Difference Between Mortgage and Deed of Trust

Despite the similarities between the two security devices, they result in two quite different foreclosure processes involving different numbers of individuals. Distinctions between a deed of trust and a mortgage can be understood in more detail.

Mortgage vs Deed of Trust

The main difference between mortgage and deed of trust is that there are just two people engaged in a mortgage transaction. A borrower, sometimes known as a mortgagor, is one of the parties. This method is confined to dual-party operation since another party lends, commonly known as the mortgagee. However, there are three parties engaged in the deed of trust process. The first is the one who takes the initiative, the second is the borrower, and the third is the trustee. In most cases, a company or firm serves as the trustee.

Mortgage vs Deed of Trust

Only activities relating to a court or judicial proceedings are included in the mortgage foreclosure procedure. Notice of default, equitable redemption, lawsuit, statutory redemption, sheriff’s deed and sale, deficiency judgement, and a year available to redeem are all part of this process.

Trustees’ deed and sale, all sales final, no redemption, a notice of sale, a three-month notice of default, trustee’s deed or a court/judicial action, and reinstatement period are all steps in the deed of trust process.

Comparison Table Between Mortgage and Deed of Trust

Parameters of ComparisonMortgageDeed of Trust
Parties Involved Two parties are involved. (Borrower, lender) Three parties involved (Borrower, lender, trustee)
Foreclosure ProcessJudicial actions only, a notice of default, equitable redemption, a notice of sale, court or lawsuit, statutory redemption, sheriff’s deed and sale, deficiency judgement, a year available to redeem.Trustee’s deed and sale, all sales final, no redemption, notice of sale, notice of default for three months, trustee’s deed or judicial action and reinstatement period.
Other Name Mortgage note Trust deed
Deficiency Judgement Deficiency Judgement is possible.Deficiency Judgement is not possible.
Stature of limitationsOutlaw 4 years from last payment date.Outlaws 4 years by Trust note and never outlaws by Trust deed.

What is Mortgage?

Only two parties are engaged in the mortgage procedure. The borrower, also known as a mortgagor, is one of the parties.

Notice of default, equitable redemption, a notice of sale, court or lawsuit, statutory redemption, sheriff’s deed and sale, deficiency judgement, and a year to redeem are all part of this process.

In the case of a mortgage, the lender also can award a deficiency judgement. Both the contract and the note from the last payment date or due date outlaws four years in a mortgage.

What is Deed of Trust?

Three people are engaged in the deed of trust process. The first is the one who takes the initiative, the second is the one who borrows, and the third is the trustee. Typically, a corporation or firm serves as the trustee.

If the foreclosure is done through judicial methods, the owner of a deed the trust retains the same redemption rights as a mortgage. A trustee’s sale, a notice of default, and a notice of sale can all be considered in this case.

In the case of a deed of trust, the lender’s rights remain the same if the foreclosure is done through the courts. A shortfall judgement is not possible in the context of a Trustee’s sale.

It also forbids 4 years after the last payment date in the case of a Trust note of Deed of Trust. In the case of a trust deed, however, the lender always has the option of selling the trustee to recoup the outstanding loan or debt.

Main Differences Between Mortgage and Deed of Trust

  1. In a mortgage, both contract and note from the last payment date or due date outlaws four years. It doesn’t include relief, and the involved monies are also not collectable.
  2. A mortgage is also popularly known by its other name, ‘mortgage note’. On the other hand, Deed of Trust is also known by its other name, ‘trust deed’.
Difference Between Mortgage and Deed of Trust

Conclusion

In the event of a mortgage, the lender also can issue a deficiency judgement if necessary. In a mortgage, the last payment date or due date is outlawed for four years in both the contract and note.

Trust of deed also prohibits 4 years after the last payment date in the case of a Trust note of Deed of Trust. In the event of a trust deed, however, the lender always has the option of selling the trustee to recover the outstanding loan or amount.

A trustee’s sale, a notice of default, and a notice of sale can all be considered in this situation. In the event of a deed of trust, the lender’s rights are unaffected whether the foreclosure is handled through the courts.

References

  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/arz15&section=13
  2. https://www.jstor.org/stable/3474580
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