[WSBAPT] TODD and Refinancing issue

Wed Nov 4 14:40:25 PST 2026

FYI, the lender just told me that this is for a VA refi, which
apparently is the reason why the existence of a TODD is a roadblock.  I
still haven't received any explanation as to why this is the case, but I
wanted to send that tidbit out for future reference.

On Wed, Nov 4, 2026 at 2:16 PM Inge Fordham <inge at fordhamlegal.com> wrote:

> Unfortunately, logic doesn’t always prevail.  Sometimes it’s more
> efficient (and less costly for the client) to just give them what they
> want.  Ten years ago, I may have had more fight in me.  I tend to be
> pickier these days about where I invest the energy it takes to fight.  (I
> also tweak my back getting out of bed in the morning - it’s so much fun
> getting older!)  😊
>
>
> [image:
> uc%3fexport=download&id=1W3rEcChy0_E0cCfV5up02mkhwnL6eWIs&revid=0B4P5JoIHdbFaR29EbHlRWHFseFV5STZpSUVGeUNPWldkVDFVPQ]
>
> <https://www.google.com/maps/search/3218+Sixth+Avenue+%7C+Tacoma,+WA+98406+%0D%0A+%0D%0AOffice:+(253?entry=gmail&source=g>*Inge
> A. Fordham | Attorney*
> Fordham Law, PLLC
> 3218 Sixth Avenue | Tacoma, WA 98406
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> *From: *wsbapt-bounces at lists.wsbarppt.com <
> wsbapt-bounces at lists.wsbarppt.com> on behalf of Zack Hofstad <
> zack at hofstadlaw.com>
> *Date: *Wednesday, November 4, 2026 at 2:13 PM
> *To: *WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> *Subject: *Re: [WSBAPT] TODD and Refinancing issue
>
> Inge:  That's a good idea, I'll look into it.
>
> Daniel:  You and I are on the exact same page, and I tried to explain how
> the TODD shouldn't affect any of this as the TODD beneficiary 1.  Isn't a
> borrower because they have no present interest in the property, and 2.  May
> not actually obtain ownership of the property, and has no legal right to
> the property unless they jump through the necessary hoops once the owner
> dies.
>
> The thing that really doesn't make sense to me is why Fannie would be at
> all concerned about the rights of a contingent beneficiary.
>
> Acceptable Forms of Property Ownership
>
> Title to the property must be held as fee simple (which may include title
> held in a life estate), leasehold estate, or as a co-op form of ownership.
> (See B2-2-01, General Borrower Eligibility Requirements
> <https://selling-guide.fanniemae.com/sel/b2-2-01/general-borrower-eligibility-requirements> B2-3-03,
> Special Property Eligibility and Underwriting Considerations: Leasehold
> Estates
> <https://selling-guide.fanniemae.com/sel/b2-3-03/special-property-eligibility-and-underwriting-considerations-leasehold-estates>;
> and B4-2.3-04, Loan Eligibility for Co-op Share Loans
> <https://selling-guide.fanniemae.com/sel/b4-2.3-04/loan-eligibility-co-op-share-loans>,
> for additional information.)
>
>
>
> *Note:* Life estates satisfying the requirements described in B2-2-01,
> General Borrower Eligibility Requirements
> <https://selling-guide.fanniemae.com/sel/b2-2-01/general-borrower-eligibility-requirements>,
> are often chosen as a means to avoid probate. However, similar arrangements
> do not qualify as life estates for loan eligibility purposes if:
>
>    - the named successors under such arrangements do not have vested and
>    irrevocable property rights in the subject property, such as with "lady
>    bird deeds", or
>    - the current holder of the property can, before their own death,
>    transfer full ownership of the subject property to a third party without
>    the approval or consent of any contingent beneficiaries, such as under
>    typical statutory "transfer on death deeds."
>
>
>
> On Wed, Nov 4, 2026 at 12:24 PM Zack Hofstad <zack at hofstadlaw.com> wrote:
>
> I just heard from a past client that their refi is being held up due to a
> TODD he recorded a few years ago.
>
> The lender sent me the following information from Fannie Mae, which states
> in the middle of the page that TODDs will prevent loan eligibility
> because they allow for the current owner of the property to transfer
> ownership without the consent of the named beneficiary on the TODD.
>
>
> https://selling-guide.fanniemae.com/sel/b2-3-01/general-property-eligibility
>
> This was news to me.  Has anyone faced this issue, and is there anything
> to be done besides recording a revocation of the TODD, closing on the refi,
> and then recording a new TODD (which is the lender's suggested plan of
> action)?
>
> --
> Zack Hofstad
> Hofstad Law
>
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> phone/fax:  360.515.7879 <(360)%20515-7879>
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