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Updated almost 5 years ago,

User Stats

132
Posts
189
Votes
Adam Odom
  • Columbia, SC
189
Votes |
132
Posts

Lending to an irrevocable trust

Adam Odom
  • Columbia, SC
Posted

I'm actually a banker and had a trust attorney stump me yesterday. He asked why banks do not lend anymore to irrevocable trusts and I knew the answer was "no" (at least at the ones I've worked for) but didn't really know the "why." My underwriter gave the answer that technically the trust is the owner of the collateral but the trustee is who we would have to go after therefore it's basically an unsecured loan so we stay away. My question is - if that's true why can you potentially do a revocable trust loan? Wouldn't that be the same issue? Or is it just banks have gotten more conservative, possibly because this went to court and someone lost so all steer clear of them now.

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