Q1: Why are banks hesitant to refinance a mortgage or issue a HELOC for a home owned by a revocable living trust*?

Many financial institutions are cautious about lending to properties held in trusts due to perceived complexities in property ownership and potential legal complications. Some banks have standardized processes that are not optimized for trust-owned properties, leading to initial resistance.

Q2: Can I refinance or obtain a HELOC if my home is in a revocable living trust?

Yes, you can refinance or obtain a HELOC. However, you’ll need to take specific steps to work with the bank’s requirements and overcome their initial hesitation.

Q3: What steps do I need to take to refinance or get a HELOC for a trust-owned property?

  1. Obtain a Certification of Trust: Prepare a simplified version of the trust document that:
    • Confirms the trust’s existence
    • Identifies the trustee(s)
    • Demonstrates the trustee’s authority to enter into financial transactions
    • Protects the privacy of other trust details
  2. Lender-Specific Documentation:
    • Contact the lender to understand their specific requirements
    • Prepare additional documentation such as:
      • Trust agreement excerpts
      • Trustee identification
      • Proof of trustee’s authority to borrow or refinance
  3. Deed Options:
    • Temporarily transfer the property back to individual ownership for the loan process. Often the bank’s attorney can do this for you. Otherwise, if you are a client of the Bernstein Law Group, PC, call us – we can help. Once the new mortgage/HELOC is in place, it is critical to deed the property back into your revocable trust
    • Some lenders may allow the loan while the property remains in the trust.

*The same applies if your home is owned by a realty trust.