I have purchased homes subject to the mortgage for 30 years and just had my first one called due. I feel the banks have started to crack down because they want the money back from these low interest loans to re-lend at a current high rate. This would be hundreds of billions of dollars in additional profit for the banks and worth their effort to pursue. The loan was not called due because of placing it in a trust, but because the Mortgagee moved out of the home after the trust was created. This “non-owner occupied” sentence in the trust exception law, is a little know section of the Garn-St. Germain Act that I had never noticed before. It is there. section : 12 U.S.C. 1701 j-3 (d) item 8 exception which states:

(8) transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or

I believe the banks are getting their info from the notification by the insurance companies when the policy changes to a trust and a rental policy. The new policy has to state it is non-owner occupied for coverage. Luckily I am in a position to pay these off if needed, but this could be a huge can of worms for anyone buying homes subject to the mortgage in a trust.

Are you aware if this issue and have you a solution?

Thank You

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