Wednesday, August 31, 2011
An Introduction To The Deed Of Trust
There are really three people that are involved in a deed of trust. The people that are involved in a trust of deed are the beneficiary, the trustor and the trustee. The beneficiary is the lender, the trustor is the borrower and the trustee is the person that legally holds or bares the title. Mortgages do not actually contain this therefore the process of foreclosure will work differently in some states compared to others.
This will generally include the amount of the loan, a legal description on the property, parties involved, late fees, provisions for mortgages, the start date of the loan the maturity date for the loan. It will also include alienation clauses and acceleration clauses. In addition to all of this information will also include what is known as riders if there is any in existence and this is things such as prepayments penalties or adjustable rate mortgages which are often referred to as ARMs.
The trustee that is involved in one of these deeds is a third party and they are responsible for reconvening the title once the deed has been paid off in full. The trustees are also responsible for filling a notice of default if a payment is not made and they have the ability to sell the affected property. A trustee is usually a company. When it comes to filing a notice of default they will normally do a substitution of trustee therefore another trustee carries out the process of foreclosure.
There is a period of ninety days between the record of a notice of default being filed. These notices are often placed in the local newspaper as well as being posted in he courthouse.
Following the ninety say period the publication period starts and this tends to last for twenty one days and this is where the sale is noticed and placed in the local newspaper. Trustees have the ability to sell the property without the court even being involved. It is not uncommon for city newspapers to list several trustee sales in the same day and this is especially the case at the moment due to the economic climate.
The promissory note is the evidence of the money that is owed and this is secured by the deed and this is usually not recorded. This note does contain the rate of interest and the terms as well as the parties who are involved in the loan.
The borrower signs the note and it is retained by the beneficiary. Once the note is paid off it will be stamped as being paid in full and it is returned to the borrower along with the re-conveyance deed. At this point there is no longer a trustee or beneficiary as the loan has been paid off in full.
It is very important to understand all of the paperwork before signing any of it as all of the pages form a legally binding contract. It is very important to make sure that the name and address on the paperwork are correct and spelled correctly. This is especially true with quit claim deeds and especially when it comes to a deed of trust.
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