This month Document Systems, Inc. (“DSI”) has added a software enhancement to DocMagic to accommodate a situation where an Inter Vivos Revocable Trust (“revocable trust”) is the borrower under a loan. Enhancements to DocMagic are consistent with Fannie Mae guidelines in that the signature block (where the trustee is also the settlor/grantor/trustor) in the promissory note and addenda would read like so:

_______________________, individually and as Trustee of the _________ Trust under trust instrument dated _____________, __________ for the benefit of
_________________________ (Seal)
Borrower.

And, the signature block in the security instrument and riders would read as follows:

Finally, the following acknowledgment will appear under the borrowers’ signature block in the Inter Vivos Revocable Trust Rider like so:

The federal and state-specific disclosures will simply have the name(s) of the individuals whose credit was used to qualify for the loan.

In order for the signature blocks to appear correctly in the note, security instrument, riders and addenda (“collateral documents”), information will have to be entered into the DocMagic worksheet in a specific manner. An example of the most common revocable trust scenario is provided for you below.

For example, assume that the name of the revocable trust is “Nascar Family Trust Under Trust Instrument, dated February 14, 1959” and that DJ Sample and Ida Noe are the individuals who established the trust (they are known as “primary beneficiaries” and “settlors/trustors”) and whose credit was used to qualify for the loan.

1. Name of Revocable Trust: The name of the revocable trust should be entered in the “Corp/Trust Name” field of the Borrower tab of the worksheet. You must enter the phrase, “for the benefit of,” followed by the primary beneficiaries’ names in order for the signatures to populate correctly on the collateral documents. In the example, you would enter “Nascar Family Trust Under Trust Instrument, dated February 14, 1959, for the benefit of DJ Sample and Ida Noe Sample.”

2. Primary Beneficiary/Settlors or Trustors: The primary beneficiary/ies is/are the persons establishing the trust (i.e., the settlor/grantor/trustor). In our example, DJ Sample and Ida Noe Sample are the primary beneficiaries and settlors. Thus, you would list their names as borrowers and designate each one of them as “I” (for “Individual”) under the “Type” column in the “Borrowers” section.

3. Trustee(s): Under the “Vesting” column in the “Borrower” section, select “Trustee” in the “Vesting” column under the “Borrowers” section if the borrower will serve as trustee of the revocable trust. In our example, both DJ Sample and Ida Noe Sample will each serve as trustees of the Nascar Family Trust. Note that the manner in which the “Vesting” is completed in the “Borrowers” section of the “Borrowers/Sellers” tab in DocMagic triggers how the signatures will populate.

4. “Final Relation”: Leave the “Final Relation” field blank.

5. “Vesting to Read” Field: The “Vesting to Read” section of the “Borrowers/Sellers” tab should read as follows: DJ Sample and Ida Noe Sample, Trustees of the Nascar Family Trust Under Trust Instrument, dated February 14, 1959. This is how “Borrower” will be defined in the applicable security instrument. Note that the phrase “for the benefit of” has been omitted. However, the DocMagic user may add this phrase if they want.

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Voila! Complete the rest of the worksheet, and the loan documents in the closing package should populate with the correct signature blocks. If you have any questions about entering trust information into your worksheet, please contact Customer Service, at (800) 649-1362.

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