that accept a trust certification in lieu of the Trust documents:

 Note: the title company should confirm which trust certifications are acceptable in each state shown above.

Title Insurance Requirements

·       Title held in the Trust does not in any way diminish the agency’s/investor’s rights as a creditor, including the right to have full title to the property vested in the agency/investor should foreclosure proceedings have to be initiated to cure a default under the terms of the mortgage.

·       The title insurance policy insures full title protection to the agency/investor.

·       The title insurance policy states that title to the security property is vested in the trustee(s) of the Trust.

·       The name of the Trust must appear on the security instrument when required to create a valid lien under state law. The owner-occupant and any other borrowers must also appear of the note; the individual borrower is not required to be listed on the property deed or title.

·       The title insurance policy does not list any exceptions with respect to the trustee(s) holding title to the security property or to the trust.

·       Title to the subject property is vested solely in the trustee(s) of the Trust, jointly in the trustee(s) of the Trust and in the name(s) of the individual borrower(s), or in the trustee(s) of more than one Trust.

Trust Block Signature Requirements

Trust block signatures will display on the following documents:

·       Note;

·       Deed of Trust/Mortgage; and

·       Inter Vivos Revocable Trust Rider.

Sample Signature Block

The following Trust documents must also be properly signed and dated:

·       Inter Vivos Revocable Trust as Borrower – Acknowledgement; and

·       Trust Certification (as permitted by state) or Trust Agreement.

 

 

V.E.2.19.19