Video Transcript:
What is the difference between a mortgage and a deed of trust? This is Dave at TitleSearch.com. A mortgage and a deed of trust essentially perform the same function. They allow a lender to lend money to a borrower to buy property. But the mechanics of how it's done is a little different. In a mortgage, the borrower borrows from the lender, the lender gives title to the property to the homeowner and retains that security interest in the property. If something goes wrong, if the mortgage is not paid or it's in default, the lender will foreclose, but they have to go through the courts. It's a judicial process. In a deed of trust, the deed of the property is actually not transferred to the borrower, but retained by a trustee. And that's why you'll see on that deed of trust, there's actually a third party that holds the deed to that property in escrow until the mortgage is paid off, and then it's given to the homeowner. If something goes wrong in that case, there's no need to go into the court system. The trustee just hands that deed back to the lender, and then they own the property. It's a nonjudicial process. So essentially, the mechanics are the same. The borrower gets to buy a house with money that's borrowed from a lender -from a bank. But the paperwork that's done behind the scenes is structured a little bit differently. Different states traditionally will do it in different formats. The main difference is if there's a foreclosure: the process is judicial through the court process or a non-judicial process done through attorneys. If you have more questions about doing research on title records or real estate records, you can reach us at our website at title search dot com.