Is Your Trust Property Left Exposed After Your Mortgage Refinance or Loan Modification?

In the last two years, California experienced an influx in the real estate sector by way of mortgage loan refinancing and/or loan modifications.  Whether this influx was motivated by attractive interest rates or the poor economy, one thing that is certain in Estate Planning situations, and an issue that many homeowner’s many not be aware of, is that their homes that were once in a Trust may be left exposed after their loan was refinanced and/or modified.

The reason this is so is because lending institutions typically require that a home owned in the name of a Trust be temporarily transferred out of the Trust in order for the refinance to close and/or for the loan to be modified. After the refinance and/or loan modification process has been completed, title to the home is then transferred back into the trust by way of a Grant Deed.

However, after the process has been completed some banks, mortgage brokers, and/or financial institutions fail to advise their borrowers to place the home back into the trust, which leaves a once protected Trust asset exposed to creditors and/or potential claimants.  Pretty unbelievable, yes, but this happens time and time again. What’s worse is that this fact is not discovered until it is too late and the house, often times one’s personal residence, is left exposed and reached by creditors and claimants, especially when a homeowner is faced with a lawsuit.

The Shirvanian Law Firm is often called about this issue and assists clients by reviewing their estate plan and checking title records to ensure that a home once titled in the name of a Trust is still done so after a mortgage is refinanced or a loan is modified.

If you have any questions regarding this issue, please call The Shirvanian Law Firm at (818) 835-5396 or email the firm at info@shirvanianlawfirm.com.

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