So, a client of mine bought a property with a conventional mortgage and Deeded the property into an irrevocable trust Now, after a number of years the lender caught on and is calling the loan. They did offer to allow him to transfer the deed back into his name and keep the loan, however due to his circumstances that is not possible. I understand that most lenders will not loan on a property in an irrevocable trust, and I am looking for help in finding one.

Does anyone have any ideas or suggestions to help him avoid the inevitable foreclosure if he doesn't payoff the loan?

In all my years working as a trustee I never found what one would consider a conventional lender that would lend on an irrevocable trust (I assume this trust is for estate/Medicaid planning).

I suppose anything's possible in the world of private lending, but the rates will probably be much higher than conventional.

Which begs the question, "why the trust in the first place"?, if this is the trouble it's causing what are the benefits that outweigh?  I've seen many a trust sold to people that didn't really need it, like using a bazooka to kill a house fly.

For the lurkers: Fannie Mae is totally cool with a revocable living trust, even at closing, for all property types - including residential investment properties. Hand that link to your estate planner or lawyer who is setting it up, and tell them to check all the boxes there. 

@Ari Bauer , I think this one is unfortunately going to have to be solved by portfolio or hard money financing. Unless, those circumstances you mention would not preclude switching it over to a revocable trust that checks all the above-linked boxes. I'd have your client call and ask if they would be OK with switching it over to a revocable living trust that checks all the Fannie Mae boxes. 

@Ari Bauer Your client has to take out from irrevocable trust but Under Writer decision is last decision.

@Tyler Mullen @Chris Mason @Harjeet Bhatti

Thanks for the responses.

The reason why he cannot transfer the deed back into his name or even to a revocable trust is that he will be disqualified from medicaid.

Portfolio lending may be an option if he can find a suitable lender but hard money is out of the question, as he'd rather sell then pay those high rates.

Does anyone have any suggestions for a portfolio lender that may work for this?

@Ari Bauer Have you tried Angel Oak?  They are pretty good in all portfolio product. I can't say anything about particular loan scenario but their turn time is good. 

@Ari Bauer

So the client is currently on Medicaid?

But can't afford to keep the property or can't live there because of care needs? 

And if he's on Medicaid how will he qualify for a loan?  Medicaid issued AL allows for housing, insurance, guardian and attorney fees if any, and a PNA, and community spousal allocation if applicable.  They don't allow for mortgage payments, but you can have a rev mort because no payments are required.

Medicaid will exempt a home (trust or not) if the client lives in it, or if the community spouse lives in it... but you also have to be able to afford to keep it.

Cart before horse here with info and not enough details, let's PM.