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Mortgage Question: What is a Deed of Trust?

Published on 28/07/07 5:28 AM

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
Posted by Adam | in financial planning | 1 Comment »

 

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One Comment on “Mortgage Question: What is a Deed of Trust?”

  1. Shane Says:

    Good explanation and correct too..Trust deed investments are becoming more social and helpful to all..But select good one!!

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