TriMark Capital Funding, Inc.

You hear it all the time. Mortgage. Deed of Trust. Mortgage Note. Trust Deed. So what’s the difference?

Or is there a difference?

Mortgages and deeds of trust are both financial instruments that a lender uses to protect their financial interests when they make a loan, usually on real estate. When you borrow money and sign a promissory note, the money that a mortgage lender loans to you is now automatically at risk, and because of that, they need some kind of security that you will pay them the specified amount of money back as scheduled. Mortgages and trust deeds will help them to make certain of it.

These types of loans have 2 parts; 1.) the promise to pay, and 2.) the teeth to enforce that promise if it is ever broken.

The Promise To Pay

You will sign a promissory note, which simply stated, is a formalized IOU. It states the amount of money you owe and the terms of repayment, such as how many months or years repayment will take, when and where the payments are to be made, the interest rate that is to be charged and how the interest is to be calculated on the unpaid balance. This is usually either simple interest or calculated with some sort of amortization schedule.

The Teeth

You will also sign a mortgage or deed of trust that will detail specifically how the lender will take the property back in the evet you stop making the payments as promised in the promissory note.

The laws of your state will dictate which instrument you will use. Some states will require this to be a mortgage while others will require a deed of trust. The primary difference is in how the property is foreclosed in the event that you default on the loan.

One of the only real differences between a mortgage and a deed of trust is in the number of parties involved in the entire foreclosure process. With the deed of trust, there are actually three different parties; the lender, the borrower and the trustee. In this case the trustee will hold the title instead of the lender or the borrower. This protects both parties and the title will only be given back to the borrower after they have paid the balance of the loan.

The trustee can be a bank, escrow company or title company. When the loan has been paid off then the trustee will order a release deed and the deed will revert back into the hands of the borrower. This release deed or deed of reconveyance should be recorded at the county recorder’s office right away. There it will be copied and public notice will be made that the entire the loan has been paid off.

Generally speaking, a deed of trust foreclosure usually goes much faster than a mortgage foreclosure simply because of the way they have to travel through the courts.

If you sold a property and used seller financing, you took back a promissory note and either a mortgage, deed of trust or land contract. Where TriMark Capital Funding, Inc. is concerned, we are able to purchase mortgage notes, deeds of trust and land contracts equally.

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