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.
Avoid Market Loss With Trust Deed Investing
This book has been designed to give you a good idea of the many golden opportunities that await you should you choose to invest in deeds of trust.
Mortgage Company Lost Deed Of Trust
Know how to recover your investment when the borrower does not meet payment. The following is how a typical loan service is conducted. Thus, make the effort to keep these seven trust deed investing tips in mind when you are making an investment:1. (Note: this is calculated by using the same method as the previous example, except that the 10% is calculated as 1.
Regardless of the term used, the closing of escrow is when all of the final papers are signed, and the closing officer is prepared to record the deed to the property, and the sale goes to the seller.
Keep all documents and important papers that describe, and provide evidence and security for the loan, in a safe and accessible place. If there is more than one lien on a piece of real property there could be a number of reasons for this. 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.
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