Why Is A Mortgage Deed Or A Deed Of Trust Used?
A note itself is a fairly straightforward promise to pay, but to secure collateral for a note, the lender or your escrow officer draws up either a mortgage deed or a deed of trust, depending upon which is used in your state. Both of them describe the property against which the loan is written and enable the lender to foreclose on the property held as collateral under certain conditions. The basic difference between them is the use of a third party (trustee) in a deed of trust, something lacking in a mortgage deed, which is a two-party agreement with the lender holding the mortgage deed until the loan is fully paid. The mortgage deed, most common in the Midwest and East, allows the borrower one year to make up back payments and always requires a court hearing for foreclosure. As we shall see, foreclosure on a deed of trust is a simpler proposition. A deed of trust deeds the property over to a third party for him to hold until the loan is fully paid. Lest you feel uneasy about a third pa
