Usually, individuals call home loans a “mortgages,” however a mortgage is not in fact a loan agreement. They promissory note will includes the promise to repay the amount your borrowed to Purchase a home. A “mortgage” is a legal agreement among you and the lender creating a lien on the home. Many states utilize mortgages for creating the lien, whereas others utilize deeds of trust or some other likewise-sounding instrument. Mortgages or deeds of trust provides the lender the right to foreclose on the home when you fail to make your monthly payments or are in violation of the loan agreement some other way. Whereas mortgages and deeds of trust are comparable since they are both agreements where a borrower puts the title up for real estate as collateral for the loan, these legal tools do come with differences. For example, mortgages and deeds of trust vary in the parties involved and, usually, how the foreclosure method works.
What are Mortgages?
Subject to where you reside, you probably signed a mortgage or a deed of trust when you took a loan out to buy the home. With mortgages, the involved parties that enter the contract are:
- the mortgagor – the borrower
- the mortgagee – the lender
Mortgage transfers between financial institutions and other entities are not uncommon. When mortgages get transferred from one party to another party, it’s authenticated and is usually recorded in the county records. The documentation used to transfer a mortgage from one party to another is known as an “assignment of mortgage.” MERS and Assignments Mortgage Electronic Registration System, Inc. (MERS) is a company devised by the mortgage-banking industries to facilitate the assignment procedure. In a lot of mortgage transactions, the mortgage is going to designate MERS as a candidate for the lender. In different cases, the loan could be assigned to MERS, only as a candidate for the lender, at a certain point later in its life prior to the loan closing. MERS then takes the role on as an agent for the loan owner, but it won’t have a beneficial interest through the promissory note. One the other hand, MERS just tracks the mortgage for its members as it is transferred from financial institution to financial institution. Following the loan getting assigned to MERS, the loan is able to be bought and sold several number of times later devoid of recording added assignment. Don’t be stunned if you discover that your mortgage was designated to MERS at some time. In many cases, there needs to be an assignment out of the MERS’ name prior to a foreclosure beginning. Mortgage Foreclosures The mortgage provides the loan owner the right to sell the property using the foreclosure method when the mortgagor fails to make the payments or violates the loan contract in some other way. Judicial foreclosures, in which are required go through state court systems, are usually in states with mortgages used as the security instrument. Though, in a couple states that utilize mortgages, like Michigan and Alabama, foreclosures are usually non-judicial. In such states, the conditions of the mortgage contracts, along with state law, enables lenders to perform out of court foreclosures of mortgages.
What Is a Deed of Trust?
A deed of trust, like mortgages, promises real property when securing a loan. This document is utilized instead of a mortgage in many states. Whereas a mortgage involves of 2 parties, a deed of trust involves:
- the trustor – the borrower
- the lender – occasionally known as a “beneficiary”, and
- the trustee
The trustee is an impartial 3rd party that retains “legal” or “bare” title to the property. The trustee’s main function is to sell the property at public auction when the trustor defaults on their payments. Many States Utilize Documents Other Than Mortgages or Deeds of Trust Rather than mortgages and deeds of trust, a couple of states utilize different, comparable-sounding documentation for loan transactions. In the state of Georgia, for instance, the most typically used contract that provides a lender a security interest in property is known as a “security deed.”
Deed of Trust Transfers
Similar to mortgages, when deeds of trust are transferred from one individual to another, an assignment is typically recorded in county records. The transferring of mortgages and deeds of trust are equally called “assignments.”
Deed of Trust Foreclosures
Non-judicial foreclosures are typical in states that utilize deeds of trust. Lenders are able to foreclose without heading to court when the deed of trust contains a power of sale stipulation. State law details the procedural requirements for non-judicial foreclosures. Non-judicial foreclosures have an inclination to be a lot faster than judicial foreclosures.
How to Discover if There’s a Mortgage or a Deed of Trust
To discover if there was a mortgage or if a deed of trust got utilized in the securing of your home loan, you are able:
- examine the documentation you got when you closed escrow on the home
- get a hold of the loan servicer, or
- go to a local land record office near you and bring up the recorded documentation. Occasionally, these records are accessible online.
Amy Loftsgordon, A. (2020, December 15). What’s the difference between a mortgage and deed of trust? Retrieved April 08, 2021, from https://www.nolo.com/legal-encyclopedia/whats-the-difference-between-mortgage-deed-trust.html
Need an Affordable Trust Lawyer in Scottsdale?
Moshier Law should be your choice when you need the best trust lawyer or the best will lawyer in Scottsdale. An experienced family law attorney will work with you to obtain the best possible outcome in your situation. We advocate for our clients so they have the brightest future possible. Give us a call today at 480-999-0800 for a free consultation.
Moshier Law services all of Phoenix and Scottsdale, Arizona. Jennifer and her team of professionals seek to resolve Family Law cases efficiently with your goals in mind. Call us today! 480-999-0800 Schedule A Consultation