UPDATE: After a week of turmoil, looks like the mortgage bond market has stabilized a bit and mortgage loans on properties held in trusts are again saleable in the secondary market. Sanity has returned for now, at least while the market is taking whatever it’s taking.
The SARS-CoV-2 pandemic continues to ripple through the economy like a slow-rolling earthquake.
The latest casualty is the hard-won comfort mortgage lenders attained (over several decades starting with California banks, and ultimately even the stodgy New York banks) with the funding of mortgage loans involving trusts.
Now, due to market convulsions over the pandemic, lenders increasingly refuse to fund mortgage loans for property held in trust — yes, even plain ol’ revocable living trusts.
Of course it doesn’t make any sense. But the mortgage markets haven’t been making much sense lately as they continue down the rabbit hole. Despite record low treasury yields, the mortgage market has been volatile, running to cash at times. So don’t look for rationality right now. The secondary market no longer likes trusts, and to them in their panic all trusts look alike.
So with many lenders now you will need a trust cert, yet only to enable escrow to take your property OUT of trust. And no, they won’t put it back in.
Where does that leave you? Exactly where we were 20 years ago, with many lenders taking property out of trust for a refi, leaving the borrowers exposed to probate and other perils if they did not have their attorney put the property back in trust.
Think about that before you seek trust help in the red light district of low- or no-commitment trust preparers.
We include a free annual trust funding checkup with all estate plans, to catch any situations like this.
Learn more at: http://Protect.LIFE