Difference Between Mortgage and Deed of Trust (With Table)

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 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.

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. The owner of a mortgage has the right to redeem the property before the foreclosure is completed. However, if the owner keeps his payments current, he has the opportunity to redeem them at any time. He also has a year to pay ‘equity of redemption,’ and is obligated to repay all debts.

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

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. However, because the lender, commonly known as the mortgagee, is a separate party, this process is confined to dual-party operation. Only acts relating to a court or judicial actions are included in the mortgage foreclosure process.

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. The owner of a mortgage has the right to redeem the property before the foreclosure decree is issued. The owner, on the other hand, has the right to redeem at any moment if the payments are current. He also has a year for ‘equity of redemption,’ and is obligated to pay indebtedness in full of redeeming.

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. It excludes relief, and the funds involved are likewise non-collectable. The term mortgage note’ is also used to refer to 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. The trustee’s deed and sale, all sales final, no redemption, a notice of sale, a notice of default for three months, trustee’s deed or a court/judicial action, and reinstatement period are all part of the deed of trust process.

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

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 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 debt or amount.

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. Therefore it is never prohibited. ‘Trust deed’ is another term for a Deed of Trust.

Main Differences Between Mortgage and Deed of Trust

  1. In the process of a mortgage, only two parties are involved. One party is the one who borrows or is also called a mortgagor. However, another party is the one who lends or is also called the mortgagee. Thus this process is limited to dual-party operation. On the other hand, in the process of a deed of trust’, three parties are involved. The first one is the one who leads, the second is the one who borrows, and the third is the one who acts as a trustee. Usually, the role of the trustee is played by a company or firm.
  2. The foreclosure process of the Mortgage includes the actions related to a court or judicial actions only. However, this process also involves notice of default, equitable redemption, a notice of sale, court or lawsuit, statutory redemption, sheriff’s deed and sale, deficiency judgement and a year available to redeem. On the other hand, the process of the deed of trust involves trustee’s deed and sale, all sales final, no redemption, notice of sale, notice of default for three months, trustee’s deed or court/judicial action and reinstatement period.
  3. In a mortgage, the owner possesses the right of redemption before the time of the decree of foreclosure. However, the owner possesses the right to redeem anytime if he brings the payments current. He also possesses a year time for ‘equity of redemption’ and is bound to pay indebtedness in full for redemption. On the other hand, in the case of deed the trust, the owner retains the rights of redemption same as a mortgage if the foreclosure is done via judicial means. Otherwise, here trustee’s sale, a notice of default and notice of sale can be taken into consideration as well.
  4. In the case of a mortgage, the lender also possesses some rights of giving possible deficiency judgement. On the other hand, in the case of a deed of trust, if the foreclosure is done by judicial means, then the lender’s rights remain the same. However, in the case of a Trustee’s sale, a deficiency judgement is not possible.
  5. 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. On the other hand, in the case of Trust note of Deed of trust, it also outlaws 4 years after the last payment date. However, in the case of a Trust deed, the lender has always an option available with him to sell the trustee to recover the unpaid loan or balance. Hence it never outlaws.
  6. 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’.

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. It excludes relief, and the funds involved are non-collectable as well. The term “mortgage note” is also used to refer to a mortgage. In the case of a trust deed, however, the lender has the option of selling the trustee to recoup the outstanding debt or balance.

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. Therefore it is never prohibited. The other name for a Deed of Trust is a ‘trust deed.’

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. A shortfall judgement, however, is not feasible in the case 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.

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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