Is Entire Mortgage Loan Due When You Transfer Home To Trust?
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- Опубліковано 25 лип 2020
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Many people, during their lifetime, want to transfer their home to a trust. There are many reasons people transfer their home to a trust, including but not limited to, avoiding probate, protecting the value of the home from state Medicaid estate recovery rights to the extent Medicaid paid nursing home expenses, and some people want to transfer their home to a trust because they fear losing their home if they get sued or if they get a judgment against them.
Mortgage loans have a due-on-sale clause which stipulates that a lender may require that the full balance of the loan must be repaid in full upon the sale or transfer of ownership of the property used to secure the loan.
Any answer or reference to this issue must include the Garn-St. Germain Depository Institutions Act, passed by Congress in 1982. The Act provides for many things regarding mortgages, but one of the many provisions in the Act states that a lender may not exercise its option pursuant to a due-on-sale clause upon a transfer to a living trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.
So, the transfer of your home to they typical "Avoid Probate Revocable Living Trust" is one of those transfers exempt from the due-on-sale clause in your mortgage loan documents.
Note that there are other exemptions in the Act, including transfers to a relative resulting from the death of a borrower, and a transfer where the spouse or children of the borrower become an owner of the property.
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This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Estate Planning Attorney
Many bank has standard clause if any changes of borrower, title, interest ownership or control without lender’ prior consent loan will be due and payable.
You delivered to the point Paul. The details were explicit and in great order. Thanks for this video, you made my day.
You are such an amazing teacher. Thank you.
I've finally found the answer for my most concerned matter with setting up living trust. Paul, You are the Best!!!
Thanks for clarifying 🙂
VERY Helpful! I really appreciate the information you share here!
You answered my question completely. Thanks for this video. Live your content Paul. Thanks again.
Thank you
Another hit!!!! You are the man Paul!!!!
Yes, thank you for your insites right on target
thank you, I need to put my home in a living trust
Should you inform the mortgage company about the new Trust? Who is responsible for making the mortgage payments after the persons death? The beneficiaries must continue to make the payments until the sale of the property?
I need this question answered
If the transfer is to a non relative, what then paul? Thanks for all of these valuable lessons. Im 17 & This is better then school i kid you not!
Can the lender sell my house if my wife passed away and my daughter collect s the rent and keeps the money and doesn't pay the mortgage
Thank you. You have been very helpful. What state are you in? I’m in Maryland and I’m wondering if you do over the phone advice? If so please let me know how to get in touch with you and what your prices are to do over the phone advice. Thank you so much 😊
Can a federal employee/veteran (that used VA benefits) transfer home to a living trust if there’s still a mortgage?
Do you have to register your living trust with a paid off mortgage? Thanks
If I had the entire amount of the mortgage during these times, definitely I would pay the due on sale.
Would you do a video what a POA can do to protect assists of someone with dementia? I have POA for my aunt who has dementia. She has a will and advance directive but no living will. I recently paid her mortgage off and want to protect her home from Medicaid. Can I setup a living trust for her now and transfer her home and cash into it?
What about doing a joint tenancy?
If you home is a mobile home with a mortgage, it is not considered Real Estate (in California). Does the Due on Sale apply if I transfer my property into a trust or when I die?
If you have real estate in an llc, and you transfer the llc to the trust do the same rules apply?
I just watched another video that said not to transfer LLCs to a trust because it erodes the protection that an LLC provides
As successor trustee and beneficiary to my mom’s Home with a heloc and mortgage. can I rent home I order to pay mortgages? I’m lost. Pleas help.
If DIY and my daughter executive and a small mortgage on it, can my daughter still make the payment
I am on title to our home only.
My husband has a mortgage with Pennymac. We want to put it in a trust what do we need to do as far as beneficiaries goes?
We have 5 children to inherit our home.
QUESTION! What if you transfer your awarded mortgage loan to your trust before you purchase the property? At the end of the day the property purchased will be a rental property.
Must trust beneficiaries, to avoid due on sale, be family members? This seems a good way for unmarried couples to address only 1 being on the mortgage/title
If one has a remaining balance of 100k in mortgage and the home is valued at 200k, then can the trust use the equity to pay off the remaining mortgage?
Spouse to spouse withOUT divorce or legal separation???
My parents have a revocable trust in Florida. They did not place their paid off home where they reside in the trust because they were told you can’t claim the annual homestead tax exemption if it’s under a trust. Not sure if that’s correct?
Not correct.
What about investment properties?
Did you get an answer?
What if: Father places real estate buildings in traditional living trust in which names son as trustee. Father dies. Real estate still has mortgages on them at time of death. Real estate goes into trust since the Father passed away. Since the trust technically owns the real estate now since the father passed away, does the trust have to refinance the loans or can they just transfer the loans into the trust as owner?
That’s what I was wondering!!
If I buy a personal residence today and put it in a trust and sell it 2+ years from now and have a 100k gain when I sell it, do I lose the home sale tax exclusion of up to 250k because it is not in my personal name?
The trust is a private document. If the purchase is in your name, you just make the trust the beneficiary of the deed. This is how the revokable works, you can make changes, additions, deletions as you go. Irrevocable you can't touch it ever. It's permanent. Generational wealth
Question: please clarify. Does a mortgage need to be paid off if in Irrevocable Trust ? My parents are on the loan and and they left home to me as a special needs Trust under Irrevocable Trust. I have same name as my mom, I pay the Mortgage $600.00 a month. So far they have not said anything. Is the lender notified when the title changes?
you have to invalidate the debt
his not going tell you cause he pledged his logion to the BAR
Is this still valid for second or third houses? Investment houses?
Create an LLC for rental properties and put them under the trust
So if you transfer to a living trust, does the mortgage still need to be pair or does that pause?
Why would you stop paying your mortgage just because you transfer it to a living trust?
Im a dual citizen & a house owner in California- Can I ROLL OVER my homes equity (800k) & buy a house in SWEDEN to avoid paying sales tax ?
Transfer to a Llc then have the trust own the llc
Garn-St Germain....
Not to a spouse or Child ~
Question: If you transfer your home to an irrevocable trust does this exemption still apply? My understanding is that your assets in a living trust are not protected from a judgment, am I wrong?
Have the same question... doesn't look like he is answering questions after live stream...
Yes that is incorrect. The purpose of the trust is to keep it protected.
It’s actually correct a living trust does not protect against creditors/judgements. You would need to put property in a land trust under an LLC to avoid having any ties with those assets.
Actually, what I found out is: If you put your mortgaged property into a revocable living trust, the "bank" will not execute the "Due on sale clause" assuming it has your social security number. If you make an irrevocable trust and put your mortgaged property in it, that will likely trigger the "Due on sale clause".
Depends on the kind of trust you get. Irrevocable trust, the home is protected from creditors but no changes can be made by the owner of the trust. Revocable trust is not protected from the creditors but the owners can make changes to that trust. Be very careful, attorneys can hide info from you.
What about the loan itself, would it need to be refinanced if the deed is transferred to the living trust?
No they are not because mortgages are fraud HJR 192