Interesting situation here. Some time ago, my parents were asked by my grandmother to be her trustee. My mom asked that I prepare the Trust document. I did, with the warning that one or more of her siblings might be resentful and bitter. My grandmother then decided that she wanted ownership of her real estate properties (one of which carried a second mortgage/ line of credit) transferred to my parents. I again obliged, but with even more warnings. A year later--you guessed it--grandmother "decides" she no longer wants parents as trustees and wants to revoke. My parents smell a rat and try to find out who, what, why, etc. Grandma insists, but my parents persist. Grandma sues (no joke) and my parents say fine. They settle the case and the houses are transferred back to grandma. Well yesterday, I got a hit from CreditWatch saying not only that I had a line of credit, but that $3,000 was past due on my LOC. Now we all smell a rat. A wayward sibling perhaps? Well, since I'm a Jr., Citi Financial obviously reported on my file and not my dad's. No problem there; I'll just dispute as Not Mine. What's interesting is that the line of credit was opened when the houses were technically in my parents' name and not grandma's name. But it seems that when the last transfer took place (back to Grandma) the LOC didn't follow the house, but stayed in my parents' name. The question is how CitiFinancial will treat this. Will they say "the account was opened under [parents]" and as such they're obligated" or will they say "even though the security for the LOC is back in [Grandma's] name, the [parents] are still responsible". Any thoughts on this?
Okay, I m not an attorney either, but I am a title examiner and this is how it works... If parents had full powers to mortgage, sell, transfer, encumber, etc. real property according to trust agreement, then whoever signed the loan documents (along with the joinder of their spouse) is responsible for paying it. So, it stands to reason that if the trustees were able to mortgage real property without consent, then they did so. As it happens frequently in my business, if the equity line of credit was not paid off or closed when title was transferred back to grandma, then it will still show as an open TL. The bank has to be notified that credit line has been terminated, which they obviously weren't.
Thanks for the info. It's starting to sound like the same person or persons who convinced Grandma to revoke the Trust, may have also finagled their way into getting access to the equity line of credit. This would have taken place after the conveyance of the property back to Grandma. Coupla questions: Does a second mortgage follow the chain of title? Is an equity LOC considered a second mortgage? Since the equity LOC remained opened after the property was transferred back to Grandma, who's TL is it?
