Jl Martin Law Firm - Difference Between A Mortgage And A Deed Of Trust

Jl Martin Law Firm - Difference Between A Mortgage And A Deed Of Trust

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Law Firm in Utah: In general, a mortgage is not interchangeable with a home loan. Under certain conditions, for a certain amount of money borrowers will sign a promissory note to the lender. A mortgage or deed of trust are contracts, which protect the lender's interests in your property by setting up a security instrument. If the borrower stops paying then the mortgage or deed of trust allows the lender to foreclose and sell the property to recoup their money.

The mortgage creates a lien on your property, which is put into records to serve as security to the lender that you will pay back the borrowed money. Ownership of the property, or title, cannot be transferred until that debt is paid in full and then the lien can be released. Now depending on which state the property is in depends on whether title is held by the borrower or lender during the loan period.

In common, if the lender holds the title it's called "title theory". If the borrower holds the title it is called as the "lien theory". In other words, the lender has the right to sell the property to recover funds. Hence, the mortgage is between you and the lender. The lender cannot transfer possession to another party until you pay the debt and release the lien. If the borrower defaults on the loan, the lender can foreclose on the property.

Though a deed of trust is similar to a mortgage there are important differences. A deed of trust includes three parties such as the lender, the borrower, and a trustee. The deed of trust is put into records to put a lien on your property, just a like a mortgage. The trustee should be a neutral party favoring neither the borrower nor the lender, in case a problem arises and are not the ones who take over your property.

Once the lender provides the trustee with proof of this type of occurrence, the request to foreclose begins. The Deeds of trust are only revoked once the debt to the lender is paid off. In which case, the trustee issues a release of the deed, and the new record is made that the loan is paid, and the lender surrenders its interest.

The Deed of trusts and mortgage differences only affect homeowners when foreclosing becomes an issue. In this case, the trustee sells your home once your loan becomes delinquent. The mortgages are used as security measures for loans and they may use a deed of trust. Thus Both the processes have significant differences, but serve the same purpose.

For more details about Bankruptcy in Utah log on to http://www.jlmartinlaw.com/attorneys.html


About the Author:
The Law Offices of JL Martin is a Debt Relief law firm as defined by 11 U.S.C. 528. We help people file for Bankruptcy Relief under the Bankruptcy Code. The information contained on this website is not to be construed as legal advice. It is not intended to solicit or form an attorney-client relationship. We do not guarantee any result and prior results do not guarantee a similar outcome.



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