Trusts, especially living trusts, often include property beyond personal effects, such as real estate or investments. If the creator of the trust did not own the asset outright, a mortgage may remain in their name and the loan must be serviced by the administrator or beneficiary of the trust.
Mortgaged properties in Florida may be refinanced for the financial well-being of the possessor, and this process must be approved by the lender holding the property in the case of default or foreclosure. Although it is occasionally complicated, mortgages on properties in living trusts may also be refinanced.
The lender is the largest independent variable on whether or not a mortgage on a property in a living trust may be refinanced. Most lenders will wish to verify whether the administrator of a trust has the legal authority to refinance their mortgage. Federal law does allow for a property to be removed from a trust to be refinanced then returned to the trust without complicating the mortgage further.
After a refinancing has been approved, the lender or the administrator of the trust will generally have the power under Florida law to put the property back in the trust. Title companies may be empowered to do it, but most administrators take comfort in the act of doing it themselves.
Lenders may retain legal counsel to verify a borrower's ability to refinance, and trust administrators may wish to do the same. An attorney is generally helpful in ensuring that complex trust documents or orders are followed through a refinancing process with minimal interference in the underlying loan.
Source: Palm Beach Post, "Home refinance may involve temporarily removing it from living trust," Joseph Karp, April 05, 2018