What is the Difference Between Mortgage and Deed of Trust?

A mortgage and a deed of trust are both legal agreements used in real estate transactions to secure a loan with the property itself as collateral. However, there are some key differences between the two:

1. Number of Parties Involved: A mortgage involves two parties: the borrower and the lender. In contrast, a deed of trust involves three parties: the borrower, the lender, and a neutral third party called the trustee, who holds the title to the property until the loan is repaid.
2. Foreclosure Process: In the event of a borrower's default, the foreclosure process differs between a mortgage and a deed of trust. With a mortgage, the lender must obtain a court order to foreclose on the property, which is known as a judicial foreclosure. On the other hand, a deed of trust allows the trustee to sell the property without a court order, making the foreclosure process quicker and potentially less expensive for the lender.

In summary, both a mortgage and a deed of trust are used to secure a loan with the property as collateral, but they differ in the number of parties involved and the foreclosure process in case of borrower default.

Comparative Table: Mortgage vs Deed of Trust

A table comparing the differences between a mortgage and a deed of trust:

Both mortgages and deeds of trust are agreements in which a borrower puts up the title to real estate as collateral for a loan. However, the primary difference between them is the foreclosure process: mortgages require judicial foreclosure, which is time-consuming and costly, while deeds of trust involve non-judicial foreclosure, which is faster and cheaper. Additionally, mortgages involve two parties (the lender and the borrower), whereas deeds of trust involve three parties (the lender, the borrower, and the trustee).