Could a mortgage lender claim that the Equity Holding Trust violated its due-on-sale clause?
Yes… although doing so would be contrary to the provisions of Federal Law (The Garn-St. Germain Act). No one can predict what a mortgage lender could [or might] “claim”; but, insomuch as none of the Equity Holding Trust documents are recorded (and needn’t be), and since the Equity Holding Trust does not adversely affect the lender’s security interest, such an assertion by a lender would be unlikely. The Garn-St. Germain Act (FDIRA 1982) provides that any homeowner may place its mortgaged property into a qualified revocable living trust, and lease the trust property to anyone he/she might choose irrespective of what a lender’s “druthers” might be. None-the-less, it is conceivable that a lender could declare the “intent” of the Equity Holding Trust to be contrary to their best interest, and assert that it was somehow a ruse to circumvent their ability to capitalize on the prevailing real estate market. In such a claim by a lender (institutional or private), the court would need to dete
