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.

Spouse On Deed Of Trust

You can do this by using a number of approaches such as: _ Ask your realtor for information on closed sales of comparable properties _ If you were to purchase the property today, what would it be worth to you?

For instance, while some companies will consider themselves control companies, the actually disburse the funds directly to the owners or general contractor, without first making certain that the subcontractors and material suppliers have been paid. Confirmation of the zoning letter issued by the city/county that confirms the zoning for the property. Recourse Note V For this note, the endorser is making a guarantee that the payments will be given to the present holder, as well as all the other holders. Finally, the investor should make copies of all the important documents (for example- escrow instructions, trust deed, promissory note), and keep them at home where they can be easily accessed and referred to when needed.

Even though each policy works in the best interest of the investor, ALTA is still considered to be the best choice among the two, and is something you should keep in mind when selecting a policy.
A loan that is considered to be high rate is one where the appraisal exceeds ten points on the Treasury Security yield that has similar development. The reason is because ALTA provides a broader range of coverage compared to CLTA. When it comes to real estate lending, LTV is the single most important element, because an adequate LTV protects the initial investment, while a remaining cushion of equity helps to pay off any unexpected costs that may occur. The amount of the title policy premium is based on the amount of money that is being insured by the loan. What is the Mortgage Investment Yield? 025: 1 = the single deposit of 0.

Each month, the loan servicing officer bills the borrower and collects payment, depositing the funds that are received into the account of the investor.
It requires that the borrower usually make regular monthly payments of interest and principal throughout the period of the loan. 00 and . A trust deed investor always needs a title insurance policy. If this action can not be performed, it may become mandatory that you seek the service of an attorney. This type of lending that is provided by Coppercrest Funding is commonly referred to as hard money or private money lending. Throughout a loan transaction there tend to be far fewer problems when a loan has been properly underwritten.