Can Trustees Refinance a Home?

Trustees have limited powers in regard to home financing.

A mortgage agreement is between the mortgagor (lender) and the mortgagee (borrower). Trustees can be lender-appointed parties during a foreclosure proceeding, court-appointed during bankruptcy proceedings or overseers of a living trust to protect the interests of a beneficiary.

Trustee in Bankruptcy Refinance

Borrowers in bankruptcy must receive approval from a court-appointed trustee before refinancing a home. The borrower must initiate the refinance, and the agreement remains between the borrower and the lender, while the trustee oversees the transaction to validate that it meets the terms of the bankruptcy filing. The trustees themselves cannot refinance a property in bankruptcy.

Trustees in Foreclosures

Foreclosure proceedings use the services of a bank-appointed trustee to oversee the foreclosure sale. The property is placed in the trustee's care to oversee the sale of the property at auction or on the open market as a real estate owned (REO) property. The trustee cannot refinance a foreclosure property.

Trustee in Living Trust

In a living trust, a trustee is in charge of administering the will of the trustor (initiator of the trust) in the interest of a beneficiary (recipient of the trust). The trustee can refinance a property if the trustor provided express written consent in the form of a power of attorney granting the trustee the legal power to complete a refinance under the trust. The trustee's powers are limited to the scope of the trustor's wishes.

References

• Mortgage Loans: Parties to Contracts
• Bankruptcy Law Firms: Can I Buy a Car or Refinance in Bankruptcy