Reverse Mortgage For A Home In A Trust
A HECM can work on a home held in a revocable living trust, or on a home where you hold a life estate. Our program does not accept irrevocable trusts, and the right people have to sign.
Quick answer
Saxton Mortgage does. At least one HECM program we offer allows a home vested in a trust when the trust meets HUD guidelines. The home cannot be vested in an irrevocable trust, and blind trusts are not eligible. A life estate is also an acceptable type of ownership.
Which ownership setups work
FHA lets a HECM borrower hold title in their own name or in the name of a living trust. Our reverse mortgage program adds limits on top of FHA’s HECM rules.
- A revocable living trust can hold the home, as long as it meets FHA’s HECM trust rules.
- An irrevocable trust cannot hold the home in our program, even though FHA’s HECM rules allow some.
- A blind trust is not an eligible borrower in our program.
- A trust that becomes completely irrevocable when one borrower dies does not qualify.
- A life estate can work only if every holder of a remainder interest also signs the mortgage and attends HECM counseling.
- Our program needs the complete, fully signed trust. A trust certification or abstract of trust is not accepted in its place.
Revocable living trusts work
Irrevocable trusts do not
Blind trusts do not
Trusts that lock at death
Life estates need signatures
The full trust is required
How A Trust Works With A HECM
FHA’s HECM rules look past the trust to the people it serves. The primary beneficiaries must be at least 62 by closing, attend HECM counseling, and qualify as borrowers themselves.
The primary beneficiaries must live in the home as their principal residence until the mortgage lien is released, or, on a HECM for Purchase, move in within 60 days of closing, and new beneficiaries cannot be added to the trust. The lender must find that the trust is valid and enforceable, gives each beneficiary a legal right to live in the home for the rest of their life, and requires notice to the lender of changes, such as who lives in the home.
Contingent beneficiaries, the people who benefit only after a primary beneficiary dies, do not have to qualify as borrowers or attend counseling unless they are otherwise required to, such as a non-borrowing owner. The trustee does not have to attend counseling either, unless the trustee is also a primary beneficiary or otherwise required to. The trust’s name must appear on the mortgage or deed of trust. In our program, on a home you already own, at least one borrower must be on title before the loan application date, or the loan needs a management exception to proceed.
In our program, the trust must give the trustee the power to borrow money and mortgage real property, and in a couple, both people listed in the trust must be eligible. The lender must get a copy of the trust agreement. For the other things the lender reviews, see our reverse mortgage requirements page.
Who signs what
This page is for homeowners 62 and older whose home is in a trust or a life estate, and for the adult children who serve as trustees or hold a remainder interest.
Trustee Signs The Note
Under FHA’s HECM rules, the trustee and the primary beneficiaries sign the Note, and the primary beneficiaries sign the loan agreement. The mortgage is signed by everyone needed to create a valid lien, which may include the trustee and both primary and contingent beneficiaries.
A Younger Trustee Is Fine
In our program, the trustee can be under 62, such as a son, daughter, or other trusted advisor, as long as the borrower created the trust and has full rights to its assets. The trustee signs the security instrument for the trust.
Trustees Cannot Sign For You
A trustee cannot sign loan documents on the borrower’s behalf, only along with the borrower. In our program, only a power of attorney or a court-appointed guardian can sign for the borrower.
Remainder Holders Sign The Mortgage
With a life estate, every holder of a remainder interest signs the mortgage or deed of trust, any riders, and the right of rescission. They do not sign the Note or the other loan documents, because they have no right to the loan proceeds.
Power Of Attorney Can Sign
FHA lets a borrower name an attorney-in-fact under a power of attorney to sign at closing, and that person must attend HECM counseling. People tied to the deal, such as the lender, loan originator, title agent, or real estate agent, generally cannot sign this way unless they are a family member or another exception applies.
Guardians Need Court Approval
A court-appointed conservator or guardian may sign for a borrower who lacks legal competency. The lender needs the court order, and our program also needs the court to approve the reverse mortgage.
Hear From Homeowners Like You
Frequently Asked Questions
Questions families ask about trusts, life estates, and signing.
Saxton Mortgage does. At least one HECM program we offer allows a home vested in a trust when the trust meets HUD guidelines. The home cannot be vested in an irrevocable trust, and blind trusts are not eligible. A life estate is also an acceptable type of ownership.
Yes, if it is a revocable living trust that meets FHA’s HECM trust rules. The primary beneficiaries must be at least 62 by closing, attend HECM counseling, qualify as borrowers, and live in the home as their principal residence, or, on a HECM for Purchase, move in within 60 days of closing.
Our program does not accept a home held in an irrevocable trust, even though FHA’s HECM rules allow some. A trust that becomes completely irrevocable when one borrower dies does not qualify either. If one spouse has died and the trust became partially irrevocable, the home must have stayed in the revocable part of the trust, and an attorney opinion letter must confirm the surviving borrower can revoke 100 percent of the property.
No. Our program needs a complete, fully signed copy of the trust, including all pages, articles, and amendments. Unsigned copies, a trust certification, an abstract of trust, or partial pages are not accepted.
Contingent beneficiaries do not have to qualify as borrowers or attend counseling unless they are otherwise required to, such as a non-borrowing owner. Under FHA’s HECM rules, they may still need to sign the mortgage if that is needed to create a valid lien.
Yes, but only if every holder of a remainder interest also signs the mortgage and attends HECM counseling. The lender must get a copy of the document that gave you the life estate.
Yes, if the power of attorney is complete, fully signed, revocable, and in effect when you apply. If you are competent and use a power of attorney, our program requires you to attend counseling and sign the counseling certificate and key application forms, and it needs a physician’s letter showing you were competent when the power of attorney was signed. If you are not competent, the power of attorney must be durable. An agent or guardian cannot use that authority to transfer your home to themselves.
Yes. FHA’s HECM rules let you move the home into a living trust without making the loan due, if the trust meets the same rules that would have applied at closing. The lender may require the trust to formally take on the debt. If the trust later ends or the home leaves the trust, the loan does not become due as long as an original borrower still lives there and keeps title.
Find out what you qualify for
Tell us how your home is titled, who is named in the trust, and what you want the money to do, and we will walk you through which rules apply.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.