Lender Fee For A Trust
I told my lender, Colonial Savings, that I wanted to put my personal owner occupied residence into a trust. They said that it would cost me a $100 fee to do so. I guess I'll pay it if I have to (or maybe they'd just add it to my principal balance) but I was just wondering if anyone else has run into this. Especially, in all of the sub2 deals people have done.
...bump...
Just trying to bump this question up b/c no one's responded.....and I think it's a good question.
Thx
Erick:
I am unsure what exactly your lender is charging you for; nor WHY $100 bucks b/c you are placing your Property's Title into your own living Trust(will)?
Sounds confusing to me...
More details please?
Derrick
Are you talking about a land trust?
If so, you simply need to sign over deed to land trust. It is not difficult.
If it is a land trust, why do you need to tell the lender anything? Zach
Why tell the lender anything...?
Because, just like any situation whether it's a sub2 or not, you have to (or at least should) do two things, IMHO. You need to have your insurance policy switched over so your trust/trustee is the "primary insured" (or is that the "additional insured"?) Anyways, the trust needs to be named on the policy. Myself, as the beneficiary of the trust would be the other insured named on the policy. Therefore, I believe that the insurance company always has to tell the lender when there's a change in the coverage (right?) So, the lender knows the property's being placed into trust.
Also, I need to give the lender the trustee's new address for any correspondence. And, I would think that for the trust to be a useful asset protection measure, you'll want another person as your trustee (rather than yourself) and you'll want a different address.
Those are the reasons why the lender has to know. Anyone have a different opinion on this?
Also, this sets me up for the future when I eventually sell my place on a lease/option or land contract. The trust and trustee will already be in place and I'll just have to change the ins policy over to a landlord policy.
My lender, Colonial Savings, sent me a little packet with some details about what I need to do for them when moving my property into trust. I'll get back to everyone with those details.
I still don't know why you need to pay them $100. The insurance agent should be sent a letter directing her to change the loss payee to Joe Blow, Trustee and the Beneficiaies as their interest may appear.
If the lender wants to know what's going on tell them that the property was placed in trust for estate planing purposes.[ Edited by sammyvegas on Date 11/24/2003 ]
Your reasoning seems very sound to me, thanks for the info. Zach
Ok, here is what the letter I got from Colonial says.
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The following items are necessary to make the requested changes:
-Copy of Trust
-Copy of recorded Warranty Deed transferring property into trust
-Transfer fee: $100.00
-Owner Occupany Affidavit
-Trust Tax ID Number
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Interestingly, it is signed by someone in the "Assumption Department"
So, what do people think about this? How can the lender expect to get a copy of the trust when this is supposed to be kept private?
Also, since this is a simple grantor trust, it is a flow-through entity and doesn't necessarily require a new Tax ID# (right?) so, what if I don't give them one?
How would anyone here handle putting their property into trust in the face of this? Just send them a change of address type form with my trustee's name and whatever address I'll use? It'll also be interesting to see what they think when they get the notice of change from the insurance company.
When I was a tax accountant in California, many years ago, most of my clients formed living trusts to put all of their assets in as a way to avoid the expense and hassle of probate.
So, living trusts are very common in some areas although lenders usually have low wage earning/high turn over personnel who don't always know the score. Or maybe they have gotten hep to the "land trust" sub2 world.
We always just sent the lenders a copy of the deed, with a letter that said for estate tax purposes only, we have transferred this property to our living trust. Everything remains the same including the tax ID #.
If you want to change the mailing address, I would do that at a seperate time. We always had PO Boxes in the first place.
If the lender wants to change their records fine, if not, no skin off your nose. That's the position I would take and I wouldn't pay any fee.
Hope this helps.
While it's clear that you have the absolute right, legally, to put the home into a trust, under Garmin St. Germaine Fed Law, it may be that your Deed of Trust gives them the right to charge you the $100 fee for doing it.
I'd venture to say they probably do NOT have right to call your loan if you don't tell them, send them copies, etc., you probably agreed to the fee when you got the loan.
When in doubt about what ANY legal doc says, go get it and read it.
Revolutionry, I know, but the doc itself sets out what you agreed to do, so you'd better read and know about it before you go much further.