Trust Agreement Requirements

Inter vivos revocable trusts, also known as Living Trusts, are eligible for origination. We must obtain copies of the trust or trust certification and include them in the loan file. A review of the trust agreement is required to ensure the agreements meets all the following requirements:

• The copies must be certified by an attorney or the grantor/trustor/settlor.
• The trust is valid under federal, state, and local law.
• The trust must be established by one or more natural persons, solely or jointly. The primary beneficiary of the trust must be the individual(s) establishing the trust. If the trust is established jointly, there may be more than one primary beneficiary if the income or assets of at least one of the individuals establishing the trust will be used to qualify for the mortgage.
• The trust is effective during the Settlor’s lifetime.
• The Settlor is the primary beneficiary of the trust. If there is more than one Settlor, there can be more than one primary beneficiary.
• The Settlor is the trustee or one of the co-trustees.
• The trustee has the power to mortgage the subject property for the purpose of securing a loan to the party (or parties) who are the Borrowers on the note.
• The trustee is not required to obtain written consent from the beneficiaries to mortgage the subject property if written consent has been provided.
• There is no unusual risk or impairment of lender’s rights, such as distributions
• required to be made in specified amounts other than net income.
• If the trust agreement requires more than one trustee to borrow money or purchase, construct, or encumber realty, the Seller must confirm that the requisite number of trustees have signed the loan documents.