How do you become a mortgage trustee?

Factual Questions
1

This question is not about how to apply for, qualify for, or get a mortgage loan.

Virginia, as well as several other jurisdictions, have a three-party mortgage system consisting of the lender, the borrower, and the trustee. The trustee is supposed to be a neutral party who will hold onto the legal title to the property during the period of the mortgage and act impartially to fulfill its original purpose. Basically, they sit back and wait. If one of the parties claims that the mortgage has been paid off or is in default, the trustee can evaluate the situation and either do nothing, sign legal title over to the (now ex)-borrower, or sell the property at an impartial public auction and distribute the proceeds.

How does one actually become a mortgage trustee? I’m guessing that the trustee is expected, at least in theory, to be an impartial party and not have an invested interest in either side that would be a conflict of interest, so the trustee is not going to be the bank’s CEO, the borrower’s mom, or a shell corporation started by either party. I’m also guessing that it isn’t as simple as overhearing a mortgage deal in progress while waiting in line at a bank and running up screaming, “oooh oooh oooh! Can I be the trustee? I’m really trustworthy, just call my brother-in-law as a reference and take a look at my awesome credit report!”

I found this Virginia statute regarding the appointment of trustees, but it doesn’t say if there are any hard and fast de jure qualifications, such as you have to be a licensed attorney, accountant, financial adviser, or real estate agent and be over 21 and never convicted of a felony. How do you become one in practice? Is there usually a formal evaluation process at the bank (e.g. “Sorry, Mr. robert_columbia, your background check came back and we just don’t think your trustworthy enough for this, we’d be quaking in fear that you’d lose the deed, sell it for beer money, or otherwise mess up.”), or is it mostly being in the right place at the right time to put sparkles in the eyes of Loan Officer #4556 at BigBank and Mr. and Mrs. HopefulHomeowner that they pick you?

I entered “how to become a mortgage trustee” and “how to select a mortgage trustee” on Google. I found this page that mentions that pretty much anyone or any company can be a living will trustee, but then this isn’t quite the same thing.

Also, while we’re at it, what do mortgage trustees get paid? Do you get a big fat (or even just a little) check every month or year just for your willingness to hold onto legal title through thick and thin, tornado and hurricane, and civil riot and ticker-tape parade, or is it basically a way to give back to the community or increase your social or professional stature?

2

Typically, the trustee is a title company. I don’t think very many individuals are in the business, they get hired by the title company to do its business, including managing trust deeds.

3

This indicates that it is a common practice for a title company to be the mortgage trustee, but that it isn’t de jure required in many areas.

I was speculating about what would happen if a wannabe homeowner walked into a meeting with BigMortgageBank and insisted that they had their heart set on the trustee being the Oak Street Baptist Church (or Smith Brothers Family Restaurant Corp. DBA John’s Diner, or that retired Army guy who lives at 133 Drury Lane and blares classical music at 2 am, or whatever company it is that makes those really good cheese curls, or Arnold Schwarzenegger, etc.) and if BigMortgageBank doesn’t like it they will go across the street to LittleMortgageBank. Maybe in this economy the bank official would laugh and say good luck, but what about 2005 when banks were bending over backwards to give out loans? Did something like that ever happen?

I assume that a person (natural or corporate) cannot be forced to be a mortgage trustee against their will except in limited circumstances based on their own prior behavior.

Some things to consider are to what extent a mortgage trustee is expected to exercise sound independent judgment and to what extent an immature, incompetent, negligent, or dishonest trustee can muck things up. For those who have had mortgages or have dealt with giving out mortgage loans (e.g. as a bank official), what goes into the selection process? Does the choice of trustee make a meaningful difference as to how the loan will feel or play out over the years? E.g. one trustee will start foreclosure proceedings based on a machine-signed form letter from the bank saying “default”, while another will drag their heels and insist that they aren’t convinced that the borrower really defaulted and they need more evidence, notarized, with DNA sample, notarized again, and hand-delivered by the bank President with additional documentary evidence and contact information for three eyewitnesses before they will start foreclosure, then when this is done they say that the third signature is to smudgy and needs to be redone and oh I only accept 10 point fonts and larger, print everything again. (Yes, I know I am exaggerating a little bit here.)