Conventional loans · Fannie Mae B2-2-05Buying a house in a revocable trust with a mortgage: Fannie Mae's rules

Fannie Mae lends only to individuals, but as an exception for estate planning it accepts property held in an inter vivos revocable trust – one created during the person's lifetime that they can change or cancel at any time. The trust signs the security instrument as mortgagor, and the person who created it is the credit-qualifying borrower. The trust must be set up by one or more natural persons, who are its primary beneficiaries; the trustee must be that person (or one of them) or an institutional trustee authorized under state law, and must have the power to mortgage the property. All property and occupancy types are eligible; for a principal residence, at least one person who created the trust must live there and sign the loan documents. Title can be vested in the trustee alone, in the trustee and the individual borrowers jointly, or in the trustees of more than one revocable trust, and the title insurance policy must state that title is vested in the trustee and list no exceptions for the trust or trustee. The lender keeps a copy of whatever trust documents the title company needed. A trustee may sign through a power of attorney only if the trust allows it or the agent is the person who created the trust.