Chapter 2 - The Basics of Trust Deeds

At this point you know that a trust deed is one of the safest investments you can make that offers you a high return, but what exactly is a trust deed? A trust deed, or deed of trust is a document that is used to secure the debt on a home acting as a mortgage. A trust deed is recorded as a lien on real property. However, although a deed of trust acts like a mortgage, it is important that you understand there are differences between a mortgage and a deed of trust. These differences will be discussed later on in this chapter.

A trust deed is used as security for a loan on real property, and the specifics regarding the loan are written in a promissory note. A deed of trust is then documented at the county recorders office to legally notify the world that the property in question has now been pledged to secure a loan.

There are three parties involved in a trust deed:
1. Beneficiary Investor/Lender/note holder
2. Trustor Borrower
3. Trustee Third party selected by the investor who has the legal power to act on the investors behalf and hold title until the note has been paid.

What secures a trust deed investment?

When making a trust deed investment, the deed of trust recorded against the borrowers property title is what secures the lenders investment. When making an investment in a deed of trust, the trustor (borrower) makes the property transfer, in trust, to the trustee (independent third party). The trustee then holds the conditional title on the behalf of the beneficiary (investor/lender/note holder), and then either of the following takes place:

1. The trust deed will be returned to the borrower once they satisfy all of the terms and conditions that were outlined in the promissory note

2. The property will be put up for sale should the borrower default also known as foreclosure. Foreclosure is the process that is taken by the investor in order to sell the property to a bidder from a third party, or to obtain title to the property. Usually the foreclosure sale satisfies the debt that is owed to the investor.

The difference between trust deeds and other investment types

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

The following are the basic differences between a mortgage and a deed of trust:

? Only two parties are involved in a mortgage document - the lender and the borrower.

? Three parties are involved in a trust deed the lender, the borrower and the trustee.

? With a mortgage document foreclosure the state law will determine the foreclosure method that will take place, which can sometime involve a lengthily process.

? A deed of trust usually involves a quicker foreclosure, because the most common type of foreclosure is a non-judicial one.


The different between investing in a deed of trust and the stocks

? The value of a stock fluctuate hourly, and sometimes by the minute.

? The value of a deed of trust is fixed and is always stable.

? An owner of stock is in third lien position.

? The owner of a trust deed is generally first or second in regards to the lien position.

? Every stock investor is charged a fee from their stock broker.

? A trust deed broker often charges investors no fees.

? Stocks can be purchased and sold through brokers.

? Trust deeds, on the other hand, are purchased and sold through brokers, but can also be purchased and sold privately at no extra charge.

? The security position of the stock owner is shared among thousands of other holders.

? The security position of the owner of a trust deed is not shared with anyone.

? A is supported by conglomerate properties and equipment that are often from foreign countries (ex. warehouses, factories, port facilities, mills, ships, etc.).

? Deeds of trust are only collateralized by real estate that occurs within the U.S., and usually by homes that are within the local area of the investor.

? A stock is a gamble.

? A trust deed is an investment


Although it is evident that there are many differences between trust deeds and other types of investments, one thing is for certain a trust deed is an investment opportunity that offers you a high return with less risk.

Trust Deed

You need to understand that not every company functions the same.

Private money loans are required by borrowers, who fail to meet guidelines set up by conventional institutions such as banks, life insurance companies and conduits. The best way to replace a note is for the two parties to come together and sign a new note. California Land Title Association (CLTA) - This policy is generally issued to a lender in second position, or to the purchaser of a property. Retirement plan without a trust deed investment Mary places 0. Delinquent taxes are paid 2. They are experts in their field, and provide creative financing solutions because they know how to deal with, and understand complex transactions.

The price at which the property was purchased 5.
This protection is made possible by the coordination of project funding with the lender. Distribution of cost, insurance costs, taxes and assessment 7. Thus, it is highly recommended that if you do decide to lend to either of the above mentioned entities, you require a larger money down payment and/or a lower Loan to Value. Judicial Foreclosure V this process is the more costly method and is when the courts are utilized to foreclose on the property, and an attorney is required. Not only is this an efficient means of collecting on a trust deed and a note, but it is more beneficial to the investor when there is a third party involved in the note and deed of trust, because the borrower simply has to make a single payment out to the servicing officer, instead of payments to multiple investors. Some of these conditions include, but are not limited to V 1.

1 1.
That being the case, you may find it in your best interest to first speak with a qualified professional or a mortgage loan broker before you make any commitments with your money. BorrowersAnother important aspect of the underwriting process is finding out how the borrower intends to refinance the loan in regard to the loan terms that have been specified in the promissory note. When the instructions have been completed, it is then important for the investor to read the preliminary title report more than once to ensure that everything is understood and nothing has been overlooked or missing. Some of these documents include the original or conformed copy of the recorded trust deed and the original note secured by the trust deed. If the property meets their equity requirements, Coppercrest Funding will then carefully analyze the borrowers personal characteristics, as well as their ability to repay the loan, and the project viability. Borrowers know that when they receive a fast response from the third party in regards to their lack of payment, that the loan servicing department has zero tolerance for such behavior.