What distinguishes a mortgage from a deed of trust?

A deed of trust involves a third-party trustee, which is a fundamental difference from a mortgage. In a deed of trust, the borrower conveys the title of the property to a trustee who holds it as security for the payment of the debt. This trustee is a neutral party who has the authority to sell the property in case of default on the loan, which provides an additional layer of security for the lender.

In contrast, a mortgage directly involves the borrower and the lender, without the need for a third-party trustee. The borrower retains the title to the property while the mortgage creates a lien against it, allowing the lender to pursue foreclosure if the borrower defaults. This structural distinction highlights the roles that each party plays in the transaction and the processes involved in enforcing the security interests.

An understanding of these roles enhances comprehension of mortgage transactions and the legal implications of default within each type of agreement, emphasizing the importance of recognizing the differences between these two financing instruments.