I’m purchasing a VA repo using conventional financing with 5% down. Everything is going pretty smoothly except that the lender does not want to let me take title in a trust. Of course, nothing will prevent me from putting the property in trust after closing. But by then my name will appear in the public records on the property. This defeats the ‘privacy’ function of the trust.
The lender says that Fanny Mae and Freddy Mac won’t let investors take title in a trust because it is harder for them to forclose if the investor defaults.
Anybody else run into this? Any suggestions for overcoming it?
Not really much to say, as you’ve answered your own inquiry. It’s more difficult for lenders to foreclose on, so they do not allow it. Though you can do it yourself later, it is not logical for them to make the process easier for you.
Trusts are designed primarily for security, and not for privacy. As for keeping your name out of the property records, good luck. Speaking of which, may I ask why this is such a concern?
2¢
DilutedImage,
I see that you didn’t read Dyches Boddiford article “Using Trust to Own Real Estate.” I suggest both of you (You too bcrider) read or re-read this article. Read the section “A Need for Privacy” and you will see why the trust can be used for privacy. Just make sure you consult with a good reputable real estate attorney of your jurisdiction and state.
It is very helpful if a person holding real estate assests is kept private :-X from the unscrupulous intruders (people who are after something that doesn’t belong to them or too lazy to make things happen for themselves) with frivilous lawsuits. You can do nothing wrong… and still incur expensive legal bills with your “hard-earned money.” We won’t get into “contingency fee attorneys” who only goes after the “fatted lamb” as Dyches Boddiford put it.
Having this privacy is part of (if not essential) part of protecting your wealth/financial earnings.
So there DilutedImage… that’s why it’s such a concern with bcrider. 8) It pays to read all articles. NO offense in saying this.
I have not read that article, but will be sure to check it out. Thanks.
Please note, I was not stating that a trust can not be used for privacy, but rather that they were not designed for that purpose.
No offense taken. I just personally don’t see privacy as a necessity in protecting your assets. But hey, that’s just my opion. ;D
Privacy is the first-line defense in protecting assets. What someone does not see they cannot steal.
Would you leave your computer laying on the front seat of your car in a parking lot, or would you at least put it under the seat? I put mine where it cannot be seen through the window, thus providing tempation for someone to break in and steal.
Similarly, if someone wanted to institute a malicious or frivolous lawsuit against me, the first thing a ocntingincy attorney will do is an asset search. If my name is on record at the courthouse he will know I have assets and assume deep pockets. If my assets are in trust and my name is not on the record, they might not consider it worth the effort to file a suit.
And, by the way, having a property in trust does NOT make it harder to foreclose. The process is exactly the same as if I own it in my name.
If somebody is really coming after you, then they will find your property, trust or no trust. I prefer to just leave nobody any reason to sue, and have a good lawyer on hand in the event they do find/create a reason. Unless the person has just cause to sue you, then a good lawyer will stop the case before it ever reaches the courtroom.
As stated though, I was sharing my opinion; I’m not here to argue it.
Back on topic; if Fannie Mae and Freddie Mac will not allow it, then that’s the way it is. You may want to consider a non-conventional loan that fits your needs. (2¢)
And that brings us back to the original question, which maybe I should rephrase.
Is this really a Fanny Mae/Freddy Mac policy or is my lender just using them as an excuse?
I thought I’d jump in here.
Trusts (properly set up) can be an excellent tool for asset protection. However, most lenders DO require title to go in your name. Which means that after you take title, you just need to transfer it to the trust. But keep in mind, that the loan stays in your name. Also, make sure you do it right, so as not to trigger a Due-On-Sale clause. And if you need or want to refinance, or do a HELOC, title has to come out of the trust and into your name - then back into the trust again.
: )