Can you get a mortgage loan to pay off the interest of the second mortgage and keep the house in the name of the trust?

Consider that a house you live in was owned by an elderly relative and s/he had a second mortgage taken out on the house. Now if that elderly relative passes away and the house went into the name of the trust with some siblings.

Moreover, the loan was a variable interest loan, and is now skyrocketing. 

Can you keep the property in a trust? So what do you do in this situation?

In order to qualify for the loan, the trust has to have a credit history and source of income. Well, trusts can have a source of income (rent, in this case), but it’s rare that they have a credit history.

The way most folks have to do this is temporarily quitclaim it to the folks who qualify for the mortgage, them quitclaim it back to the trust, who agrees to be responsible to them for the payments, loan balance, indemnities, etcetera.

Another way is for the people to guarantee repayment, but this is complex and may result in higher rates than the first way..

Either way, there are tax and credit implications. Talk to an accountant about the one, and ask your loan officer about the second. If the loan officer is clueless, run “Cosigning Mortgages” through a search engine, but you do not want to trust a clueless loan officer.

 


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