A deed of trust is a special type of mortgage which involves 3 parties.

• trustor: the borrower
• lender: the bank (or other source of financing)
• trustee: the person who temporarily holds the title until you have paid off your lien

When you pay off your debt the deed of trust is cancelled.

How Do Mortgages Compare to a Deed of Trust?

What is commonly referred to as a mortgage, is actually a deed of trust. In fact, 34 out of 50 states use allow home sales via a deed of trust. Home lenders typically prefer to use a deed of trust over a mortgage because it gives them greater legal protection and does not require an appearance in court to have the trustee foreclose and sell on a delinquent mortgagor.

The differences between a mortgage and a deed of trust are

• a deed of trust involves three parties and foreclosure typically is much faster because it does not require going through the court system
• a mortgage only has two parties and foreclosure typically is much slower because it may require going through the court system to get a judicial foreclosure

A Healthy Fear of Fame

The internet makes it easy to become famous, even if that fame is for messing up, but the fame can crack relationships. Casey Serin, author of the popular I Am Facing Foreclosure blog, and owner of a $2.2 million debt, recently mentioned that he is shutting his site down in an attempt to save his marriage.

Anyone who gets as big in the hole as he did at that young of an age will eventually likely wind up on the other side as well. Best of luck Casey!

A Growing Trend Amongst Home Owners

Foreclosures are more common than some would lead you to believe. A recent Moody’s report suggests that fall 2011 forclosure rates may reach 20%, and that does not even include the foreclosures that occured before that point in time:

Subprime ARMs issued during the last three months of 2006 could fare worst of all, with a projected foreclosure rate of just under 20 percent during the fall of 2011.

That would mean a full one in five owners still paying off subprime ARMs from late 2006 – about 12,000 in all – would lose their homes. Many others from that group would have already lost their homes to foreclosure in the previous years.

The Cost of Borrowing Money

Home loans are a calculated risk against your job, your future, and the economy. If the economy gets hot and inflation sets in, rising interest rates may cause your mortgage payment to exceed your free cash flow. If the economy goes into a recession and the job market stumbles or something happens to you and you lose your job you may also lose your home.

If you don’t understand how shifts in money supply can effect leverage, the cost of currency, and mortgages rates it is worth watching the Money Masters DVDs.