How to Mortgage Real Estate as the Trustee of a Trust

After creating a trust, many people choose to move their real estate into the trust as part of the estate planning and trust funding process. Trusts are permitted to hold title to real estate in many cases. Later on, the trustees of the trust may find themselves in need of liquidity during the estate planning implementation process. As a result, the trustees may need to obtain a mortgage, equity line, or other type of loan against the real estate held in trust.

5 Things the Lender Is Looking for When Granting a Loan on Trust Real Estate

Fortunately, in many cases, trustees of a trust can obtain a mortgage against trust property. Before issuing the loan, the lender will review certain important information. This may include the following:

  1. The lender will likely want to review the trust instrument.
  2. The bank will want to confirm the identity of the grantors and trustees of the trust.
  3. The bank will want to see that the trust grants the trustees the power to borrow money and pledge and encumber trust assets.
  4. The bank may want the trustees to sign a trustee’s certificate reciting certain key terms of the trust and confirming the trustees’ authority to enter into the loan.
  5. The bank will want to confirm that the property is truly owned by the trust. This can be done by reviewing the deed that is on record.

Trustees seeking to obtain a loan against trust assets should first consult with a knowledgeable trust administration attorney. This is especially important because trustees who take action without the proper authority may subject themselves to liability, or they may potentially harm the assets of the trust. We are here to help guide you through this process. We encourage you to check out the positive feedback on our client testimonials page today.