What is a Deed of Trust and how is it different from a Mortgage?

Answer 1

The first poster is incorrect. The deed of trust is merely the legal document which is recorded on the property to show that you have a mortgage (or owe money) on the property.

See:
http://www.realestatelawyers.com/Deed-Trust.cfm

What Is A Deed of Trust ?

This is the mortgage document. It is recorded among the land records, and your lender will keep the original. When you pay off the loan, the lender will return it with the promissory note. This document is rather lengthy -- and quite legalistic. Make sure that the person conducting the settlement fully explains all of the ramifications and conditions contained in this document.

The deed of trust helps to verify and protect your legal interest in a property. Contact a Real Estate Lawyer for a further explanation on what is a deed of trust.

Basically, so long as you make your monthly payments on a timely basis, you should have nothing to worry about. But once you are in default (a term which is defined in both the note and the trust) then many of the provisions of that deed of trust become operative -- such as the right of the lender to ultimately foreclose on your property.

Deed types:

* Quitclaim Deed
* Quick Claim Deed
* Warranty Deed

It should also be noted that you cannot deduct any mortgage interest for tax purposes unless your property is secured by a deed of trust. That means that the deed of trust must be recorded in land records.

The deed of trust helps to verify and protect your legal interest in a property. Contact a Real Estate Lawyer for a further explanation on what is a deed of trust.

Answer 2

See http://homebuying.about.com/od/marketfactstrends/qt/111307_DofTrust.htm:

Why is a Deed of Trust Different From a Mortgage?

What is a Deed of Trust?

If you have never read a deed of trust, you might have questions about it. After all, it is the security for your loan. It is the document that is recorded in the public records.

A deed of trust contains three parties:


The Trustor, which is you, the borrower

The Trustee, which is an entity that holds "bare or legal" title

The Beneficiary, which is the lender
The deed of trust is an instrument that 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

Acceleration and alienation clauses

Riders, if any, regarding such clauses as prepayment penalties or terms of an adjustable rate mortgage

What is a Trustee?

Because mortgages do not contain a trustee, many borrowers are confused between a mortgage and a deed of trust. Deeds of trust contain a trustee, an independent third party that does not represent the borrower nor the lender.


The trustee is an entity, generally a title company, that holds the "Power of Sale" in the event of default.

The trustee also reconveys the property once the deed of trust is paid in full.

In the event of a default, the trustee files a Notice of Default; however, in most instances, the trustee will substitute another trustee to handle the foreclosure under a Substitution of Trustee.

After the 90-day period in the public records, and a 21-day publication period in the newspaper, the trustee then has the power to sell the property on the courthouse steps without a court procedure.

During the three months following recordation of the Notice of Default, the borrower can redeem the property by making up the back payments and paying the trustee's fees.

Once the trustee sells the property at a Trustee's sale, it is final.

What is a Promissory Note?
Whereas the deed of trust is security of the debt, secured by the property, the promissory note is secured by the deed of trust and is the evidence of the debt.


The promissory note is a promise to pay, signed by the borrower in favor of the lender.

It contains the terms of the loan such as the interest rate and payment obligations.

The promissory note is generally not recorded.


When the loan is paid, the promissory note is marked "paid in full" and returned to the borrower, along with a recorded Reconveyance Deed.

During the term of the loan, the lender retains the promissory note.

Before Signing a Promissory Note and Deed of Trust
Read both documents, including the pre-printed portions. You might ask the closer to send you a blank deed of trust and promissory note beforehand. Because preparers are human and can make mistakes, here are the important items to review:

Spelling of trustors' names

Principal balance of the loan

Interest rate (and the rider, if adjustable)

Payment amount

Prepayment penalties, if any

Address of property

All nicely annotated and with samples and examples!

Answer 3

a deed of trust is the mechanism used in some states to protect the interests of the mortgage [or other debt] holder.

in those states, a Trustee [usually a title company or bank] is hired to hold title to the property until the terms of the underlying debt are discharged.

If a property's debt goes bad, a Trustee's sale of the deed is much easier to arrange and cheaper than a foreclosure on a mortgage [as is done in the other states].

Answer 4

A mortgage is a loan on the security of your property.
A Deed of Trust sets out the terms of ownership - e.g. co-owners in unequal shares, or property in one person's sole name but he is holding the property on trust for himself and another person.

Answer 5

deed shows ownership