4. Living Trusts

Introduction

This topic contains information on living trusts, including

•	property held in living trusts, and

•	living trusts and security instruments.

Change Date

May 10, 2009

4155.1 4.A.4.a Property Held in Living Trusts

Property held in a living trust is eligible for FHA mortgage insurance for an owner-occupied property when an individual borrower

•	remains the beneficiary, and

•	occupies the property as a principal residence.

The lender must be satisfied that the trust provides reasonable means to assure that the lender will be notified of any changes to the trust regarding

•	occupancy changes (for owner-occupant loans only), or

•	transfer of beneficial interest.

4155.1 4.A.4.b Living Trusts and Security Instruments

The name of the living trust must appear on the security instrument, such as the mortgage, deed of trust, or security deed.

The individual borrower must appear on the security instrument when required to create a valid lien under state law. The owner-occupant, and other borrowers if any, must also appear on the Note with the trust.

The individual borrower is not required to appear on the property deed or title.