Deed of Trust
A deed of trust is a legal document used to secure interest in real estate. Some states use trust deeds instead of mortgages. Although these two documents are similar in nature there is one primary difference. With a deed of trust the lender retains the property title until the loan is paid in full. With a mortgage, the buyer holds the title while the lender is provided with a property lien.
Deed of trust mortgages involve three parties and include the borrower, lender and trustee. The borrower is provided with a mortgage loan through the lender and must designate the lender as beneficiary to the legal title. The trustee retains the property title throughout the duration of the loan.
The trustee is a neutral party and is not allowed to sell or transfer the property unless the borrower becomes delinquent on their loan payments. When lenders initiate foreclosure proceedings on real estate secured through trust deeds, it is referred to as 'foreclosure by power of sale'. At this point, the trustee is permitted to sell the property to pay off the unpaid balance.
When mortgage notes are used to secure the property and the borrower defaults on their loan, it is referred to as 'judicial foreclosure'.
Court confirmation is required with judicial foreclosures, while foreclosure by power of sale is unsupervised.
Unlike judicial foreclosure, borrowers using a deed of trust are entitled to a refund if the property is sold for more than is owned on the mortgage loan.
Overall, the differences between a deed of trust and mortgage note become apparent only if foreclosure proceedings are initiated. The foreclosure process for property secured by trust deeds occurs more swiftly than houses secured by mortgage loans.
If your lender has initiated foreclosure proceedings and you need to sell your house fast, I might be able to help. Feel free to submit information about your property via the "we buy houses" form. While I can't guarantee I will buy your house, I will be happy to take a look at your situation and determine what options are available.
Published on March 11, 2009 at 03:16 AM