What is the essential difference between a deed of trust and a mortgage?

The essential difference between a deed of trust and a mortgage lies in the way legal title and the roles of the parties involved are structured. In a deed of trust, legal title to the property is conveyed to a trustee, who holds it on behalf of the lender (the beneficiary) until the borrower (the trustor) pays off the loan. This arrangement allows the lender to benefit from quicker foreclosure processes, as the trustee can initiate foreclosure without court involvement, making it a more streamlined process.

In contrast, a mortgage does not involve a trustee; rather, the borrower retains legal title to the property while the lender has a lien on the property as security for the loan. The mortgage agreement provides the lender a right to reclaim the property through a judicial foreclosure process if the borrower defaults.

Thus, stating that a deed of trust transfers legal title to a trustee accurately captures a fundamental distinction between the two, highlighting the different legal frameworks and implications for property security and foreclosure processes.