Wholesale Loans for Irrevocable Trusts in California
We are California’s leading provider of loans to Irrevocable Trusts. If you are a licensed California loan broker and have a client who needs a loan funded directly to an irrevocable trust, call us at 877-464-1066. With a complete loan package, we can often fund a trust loan in as little as 7 business days. Our loans to irrevocable trust and estates are California Proposition 58 compliant. On average we are able to help borrowers save over $6,000 annually in property taxes by taking advantage of Prop 58’s exclusion for property tax reassessment.
Work With A Lender You Can Trust
Our loan is a necessary step in order to follow California’s Revenue and Taxation code 63.1 and gain an exclusion for reassessment of property taxes. Our typical loan terms are for 120 days. This gives the trustee enough time to distribute the assets of the trust and get approved for the California Proposition 58 exclusion for reassessment of property taxes. Our loan must be refinanced after 4 months. Although we do broker conventional loans, we do not take loans from a referral source. If you have an arrangement with your client to provide the permanent financing, rest assured that we will not take your deal from you. It is our goal to create lasting relationships with our Loan Broker Referral Partners.
Broker Your Trust Loan
We are open about our interest rates, closing costs and fees. With a standard first mortgage Proposition 58 compliant loan to an irrevocable trust, you can expect the following terms.
9.25% Interest Rate
$1695 Underwriting Fee
3rd Party Fees:
Review Appraisal $200+ (Most trusts will already have an appraisal)
Title Insurance $950+
Escrow Fee $750
Reconveyance Fee $172 (Collected at pay off)
A mortgage broker is compensated by the fees they add on top of our fees. A broker will typically add between 1 and 2 points.
It is important that the loan makes sense for the borrower. Make sure the borrower(s) will keep the property long enough for the tax savings to cover the loan costs. We will not provide a loan that is not of benefit to a borrower.
Once our transaction is complete, the broker can provide the conventional financing to earn additional compensation.
Please call us with questions or to submit a loan at (877) 464-1066
You may also complete this only form to be contacted by a wholesale trust loan representative.
About Trust Loans for California Proposition 58
Mortgage brokers will run into these types of transactions from time to time. It is important to note that transactions to take advantage of Proposition 58 must be done in a certain way or the person taking the property at distribution (the acquiring beneficiary) risks reassessment of the property. Most of the rules for these transactions are found in California Revenue and Taxation Code 63.1. The code and its annotations are specific in relation to the need for trusts to equalize distributions in order to take advantage of Proposition 58. If a trust or estate needs to equalize the distribution by taking a 3rd party loan, it is clear that:
- The acquiring beneficiary cannot put the money into the trust to equalize the distribution.
- The acquiring beneficiary cannot be the 3rd party lender to the trust.
- The acquiring beneficiary cannot personally guarantee the 3rd party loan to the trust.
- The acquiring beneficiary cannot own any portion of the entity lending money to the trust.
The Board of Equalization does not permit the loan to be structured as a For Sale by Owner (FSBO) between the trust and the acquiring beneficiary. The problem is that ultimately the funds being contributed to the trust come from the acquiring beneficiary. When this type of transaction is discovered, it will result in the reassessment of the property. We have a letter from the Board of Equalization regarding this specific transaction type. The loan must be made directly to the irrevocable trust with no personal guarantee from the child inheriting the home. Please call us with any questions you may have or for a copy of the letter from the California Board of Equalization.
Often mortgage brokers will make the mistake of taking the property out of the trust in order to fund the loan and then return the property to the trust afterward (FNMA guidelines do not allow funding to irrevocable trusts). These transactions will cause a reassessment of property value and disqualify the beneficiary from Proposition 58 for a couple reasons:
- The acquiring beneficiary is ultimately contributing the funds to the trust
- Once the property is taken out of the trust, a distribution has occurred. The trust is irrevocable and the transferring of property would not be an equal distribution for those cases needing third party funds to equalize a distribution of the trust.
In the past, many of these types of transactions may have gotten by the county assessors. In 2019, there have been “un-approvals” of previously approved transactions. The assessors are looking more closely at these transactions and may reassess previously approved transactions.
Please call us at (877) 464-1066 to submit a loan for approval.