What is a deed of trust?

[ocnprknatv]

I believe that is what the bank called it. I found an underwriter willing to let my stepmother refinance the mortgage on the house. He says we do not have to sign for mortgage nor do we have to sign over the deed to her, but we do have to sign a deed of trust, which the bank says is basically just a permission slip, stating that we are aware that she is using the house as collateral to obtain the loan. Anyone know anything about this?

[ocnprknatv]

Another question before we go ahead with this...does a deed of trust change anything with the life estate? Can it even be done as a deed of trust if the home is in life estate?

[Mr. Knowitall]

Can you provide some context, please?

A deed of trust is similar to a mortgage, but is a three-way contract involving a "trustor", "trustee", and "beneficiary". The lender is the beneficiary. The trustor is the person who borrows the money. The trustee is the person who holds temporary title to the property until the loan is satisfied. The trustee has the power to sell the property in the event of a delinquency, to pay off the mortgage.

[ocnprknatv]

Sure. The home is in a life estate with my stepmother as the life estate, my sister and I as remaindermen. There is a mtg on the home that is was in my fathers' name and stepmothers. Father has since died. Thus reason in life estate now.

Stepmother is paying mtg but is finding it a struggle, wants to lower payments. No banks would touch her conventionally. The bank that she has mtg through now, through the credit department and the loan processing department, have offerred her to do an equity builder loan. She can refinance the balance on the loan, this will lower her monthly payments.

The bank is requiring my sister and I sign a deed of trust when the loan application gets to that point in their process. The bank offices are corporate offices of Bank of America,in Virginia. She lives locally in Volusia County Florida in the house that is the life estate property. Based on her credit history with the bank for the last te years, they are willing to recast her loan , but because of the matter that it is in life estate, they ask that my sister and I sign a deed of trust. Does this help? Thanks.

[Mr. Knowitall]

It sounds like they are asking you to effectively put up your remainder interest in the property as security for the loan.

[lwpat]

Actually, that is what they have now so you are not giving up anything. The mortgage should have gone against the estate and been paid off, even if it was nesessary to sell the house. Now your stepmother is responsible since she is on the mortgage but if she stops paying, they will take the house. As long as you are not incurring more debt and this will allow her to continue the payments, it is a good deal.

[Mr. Knowitall]

That's a good point to consider.

[ocnprknatv]

The mortgage wasn't paid off completely within the estate, because it was a separate issue in probate. My dad did have a partial payment from mortgage insurance when he died...which took that balance down to approximately 60k. The home was exempt homestead, by Florida rules, cannot be devised to anyone other than the spouse, unless the home is deeded only in one person's name, which was the case. My father owned the deed to the home solely in his name. My father left very little money in the form of the "estate" that went to probate, as most of his money was put in life insurance policies, annuities, etc...with specific beneficiaries. This way, that money avoided probate. The only assetts in probate were his car, and about 28k, of which, the spouse is automatically entitled to 18k from the start. The final accounting from the atty who handled the estate, left it with a $0.00 balance...the rest went to court costs, funeral costs, and the attorney I guess. Seemed like a lot of money to me to be spent on the atty fees, but whatever, that's the way it went. It is the reason my dad left things the way he did in his will, with very little in actual monies to be probated, enough to take care of burying him in the manner in which he wished, and to pay whatever it was supposed to. The mortgage was taken out by him and his wife in 1991. I suppose she could have paid it off with the money she received from the insurance policies, but since she only now owned a life estate in the house, there would be no monetary value really for her to bother doing that. She doesn't get to keep the house for it's value in the long run...kind of a no brainer there. I am just hoping that by signing the deed of trust from the bank at this point, that this doesn't some how affect my sister's and my standing within the boundaries of the Florida Life Estate Laws...I'm told by the bank that it doesn't...but they aren't attorneys, so I don't know. I have placed a call into the attorney I hired when my dad died, to double check with him that this is all okay to do, but I haven't heard back yet from him.