PREMIER REVERSE CLOSINGS 1

Trust, POA,

Conservatorships and

Life Estates

Presented By: Alissa Prieto

VP, Eastern Regional Sales Manager

347-281-0342

aprieto@prclosings.com

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Trusts

A relationship created at the direction of an individual,

in which one or more persons hold the individual's

property subject to certain duties to use and protect it

for the benefit of others.

Must meet State, Lender, HUD and Title guidelines

Trustee and borrower must sign documents

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Settlement/Closing Needs:

Full copy of trusts and any amendments

Trust Certifications are allowed only in certain states

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Trusts Have Three Parties

Settlor/Trustor – creator of the trust

Trustee – fiduciary who is authorized to act on behalf

of the trust

Beneficiary – normally the settlor/trustor

Immediate beneficiary

Contingent beneficiary

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Trust Checklist: All borrowers must be the immediate beneficiaries and

all immediate beneficiaries must be borrowers

Correct trust received

Verify trustee(s)

Trustee has the power to borrow

Signed and notarized copy

Revocable for HECM Loans

Irrevocable (only acceptable to some lenders)

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Deceased Trustee

Need original county-certified death certificate.

Closer/Settlement Officer will notify of any vesting

change.

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Deceased Settlor

Trust may divide into sub-trusts

One or more of the sub-trusts may be irrevocable

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Incompetent Borrower

Successor trustee(s) to sign in the event that trustee is

deemed incompetent

POA or Conservator to sign on behalf of the borrower

as individual

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Vesting Trust issues:

Missing trust or pages of the trust

Possible irrevocable trust

Trust but title reflects as individual

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How to Execute the Documents

Vesting: John Smith and Jill Smith, Trustees of the

Smith Family Trust dated 7/29/2011

Signature: _________________

John Smith, Trustee

Signature: _________________

Jill Smith, Trustee

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Reasons for Trust Denial

Irrevocable

Trust Certification with insufficient information or

deceased party

Incomplete copy

A-B Trust involving a deceased party

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Reason for Trust Denial

No Power to Borrower

All borrowers are not immediate beneficiaries

All immediate beneficiaries are not our borrowers

Not executed

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Power of Attorneys

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Power of Attorney

A legal document appointing another person to

manage the principal’s financial affairs.

USES: Mentally incompetent principal

Physically incompetent principal

Competent principal, but prefers not to sign

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Example POA

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Power of Attorney

Financial POA is required. We can not utilize a

Medical POA .

Original POA is required at closing and must record

with Mortgage/Deeds Of Trust if POA is not already

recorded.

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Types of POAs Standard-

Effective upon signing. Doesn’t have durable verbiage. Lenders may reject a standard POA if the borrower is unable to sign the loan application.

Durable-

Continues to be effective even after a borrower becomes incompetent.

Springing-

Only becomes effective after the borrower becomes incompetent.

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Competent Borrower Durable or Standard POA is normally acceptable but

must be reviewed to insure that it meets guidelines.

Competent borrower must be counseled and sign the

initial loan application.

Principal’s Affidavit signed and notarized by the

borrower (settlement to provide).

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Incompetent Borrower

Either a Durable or a Springing POA may be

acceptable but must be reviewed prior to approval.

May need 1 or 2 letters from a medical doctor to

demonstrate the borrower is currently incompetent.

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Requirements for a

Doctor’s Letter

Doctor’s letterhead

Dated

Doctor’s signature

Include that the party can no longer handle their

financial affairs

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What a POA Can’t Do

In most cases, it can’t be used for self-serving purposes.

Can’t be used to sign on behalf of a trustee, unless both

the POA document and the trust specifically allows for

it.

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All POA’s Must Have the Following:

Power to deal with real property

Power to borrower, mortgage, encumber, or

hypothecate.

Be properly signed and notarized

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Signing using a POA

Sally Borrower by Joe Agent as her attorney in fact

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Reasons for POA Denial

Lack of power to borrow

Improper notary acknowledgement

Lack of durability language

Invalid signatures

Lack or insufficient number of witnesses

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Reasons for POA Denial

Springing POA

Insufficient Doctor’s letter

POA form doesn’t conform to state guidelines

Missing original POA

Principal’s competency at time of execution

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Conservatorships

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Conservatorships

A Court Action designed to protect the interests of a person determined to be incompetent

Conservator must be appointed for the Estate. A Conservator is frequently appointed for the Borrower’s Person (for health care) and Estate (for property).

Also referred to as a Guardianship in some states

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The court must approve the reverse mortgage and

normally this is done by an Order.

Title and settlement need a copy of the letters of the

conservatorship.

If the letters of conservatorship or the court order

authorizing the reverse mortgage haven’t been recorded

by the county recorder then we will require an original

or court certified copies.

Conservatorships

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How to Execute Documents

Jane Smith, Conservator of the Person and Estate of

John Smith, a Conservatee

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Life Estates

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Life Estate Life estates may be either granted or reserved in a deed.

The Life Tenant must be our borrower and the

Remainderman can be anyone as long as they are 18

years and older.

Both the Life Tenant and the Remainderman will need

to sign the loan documents.

Liens incurred by the Remainderman can attach to the

property.

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How to Execute Documents

Vesting: John Smith, as to a Life Estate and Susie Smith

as to the Remainder

Signature: ___________________

John Smith

Singature: ___________________

Susie Smith, Remainderman

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Questions?

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DISCLAIMER

This information provided herein is up to date as of June 19, 2012. Information

may vary by Underwriter and State. It is always best to check with your Account Manager or Closing Officer as to current

requirements.

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Your loans and borrowers deserve the best treatment in the industry; that’s why it’s important to pick a

partner where reverse mortgages take center stage.

THANK YOU!

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