How to Transfer a Mortgage to a Living Trust

By Marie Murdock

You and your spouse may have decided to form a living trust, via a trust agreement, to hold your real property or other assets. If you are the mortgagee, or holder of an existing mortgage made by someone else to you, you may desire to transfer that mortgage into your trust as an asset. It may be much more difficult, however, to obtain consent from a lender to transfer a liability, such as a mortgage from a bank or other lending institution, into the trust because it ceases to be an individual liability and becomes a liability of the trust.

Mortgage as an Asset

Step 1

Locate the original recorded mortgage, either from your records or by obtaining a copy from the county courthouse or online property records. Note the legal name of the mortgagor, or person or entity making the mortgage, date of the mortgage and recording information, such as the book and page number or instrument number used to index it in the real property records. The recording information will be stamped on the recorded document.

Step 2

Obtain a blank assignment of mortgage form from an online legal document site. Complete the form using your name as the assignor, or holder of the mortgage. Also list the assignee, who is the trustee or trustees of the trust, and full legal name of the trust. Make sure the assignment states the mortgage is being transferred to the trustees solely in their capacity as trustees for the benefit of the trust to avoid any confusion that they might be acquiring the mortgage individually. Fully describe the mortgage being transferred using the names of the mortgagors, dates and identifying recording information. Be sure the assignment conveys all rights, title and interest in the described mortgage.

Protect your loved ones. Start My Estate Plan

Step 3

Sign the assignment on the line provided for your signature in the presence of a notary public who must notarize your signature. Deliver the original completed assignment to the trustee of the trust to complete the transfer and for recording in the real property records for the county where the property is located. Notify the mortgagee of the transfer so that he or she will begin making future payments payable to the trustees of the trust as required by its banking institution.

Mortgage as a Liability

Step 1

Contact the lender who holds your mortgage to determine if it will allow the transfer of title by deed of assumption to the trust. The mortgaged property will have to be deeded; otherwise, the mortgage cannot be assumed by the trust. An individual or local lender may be more willing to accommodate your request for the assumption than a large national lender.

Step 2

Prepare a deed of assumption from yourself, as grantor, to the trustees of the trust, making sure the legal names of the current title holders as well as the legal names of the trustees and the trust are correctly recited in the document. Search an online legal document site for the deed form. The deed should contain proper assumption language so that it is clear the mortgage, identified by names, date and recording information, is being assumed by the trustees of the trust. Add a signature line below the grantor and grantee signatures for the lender to sign with language above the signature stating the lender consents to the assumption of the mortgage.

Step 3

Sign the deed of assumption and have the grantee and lender also sign. All signatures should be notarized with a proper acknowledgment according to the laws of your state. Record the properly executed assumption deed in the real property records for the county where the land is located, typically the county where the mortgage is also recorded.

Protect your loved ones. Start My Estate Plan
How to Transfer Property to an Irrevocable Trust in Pennsylvania

References

Resources

Related articles

How to Record a Trust Transfer Deed

Trust Transfer Deeds are used to create revocable living trusts. These legal devices transfer property a donor owns into the trust he creates. The donor would retain control of the property, as a trustee, and is subject to all relevant obligations of that position. Many states require that any documentation involving the transfer of real estate, including trust transfer deeds, be recorded at the local recorder’s office. The recorder’s office is the centralized location for a county’s public records.

What is an Assignment of Trust Deed?

If you own a home, you may have signed a trust deed that gives the mortgage lender a claim on the property. A default on the loan gives the lender the legal authority to foreclose on the loan and take possession of the house. An assignment of a trust deed conveys that claim to another party.

Can a Property Owned by an Irrevocable Trust Be Foreclosed?

A living trust is an estate planning tool used to transfer property at death, allowing probate to be avoided. When you place property into a trust, it is retitled or redeeded to the trust. Thus, transferred property legally belongs to the trust. However, mortgaged property held in trust can still be foreclosed upon.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

How to Fill Out the Deed of a Trust to Secure Assumption

A deed of trust to secure assumption is not a property ownership document. Some states, such as Texas and California, ...

How to Transfer Real Estate to a Revocable Trust in New York State

A revocable trust, also known as a living trust, is an entity created for the purpose of managing assets, which the ...

How Can I Transfer My Mortgages to My LLC?

A limited liability company, or LLC, is an independent legal entity. Once a business files articles of organization and ...

How do I Change a Quit Claim Deed in New Hampshire After a Divorce is Final?

A quitclaim deed conveys title to New Hampshire real estate without the guarantees typically included in a warranty ...

Browse by category
Ready to Begin? GET STARTED