Can I put my Mortgage into a Trust? | Expert Advice

hey guys welcome back to another week of Mortgage Matters in Minutes again I'm your host Brent Rasmussen owner of Mortgage Specialists as some as you are checking into this video it might feel very complicated to talk about the words mortgage and trusts and deed of trusts and beneficiaries and trustees and all the others but we're going to keep it as simple as we can here today to understand a few basic questions people have when uh they understand have a trust and they want protection with that and obtaining a mortgage so this week is our 135th episode and we want to say thank you all for tuning in checking us out continue to like And subscribe below it's the summer months we hope you're enjoying at this point in time as here in Omaha it's about as hot as it comes so today's question is can I put my mortgage in a trust so let's talk a little bit about that um and talk about first you know know what a trust is um a trust is basically just a legal document that uh a party known as a trustee holds and manages assets for uh another party you know such as the beneficiary so that's what a trust is that's really complicated but generally what we want to know is there's different kinds of trusts that are out there revocable irrevocable and the common reason people set those up is to protect assets uh protect themselves from liability possibly of people knowing what they own um and knowing where they live um but mainly people use them for estate planning reasons to not pay um taxes or to avoid um situations of generational wealth a lot of different reasons we're not going to get into all those but generally when people call us and clients call us they want to put the mortgage themselves uh in the trust so let's talk about that as an example for the type of mortgages that we do they're all going to be again set by the secondary Market which we've talked about many times as Fannie Mae Freddie Mac FHA VA and USDA are the types of loans that exist all of those underwriting rules are not allow the trust itself to be the borrower you as the person the individual has to be the borrower but can you put who owns the house into the trust yes you can do that and we're going to talk a little bit more about that so we also get this question a lot can I put the mortgage in my business's name so we ask do you want the loan to be in the business name or the ownership of the house to be in the business name again the loans for mortgages are only going to be done in the person or borrower individual's names they're not going to do the loan in the business name if you want a business loan we send you over to a business lender that's what they do is commercial lending not residential Lending then they'll look at whether the business has enough assets income to qualify on its own or they need you to personally guarantee so all residential loans nearly are going to require a personal guarantee so what's the real Saga here again what comes up is some attorneys contact us and state hey if I move the ownership of the property from person A and B's name into a trust the Data Trust states that that could be a due on sale clause which basically means if the ownership of the Property Transfers to someone else like in a sale or you give your property to someone else that can cue the do on sale Clause so let's back up a little bit and say what's a do on sale Clause basically if you own a property and you had a $100,000 loan on and you said I don't want to own this property anymore and you give it to your next door neighbor that lender is going to care that you still have $100,000 loan and you need to pay that loan off because you now relinquished your ownership of that property so that's what a lot of times people are scared about when they're transferring residential loans into a trust um but the scenario exists when you do go about doing that which you can transfer uh change title and ownership all the time I would highly highly highly suggest I can't say highly enough to contact an a a CPA an EST estate planning attorney financial advisor And or mortgage person before you do this to make sure there's not tax implications financial implications that can happen to you and we see this happen often where family members State when I pass away I don't want my house being gone so I'm going to put my daughter's name on the deed of trust or on the trust or I'm going to transfer ownership to my son's name that can cause a lot of different issues so before you file what's called a quick claim deed and a quick claim deed can transfer ownership it's very easy document to do but please before you go find a quit claim deed and you do this consult professionals because there's lots of financial laws rules and regulations that can cause more harm by you doing that than not enough so let's back up a little bit and talk about that due on sale clause and while that is a normal question when it comes to the residential loans that we do we have the St Germain Act of 1982 to look back on which basically States if you transfer the ownership of your own home into a trust that you you know as intervivos living trust which you remain the beneficiary of it doesn't consider that to be a due on sale Clause you also your family can continue if you pass to make those payments for you and can still continue to keep that loan for as long as need needed and also you may not need to refinance that loan and you can add other family members to the property without there being a du on sale Clause so if you ever get concerned about transferring the property due to what kind of loan you have obviously refer to the gar St Germain Act of 1982 and look at the summary points there to make sure you're covered in regards of transferring over the ownership of your house to your irrevocable living trust um because that is something we see happen each and every day and is totally okay I can't guarantee and say that's the fact if you go out get a commercial loan or a loan that's inhouse a particular lendering institution but this law states on behalf of the loans to the secondary Market that you are protected in those steps that can happen so again what's the benefit of doing this it's for protection it's for asset protection estate planning protection and also possibly um you know knowing who what assets you own and where you might possibly live so hopefully we kept this very simple today if you like this information please like And subscribe check us out each and every week as we're working to give you accurate simple short answers to mortgage and real estate information that can help you hopefully answer a few questions throughout the process if you're looking at buying or selling real estate in regards to mortgage needs uh I'm Brent Rasmussen of Mortgage Specialists feel free to call us anytime at 402-991-5153 or check us out on our website at mtg-speicalists.com

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