Arcadia, CA asked in Banking and Real Estate Law for California

Q: Will bank call loan due if I put my house that still has a mortgage into an irrevocable trust?

I put my house that still has a mortgage into an irrevocable trust, with the beneficiaries/trustee as my daughter. My lawyer sent out the deed transfer/paperwork to the county a few days ago.. will the bank know of the transfer and will they call the loan due because of it? I've always paid my mortgage on time and will continue to do so even after the deed transfer.

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2 Lawyer Answers
Seril L Grossfeld
Seril L Grossfeld
  • Fort Lauderdale, FL

A: Banks do not usually review public records to look for transfers like this. Banks are more concerned with receiving their mortgage payments. As long as the payments are received on time, even if paid through the trust, rather than you, there should not be a problem. The problem would arise if the mortgage was not being paid and the bank discovers this transfer and determines it is a violation of the mortgage agreement. At that point this might be another reason for the bank to go forward with a foreclosure.

The big problem here is if something happens to you or if you are no longer able to handle your affairs the bank may not want to communicate with your daughter as trustee, since she is not a party to the mortgage agreement. Generally when an irrevocable trust is set up there is usually a power of attorney signed which would enable your daughter, the trustee to handle these affairs in your behalf. You may want to make sure the proper documentation was also prepared so that your daughter can communicate with the bank holding your mortgage, since a trust agreement alone may not allow for this.

Bruce Alexander Minnick agrees with this answer

1 user found this answer helpful

Bruce Alexander Minnick
Bruce Alexander Minnick
  • Business Law Lawyer
  • Tallahassee, FL

A: The loan documents will tell you what you cannot do with the mortgage. For example, you most likely cannot sell the property unless the loan is assumable; and even then the bank may not accept the new borrower.

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