I am feeling a little better because apparently LaserPro read the rule the same way I did. Regardless of the type of trust we enter (revocable, irrevocable, land) we get a Critical Warning we need to add the beneficiaries. Is anyone else getting this warning (that uses LaserPro). I think the CFPB needs to clarify whtat they mean by "beneficiaries" and when we need to get them or someone is going to get in trouble for requiring signatures of people or giving the ROR to the wrong people.

For these estate planning types of trusts that are now covered by Z the only beneficiaries that should matter are the current beneficiaries -- not contingent or after-grantor-death beneficiaries. With these trusts, the grantor is typically the beneficiary during the grantor's life, with others having an interest (or getting a distribution) only after the grantor's death.

You don't have to parse through all the particulars of how the trust will operate in the distant future. Simply look at who benefits right now.

In essence then, what you're saying Mary Beth, is that the beneficiaries = the trustees, right?
ex: When doing a mortgage on the home of John & Jane Smith that is held by The John Q Smith and Jane L Smith Revocable Trust of which the Trustees are John and Jane, the beneficiaries of the trust are John and Jane too.
The fact that when John and Jane pass, Suzy Smith, their daughter inherits is not relevant to the loan at all.

The grantors are often the same as the trustees, at least in the beginning. But at some point they may resign in favor of successor trustees, often one or more children, when the grantors decide they don't want to manage the property or accounts any longer. But in such cases, the grantors retain the right to revoke the trust until their deaths. If the trust remains revocable, the individual(s) able to revoke the trust have the rescission rights. They are considered the owners of the property in the trust.

Thanks- I am in that camp now, but now I have critical warnings to deal with as LaserPro must have interpreted it the same way I originally did. I am trying to write something to explain why we are closing loans with Critical Warnings (against bank policy).

Operationally, and this may be a silly question, if we give the ROR and CD to John and Jane individually as borrowers (in Truffle's example above), do we have to give another set to those individuals as John Q Smith, Trustee of the John Q Smith Revocable Trust and Jane Smith, Trustee? If not, how do we "prove" we provided the disclosures to all the trustees?

No. Only the individuals have the right to rescind. They are the only parties for whom the property is a principal dwelling. The trust doesn't have a residence.

OK - got that. What about the CD? Just John and Mary individually or as trustees as well? I know it sounds stupid but I know I will be asked this question and be back here asking.

There are no "silly" questions. There may be some that, after being reminded of the answer, you think "Duh!" This trust dust-up just means you have to stick with the basics. Who resides in the dwelling and has an ownership interest in it, and is it his/her/their principal dwelling? There's no need to look further. It just causes migraines.

Just curious, will this be included in the Triage Oct 20-21? Please?!

We will discuss this during the Lending Compliance Triage Conference in St. Louis (or remotely viewed on your site).

Would Right of Rescission apply?...........Trustee dies. The beneficiary of the trust comes to obtain financing to payoff trust debt on the property and also to put property into his own name. Property is the beneficiary's primary residence.

How would this be reported under HMDA - A purchase since the property is being transferred?

Is the beneficiary also on title? If this is a joint trust and one trustee has passed, treat it the same way you treat a divorce where one spouse is paying off the ex.

Original Trustee has passed. Beneficiary is obtaining a loan to transfer property to his name and payoff the Trust debt.

I'm really muddled on this one.
I think that, based on the fact that the property being taken as collateral is already the borrower/beneficiary's primary residence, I'd give RoR just to cya.
Maybe one of the gurus will opine with a citation that proves me wrong.

It would appear to me, but legal counsel probably needs to get involved, but the property may have technically passed to the beneficiary upon death. The fact that the property has yet to be recorded into their name may not be relevant. The fact that they are using the property as collateral to settle with the estate is probably a rescindable transaction. I would error on the side of caution without legal telling me otherwise.

I'll join this chorus.

Tesla - How did you handle the critical warning issue from Laser Pro on the trust? Did you add a memo to the file that you are comfortable proceeding even though the transaction has a critical warning? Same thing happening here.

Bump

The CD would be in the Trust's name or the individuals with ownership interest?

It would be in the borrower's name. If the borrower is the trust, it's in the trust's name.

I'm going to bump this thread up with some additional questions, not necessarily related solely to rescission.

We are having ongoing discussions with our vendor because we are trying to do a loan to a Trust and they are telling us that their interpretation that they received from CFPB is that you can't do such a loan to the Trust, you'd need to do it to the individuals with the Trust as a hypothecator of the property because you must provide the disclosures to a natural person and you'd also be looking to the individuals, not the Trust, for such things as ability to repay, therefore the loan should be done to the individuals with the Trust as hypothecator.

This doesn't make sense to me. I'm no expert on trusts, but if a Trust couldn't be the borrower (as they are saying the CFPB told them), then why would the CFPB have comment 3(a)-10 in Reg Z as well as the verbiage at the bottom of page 20 of the Small Entity Guide for TRID?

they are telling us

Who is they?? The CFPB never has and never would opine on who you can or cannot make a loan to or how to structure such a transaction to ensure that you can collect. The only person you should be listening too is your legal counsel. Much of this may depend on the trust documentation and State law. Once you figure out the loan structure, then you decide on who gets to rescind and who does not.

Is anyone running into issues where a Land Trust will not sign the Notice of Right to Cancel?
Specifically in IL - Land Trusts Laser Pro is recommending based on recent litigation that the Land Trust should get all disclosures.

For reference - http://www.lexology.com/library/detail.aspx?g=961bb7d6-f46e-4d2a-8167-d3c1a9620af0

I am very, very late to the game on this thread; but hoping someone will respond to my scenario...

Borrower is the Settlor (Grantor) of a Preservation Trust and resides in a primary residence held in the trust which is being pledged as collateral by the Trustee (Daughter of the Borrower/Settlor) of the trust, who does not reside in the residence, and will not be a borrower. The Trust is irrevocable, as the Settlor transferred and assigned all rights, title, and interest in the property and have no power to revoke the Trust.

Is my thinking correct that no one will have the Right of Rescission, as the borrower no longer has ownership in the property and the Trustee does not reside in the home?

Who is the current beneficiary of the trust? I assume it is the Grantor and as such, it is his current primary residence and the grantor and the trust would both have a right of rescission. Grantor individually and the trustee of the trust.