Mortgage Foreclosure & Refinance Resource

Deed of Trust is very similar to a mortgage. With a mortgage, the home owner holds full legal title to the property but gives the lender a lien on the property. If the home owner does not make his mortgage payments, the lender can foreclose on the property. With a deed of trust, you give the lender a deed to the property but the lender can only take control of the property if you do not meet the loan terms.

There is very little difference between these two methods of giving the lender a security interest in the property. The deed of trust differs from a mortgage in that it can be foreclosed non-judicially, while a mortgage must be foreclosed through a lawsuit. Technically, the borrower transfers the property into a trust for the benefit of the lender, and in the event of a default the trustee of this trust forecloses the deed of trust.

A deed of trust contains three parties:

• The Borrower
• The Trustee, an entity that holds “bare or legal” title
• The Lender

The deed of trust identifies the following:

• Original loan amount
• Legal description of the property being used as security for the mortgage
• The parties
• Inception and maturity date of the loan
• Provisions of the mortgage and requirements
• Late fees
• Legal procedures
• Payment acceleration clauses and alienation clauses
• Riders, if any, regarding prepayment penalties or terms of an adjustable rate mortgage