Can a beneficiary of a trust get a HELOC on the property?

Question

Can anyone tell me if I as a beneficiary, can take out a HELOC on my mothers property that is in a revocable trust for me? She is the the trustee and I am the beneficiary, I have a stable job and can qualify for the HELOC, but she just started her own company this year and doesnt have the years of experience to qualify for a HELOC on her own. Also she doesnt want to be on the HELOC or loan if possible, but wants me to be able to access the money for my investments.

Henry M. · Answer

Yes, I was able to... As long as it is consistent with Fannie Mae (inter vivos trust) and Property Code (Texas is my state). I was denied unofficially 12+ times and officially three times, but I finally was approved. It took me four months to pull off.

Here are the requirements for Fannie Mae:

B2-2-05: Inter Vivos Revocable Trusts (10/31/2017)

Here's the short version of Texas Property Code (I am sure similar elsewhere):

Texas Property Code § 41.0021. Homestead in Qualifying Trust

This is the long version of the property code in Texas:

PROPERTY CODE TITLE 9 TRUSTS SUBTITLE B. TEXAS TRUST CODE: CREATION, OPERATION, AND TERMINATION OF TRUSTS CHAPTER 112.

Here's a contact who I believe does loans on Irrevocable Trusts - Doing a loan inside a Revocable Living Trust is hard enough, but Irrevocable Trusts, wow! - Check out call. BTW, I believe he only does HML on these types of trusts in California. Click link below:

021: Making Loans to an Irrevocable Trust Is Possible. Here’s How.

At the end of the day, it was difficult, but worth it... Did spend thousands to get it right. Not by choice... Freaking Attorneys need to make their house payment and get their girlfriend boobs (sarcastic).

Fannie Mae is across the board, however where the problem lies is the lender... I went through a dozen lenders (as in researched and contacted) before I was able to find a lender who would not force me to pull out of trust, then back in.

If any of this helps you please VOTE. If you want a little bit more info, feel free to contact me directly... Either way, this info, although easy to find, is difficult when applying.

This is my two cents and it was a grind... If anyone knows about loans, your finances are placed on hold especially if the debt ratio is tight. It was for me considering I lost my job at the end of October 2018. In other words, my finances were less than two years and not applicable. Yet, thank God I pulled it off.

Helene Fox · Answer

@Stephanie Medellin is a construction loan possible to obtain within a trust?

The trust owns the property (my mother is the beneficiary of the trust, me and my siblings are 2nd, 3rd, and 4th beneficiary’s)

Yes, it already had a home on it. The property sits on a 9,200 square foot lot. The current house is around 1,200 sqft. According to our city regulations we are allowed to have 2 single family homes 3,500sqft. Each). We would like to build a large home in the back and renovate/expand the original home. Loan amount needed would be approximately $325,000.

Yes, me and my mother both live on the property.

Stephanie Medellin · Answer

@Helene Fox So you or the trust already owns the property? Does it already have a home on it? Do you live there? It sounds like you need a construction loan.

Helene Fox · Answer

@Stephanie Medellin and @Henry M. thanks for your reply. That’s great news. I’ve just begun my research and I am currently only finding company’s that will give a loan but are hard money loans; ie high interest with only 1 year to payback.

With the loans I am looking to build investment/rental property on the property of which is in the trust. @Stephanie Medellin what type of conventional loan would you recommend?

Stephanie Medellin · Answer

@Helene Fox As it relates to conventional loans (not HELOCs as mentioned in orginal post), it is possible to get the loan in a revocable trust, but you would need to be the trustee of the trust, not only a beneficiary.

Henry M. · Answer

Yes. Just read the post above yours and it will give you a detailed answer.

Helene Fox · Answer

@Henry M. were you able to get a bank loan? Or did you get a hard money loan?

Babatunde Onwukeme · Answer

@Henry M. any updates? were you given the heloc account with the properties in the trust?

Henry M. · Answer

I am currently pursuing this myself... I am able to, however I am not willing to give up anonymity.

So still negotiating or researching outside the box.

Will post results.

"Big" Henry

Royce Talbo · Answer

@Roderick Sims no i did not pursue it.

Can a beneficiary of a trust get a HELOC on the property?

Can a beneficiary of a trust get a HELOC on the property?

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