Can Your Mortgage Be Called Due If You Transfer Your Home to a Trust? Here’s the Truth Behind the Viral Claim.
Lately, I’ve been getting a lot of calls from concerned homeowners asking the same question: “If I transfer my home into a trust, can the bank call my loan due?”
A viral video circulating online has stirred up quite a bit of worry about this issue - and understandably so. The thought of a bank demanding full repayment of your loan just because you moved your property into a trust is enough to stop anyone in their tracks.
So, I thought it might be helpful to write a quick explainer—because while the concern is understandable, the claims are not entirely accurate. In fact, there’s a federal law that protects homeowners in this exact situation.
What Is a “Due-on-Sale” Clause?
First, let’s talk about what a “due-on-sale” clause actually is.
When you sign a mortgage agreement, many lenders include a due-on-sale clause, which allows the lender to demand full repayment of the loan if the property is sold or transferred to someone else. This clause protects the lender from the risk of the loan being passed to someone they didn’t vet.
So, the fear is: if you transfer your property—even to your own trust—does that count as a “sale” or “transfer” that could trigger the clause?
Enter: The Garn-St. Germain Act
This is where The Garn-St. Germain Depository Institutions Act of 1982 comes in. This federal law specifically says that a lender cannot enforce the due-on-sale clause in certain situations—including when you transfer your home into a revocable living trust, as long as:
You are the borrower and remain a beneficiary of the trust,
And the transfer does not result in a change in occupancy rights (i.e., you’re still living in the home).
In other words, you can transfer your home into your revocable living trust without the bank calling your mortgage due, as long as the trust is properly structured and you still own and have the right to live in the home.
So Why the Confusion?
To be fair, not all trusts are the same—and not all transfers are exempt. If you were transferring your home into an irrevocable trust or to a third party not related to the loan, you could run into problems.
This is likely where some of the online confusion is coming from. Social media can be a powerful educational tool—but it can also spread partial truths that spark unnecessary fear.
When in Doubt, Talk to a Professional
Transferring your home into a revocable living trust is a very common and smart estate planning move—and it doesn’t mean you’ll lose your home or trigger a loan recall. But it’s important to do it the right way.
That’s why it's always best to talk to an experienced estate planning attorney before making any changes to your property title. An attorney can make sure your trust is properly drafted, your deed is correctly recorded, and your mortgage remains unaffected.
Final Thoughts
Yes, the due-on-sale clause is real—but it’s not a problem for most people transferring their home into a revocable living trust. Thanks to the Garn-St. Germain Act, your estate plan and your mortgage can coexist peacefully.
So, if you’ve been putting off creating or funding your trust out of fear, take a deep breath. You're not alone—and you're not at risk of losing your home if you do things properly. And as always, don’t believe everything you hear online—especially when it comes to something as important as your legacy.
Have any questions? Visit www.cedarcounsel.com to schedule a complimentary consultation today.
This article is a service of Cedar Counsel. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.