Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is the deeded of trust.
Purchasing a property typically involves a mountain of paperwork, and sometimes it includes a deed of trust. In this episode, Charles discusses what a deed of trust is, and why you may or may not need it when buying a property.
o The document states that the purchaser will repay the loan amount to the lender. In addition, it declares that the mortgage lender will hold the property’s legal title until the mortgage is paid back to the lender in full. A deed of trust is a particular form of a secured real estate transaction that certain states use instead of mortgages.
o In a deed of trust, there are 3 parties involved
o Several components are included in a deed of trust
o When a property buyer takes out a loan to finance their purchase, the lender provides the loan funds in exchange for one or more promissory notes that are attached to a deed of trust.
o The deed of trust transfers the legal title of the real estate to a third-party trustee as collateral for the promissory notes until the borrower repays the loan in full; at which time the title to the real property becomes the borrower.
o The right to obtain full ownership or the equitable title stays with the property owner/ the borrower, throughout the process, in addition to the full use and responsibility of the real estate.
o The deed of trust is utilized as a substitute for a mortgage.
o Mortgages provide the borrower and the lender an equal interest in the property until the loan has been paid in full
o A deed of trust gives the legal title of the property to an impartial third-party trustee
o Mortgages have 2 parties (lender and borrower), while deeds of trust have 3 parties.
o With a deed of trust, if the borrower defaults, the trustee will initiate, and complete the foreclosure process, at the request of the lender.
o When a mortgage is used, the lender must pursue a judicial foreclosure; a court-supervised process that becomes enforced once the lender files a lawsuit against the borrower for non-payment. It is both timely and expensive.
o On the other hand, a deed of trust allows the lender to utilize a faster and less expensive foreclosure process by circumventing the court system and following the procedure spelled out in the trust deed and allowed by state law. If the borrower does not make the loan current, the trustee will sell the property through a trustee’s sale.
Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is the deeded of trust.
Charles:
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Charles:
A deeded of trust or a trust deed is a contract between a lender and a borrower that is signed at a real estate closing. When the property is being financed, the deed of trust would be used instead of a mortgage. The document states that the purchaser will repay the loan amount to the lender. In addition, it declares that the mortgage lender will hold the property’s legal title until the mortgage is paid back to the lender in full. A de of trust is a particular form of a secured real estate transaction that certain states use instead of mortgages. So what is included in a de of trust? Well, in a de of trust, there are three parties involved. The trust door, who is the borrower? The trustee, who is the third party who will hold legal title to the real property, often a title company and the beneficiary who is the lender? Now, several components are included in the deed of trust. First is the original loan amount, a legal description of the property, names of all the parties who are involved, the inception and maturity date of loan, the fees, the process if the loan goes into default and riders, and possibly additional language depending on the specific sale and specific deal.
Charles:
Now, how the deeds of trust work? Well, when a property buyer takes out a loan to finance their purchase, the lender provides the loan funds in exchange for one or more promissory notes that are attached to the deeded of trust. Now, the deed of trust transfers the legal title of the real property to a third party trustee as collateral for the promissory note until the borrower repays the loan in full, at which time the title to the real property becomes the borrowers. Now, the right to obtain full ownership or the equitable title stays with the property owner, the borrower, throughout the process. In addition to the full use and responsibility of the real estate, the deeded of trust is utilized as a substitute for a mortgage. Now, a deed of trust versus a mortgage mortgages provide the borrower and the lender an equal interest in the property until the loan has been paid in full.
Charles:
A deed of trust gives the legal title of the property to an impartial third party trustee. Mortgages have two parties, lender and borrower. While deeds of trust have three parties with a deed of trust, if the borrower defaults, the trustee will initiate and complete the foreclosure process at the request of the lender. One of the main differences between a deeded of trust and mortgage is the foreclosure process. When a mortgage is used, the lender must pursue a a judicial foreclosure, a court supervised process that becomes enforced once the lender files a lawsuit against the borrower for non-payment. It is both timely and expensive. On the other hand, a de of trust allows the lender to utilize a faster and less expensive foreclosure process by circumventing the court system and following the procedure spelled out in the trust deed and allowed by the state law. If the borrower does not make the loan current, the trustee will sell the property through a trustee sale. So I hope you enjoyed. Please remember to rate, review, subscribe, submit comments and potential show [email protected]. Look forward to two more episodes next week. See you then.
Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.
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