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Re: Garn-St Germain Act of 1982

Posted by Gary on January 02, 2003 at 10:23 PM

In Reply to: Garn-St Germain Act of 1982 posted by Ward-CA- on December 30, 2002 at 5:58 PM

: : Ward,

: : I have heard about this case many times in reference
: : to the 'due on sale' clause.Once,infact,in a publicly
: : advertised seminar where the company that was trying
: : to sell some real estate buying products claimed
: : that the above case could be 'used' to circumvent ANY
: : due on sale clause!
: : Can you enlighten as to the case and the ruling?
: : Thank you in advance!
: :
: =•=•=•=•=•=•=•=•=•=•=

: VJ,

: Well, actually this is a federal law, not a court case. It’s formally called the Garn–St Germain Depository Institutions Act of 1982. It was sponsored through Congress by two Democratic senators, Jake Garn of New Mexico and Fernan St. Germain of Rhode Island.

: The operative part of the Act you’re interested in is the US Code, Title 12, Chapter 13, Section 1701j-3(d) Exemption of specified transfers or dispositions.

: You will find there nine exceptions barring a lender from exercising their due-on-sale rights. Most of them deal with the transfer of title between family members due to divorce or death.


I have a question related to the Garn-St. Germain Depository Institutions Act of 1982. I refinaced my primary house through Ditech Funding and would like to do the same with a rental. They had no problem with my placing my residence in a trust after I refinance. They did have trouble with this on the rental property. I was told that if I placed my rental in a trust after getting refinanced, Ditech would call the loan due. Isn't this a violation of the Garn-St. Germain Act or have they circumvented this in some way such as having the borrower agree that they can't put it in a trust?


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