What is the difference between a mortgage and a deed of trust?

As a lawyer, I can provide legal advice on the difference between a mortgage and a deed of trust.

A mortgage and a deed of trust are both instruments used to secure a loan. However, there are some key differences between the two.

A mortgage is a legal document in which a borrower pledges real property as collateral for a loan. The lender holds a lien on the property until the loan is repaid in full. In a mortgage, the borrower retains ownership of the property, but the lender has the right to foreclose on the property and sell it to recover the unpaid balance of the loan.

A deed of trust, on the other hand, is a legal document that transfers the legal title of real property to a trustee. The trustee holds the title until the loan is repaid in full. The borrower retains possession and use of the property, but the trustee has the power to sell the property in the event of default. The lender is the beneficiary of the deed of trust, and receives the proceeds of the sale to recover the unpaid balance of the loan.

One key difference between a mortgage and a deed of trust is the role of the trustee. In a mortgage, there is no trustee, and the lender holds the lien on the property directly. In a deed of trust, the trustee holds the legal title to the property until the loan is repaid in full.

Another difference is the foreclosure process. In a mortgage foreclosure, the lender must file a lawsuit in court to obtain a judgment and foreclose on the property. In a deed of trust foreclosure, the lender can foreclose on the property without going to court, as long as the foreclosure process is carried out in accordance with state law.

It is important to note that the specifics of mortgages and deeds of trust can vary by jurisdiction, and that there may be additional rules and regulations that apply. Additionally, some states only allow one or the other instrument for securing a loan.

If you are considering taking out a loan that will be secured by real property, it is important to consult with a licensed attorney in your jurisdiction to determine the best option for your circumstances and to ensure that all legal requirements are met.