What is the difference between a mortgage and a deed of trust?
The fundamental difference between deed of trusts and mortgages is the utilized procedure that is followed if the borrower neglectes his or her obligation to pay off the loan and breaks the agreement. Concerning mortgages, if a borrower “defaults”, such as by failing to make monthly payments or meet other conditions of the loan, such as carrying homeowner’s insurance and maintaining the house in good repair, the lender have to bring a court action in order to foreclose on the property. Nevertheless with a trust deed, if the homeowner does not pay the loan, the foreclosure process is usually much faster and less complicated than the formal court foreclosure process. As a technical matter, a mortgage involves a relationship between • the lender and • the borrower/homeowner Nevertheless a deed of trust involves three parties: • the homeowner, • the lender, • title insurance company which is holding legal title to the real estate until the loan is fully repaid. When the loan is fully paid,
