Inter Vivos Revocable Trust Rider Requirements

An inter vivos revocable trust rider is an addendum to a mortgage or deed of trust that applies when the property securing the loan is held in a living trust rather than in an individual’s name. It redefines “Borrower” to include the trust, its trustees, and its settlors, binding all of them to the loan’s covenants jointly and severally. Fannie Mae and Freddie Mac require this rider, or equivalent amended security instrument language, before they will purchase a loan secured by trust-held property, which is why nearly every residential closing involving a living trust uses one.¹

What the Rider Does

The rider’s core function is to pull the trust fully inside the mortgage contract. Fannie Mae’s sample rider language treats the trustees, the settlors, and the trust itself as borrowers “jointly and severally,” so the lender can enforce every covenant against any of them individually or all of them together.² Without that language, a lender holding a mortgage signed only by an individual could face attachment problems when legal title sits with the trust, which is the kind of title defect that invites foreclosure litigation.

The rider also functions as a gatekeeper for the secondary market. Most residential lenders sell their loans to Fannie Mae or Freddie Mac, and neither will buy a loan on trust-held property unless the security instrument carries a conforming rider or equivalent amended language.¹ A missing or defective rider can stall a closing entirely.

Whether Your Trust Qualifies

Not every trust is eligible. The trust must be an inter vivos revocable trust: created during the settlor’s lifetime, effective while the settlor is alive, and revocable or amendable by the settlor at any time for any reason.³ Irrevocable trusts do not qualify.

Beyond revocability, the trust has to meet several structural requirements:

It must be established by one or more natural persons, not by a corporation or other entity.
The individual who created the trust must be the primary beneficiary. Joint trusts can have multiple primary beneficiaries, but at least one must be a qualifying borrower on the loan.
At least one person who created the trust must serve as a trustee, or an institutional trustee authorized under state law can fill that role.
The trust instrument must grant the trustee authority to pledge the property as collateral for a loan to the borrower.

All property and occupancy types are eligible. For a principal residence, at least one person who established the trust must live in the property and sign the loan documents.³ The lender is responsible for confirming eligibility before delivering the loan, including verifying that title insurers in the relevant state will provide full coverage without exceptions for the trust structure.

Due-on-Sale Protection When You Transfer Property Into the Trust

If you already have a mortgage and want to retitle the property into your living trust, the main worry is usually whether the lender can call the loan due. Federal law blocks that move. The Garn-St. Germain Depository Institutions Act prohibits lenders from exercising a due-on-sale clause when residential property with fewer than five dwelling units is transferred into an inter vivos trust, as long as the borrower remains a beneficiary of the trust and the transfer does not change who occupies the property.⁴

The implementing regulation adds a practical catch. The borrower cannot refuse to give the lender reasonable notice of any later transfer of the beneficial interest or any change in who occupies the property.⁵ Keep the lender informed, and the protection holds. Transfer your beneficial interest to someone else, or move out and let a non-borrower occupy the home, and the lender may regain the right to accelerate. The rider reinforces this by making the settlors and trustees contractual parties to the mortgage, giving the lender an enforcement hook alongside the statutory one.

Information the Rider Needs

Preparing the rider means pulling specific details from the trust agreement, and any mismatch between the rider and the actual trust can cause the title company to reject the paperwork. You will need:

The full trust name, exactly as it appears on the trust agreement, typically including the settlors’ names and the trust designation.
The date the trust agreement was originally signed.
The names of every settlor or grantor who established the trust.
The names of every current trustee. If there are co-trustees, all must be listed.

Lenders usually accept a certificate of trust, sometimes called a memorandum of trust, as verification without needing the full trust agreement. The certificate is a shorter document signed by the trustees confirming that the trust exists, identifying the settlors and current trustees, stating that the trust is revocable, and describing the trustee’s powers. That lets the lender rely on verified facts in good faith while keeping private estate planning details out of the loan file.

There is no single Fannie Mae form number for the rider itself. Fannie Mae publishes sample rider language through its Selling Guide, and lenders may use their own trust rider language as long as it meets Fannie Mae and Freddie Mac requirements.¹ Your lender’s document preparation team will generate the finished rider from the trust details you provide.

Signing the Rider

Signing is more involved than a standard mortgage closing because the same people often sign in two capacities. Trustees sign in their representative capacity, typically adding “as Trustee of [Trust Name]” after their signatures, which distinguishes acts on behalf of the trust from personal obligations. Settlors also sign individually to acknowledge the transaction and accept personal liability under the rider’s joint and several language.² Every signature must match the names on the trust documents and the rider exactly, including middle initials and suffixes. A notary public witnesses the signing and provides the official acknowledgment.

No Power of Attorney

If a trustee cannot attend the closing, a power of attorney will not solve the problem. Both Fannie Mae and Freddie Mac prohibit the use of a power of attorney when a loan closes in a revocable living trust, with no exceptions. Every trustee and settlor listed on the rider must appear in person, or through remote online notarization where the state and lender allow it. Trust closings most commonly stall over this requirement, so coordinate schedules well ahead of your closing date.

After Closing

The rider creates obligations that continue after the loan funds. The trust has to remain revocable for the loan to stay in compliance with Fannie Mae’s requirements, so converting it to an irrevocable trust afterward can create problems. A trust that contains a provision to become irrevocable upon a settlor’s death does not affect eligibility at the time the loan is delivered, but the change in structure may affect eligibility for future refinancing or modification.³

If a named trustee can no longer serve, the trust instrument’s own mechanism for appointing a successor controls, and Fannie Mae recognizes that the trust can act through a successor trustee.³ Notify your lender promptly of any trustee change, consistent with the federal requirement to give the lender reasonable notice of changes to the trust’s beneficial interest or occupancy.⁵

Title Insurance

When property moves from your individual name into a trust, your existing owner’s title insurance policy may not automatically cover the trust as the new titleholder. Many title companies will issue an additional insured endorsement that amends the existing policy to add the trust as a named insured. Ask about this at the time of transfer; sorting out coverage gaps later is harder. For properties purchased directly in the trust’s name, the lender will require a lender’s title insurance policy that names the trust without exceptions, which is part of the lender’s verification responsibilities under Fannie Mae’s guidelines.³

1
Fannie Mae. Riders and Addenda
2
Fannie Mae. Revocable Trust Rider (Sample Language)
3
Fannie Mae. Inter Vivos Revocable Trusts
4
Office of the Law Revision Counsel. 12 US Code 1701j-3 – Preemption of Due-on-Sale Prohibitions
5
eCFR. 12 CFR 191.5 – Limitation on Exercise of Due-on-Sale Clauses