Inter Vivos Revocable Trust

Overview

Pennymac will purchase loans where the property is held in a revocable trust provided the trust meets investor and Pennymac guidelines.

Acceptable Forms of Revocable Trusts

• Inter Vivos Revocable Trust
• Family Trust
• Living Trust
• Revocable Living Trust

Unacceptable Forms of Trusts

• Irrevocable Trust
• Qualified Personal Residential Trust
• Institutional Trust
• Corporate Trust
• Trust established under the laws of any entity other than one of our 50 states (or D.C.)
• Survivor Trust where the Trust is no longer Revocable
• Testamentary Trust
• Blind Trust
• Land Trust (including IL)

Eligible Property and Occupancy Types

All property and occupancy types purchasable by Pennymac are eligible. For properties that are the borrower's principal residence, at least one trustor/settlor (individual who established the trust) must occupy the security property and sign the loan documents.

Underwriting Considerations

The mortgage must be underwritten as if the individual establishing the trust (or at least one of the individuals, if there are two or more) were the borrower (or a co-borrower, if there are additional individuals whose income or assets will be used to qualify for the mortgage).

Title Requirements

Prior to delivery to Pennymac the lender must ensure the title company has reviewed and approved the Trust Agreement or Trust Certification. Upon delivery to Pennymac title must not contain any title exceptions and offer full title protection without exception to the trust.

Acceptable Title Vesting

The property must be vested in the trusts name or in the trustee’s names on behalf of the trust.

Pennymac accepts loans closed in:

• One trust
• One trust and an individual(s)
• Multiple trusts
• Multiple trusts and an individual(s)

Documentation Requirements

The following documentation must be provided in the closed loan file delivered to Pennymac.

Trust Agreement

The loan must include a complete copy of the Trust Agreement or Trust Certification as outlined below. In the case where amendments have been made to the trust that designate new parties or other changes those must be documented and copies must be provided in the loan file.

Note: If the trust includes significantly more assets than the subject property some borrowers may be hesitant to provide a full copy of a trust. In these cases, the borrower must supply all portions of the trust, as required by the title company, that clearly identify:

• The identities of the grantor/trustor/settlor, beneficiaries (if there is a beneficiary, or if applicable state law requires a beneficiary), and trustee
• The powers of the trustee (sell, convey, exchange, borrow, encumber)
• The property is held as part of the trust
• Revocability of the trust
• The trust was created and became effective during the lifetime of the original grantor/trustor/settlor
• The primary beneficiary of the trust is the settlor (if there is a beneficiary, or if applicable state law requires a beneficiary). Multiple primary beneficiaries are permitted if the settlor’s income and assets are being used to qualify for the loan.
• The trust document names one or more trustees to hold legal title to and manage the property.

Trust Certification

Trust Certifications are acceptable provided it contains sufficient information to determine the trust meets all Pennymac requirements. A Trust Certification can be used in lieu of the complete Trust Agreement in the following states:

Alabama	Arizona	Arkansas	California
Colorado	Delaware	District of Columbia	Florida
Georgia	Hawaii	Idaho	Illinois
Indiana	Iowa	Kansas	Maine
Maryland	Michigan	Minnesota	Mississippi
Missouri	Montana	Nebraska	Nevada
New Hampshire	New Mexico	North Carolina	North Dakota
Ohio	Oregon	Pennsylvania	Rhode Island
South Carolina	South Dakota	Tennessee	Texas
Utah	Virginia	Washington	West Virginia
Wisconsin	Wyoming

Trust Rider to Security Instrument

The Security Instrument may include an Inter Vivos Revocable Trust Rider. If provided, it must be completed in its entirety.

Clients are not required to execute an Inter Vivos Revocable Trust Rider. However, by not providing an executed rider the lender agrees to hold Pennymac harmless in the event we suffer a loss due to the lack of amendment of other ambiguity. Should foreclosure proceedings later have to be initiated to acquire the property and Pennymac suffers a loss that relates either to the lender’s amendment or to any ambiguity in the application of the covenants in the security instrument the lender must either repurchase the mortgage or the acquired property or make Pennymac whole.

Borrower Acknowledgement

The loan file must include a Borrower Acknowledgement. This can be provided on a standalone document or incorporated into the Security Instrument or in any Security Instrument Rider.

Trust Addendum to Note

The Note may include a Trust Addendum. If provided, it must be completed in its entirety.  

Execution Requirements

Use the execution chart to determine if the loan documentation has been executed correctly.

At least one borrower on the loan must be all of the following:

• Credit Qualifying Borrower
• Trustee
• Settlor/Grantor/Trustor
• Beneficiary (if there is a beneficiary, or where applicable state law requires a trust to have a beneficiary).

 

Signature Block Examples

Use the acceptable signature format examples below to determine if the loan documentation has been executed correctly.

Power of Attorney Executions

Power of Attorney powers cannot be utilized in connection with trust executions.