Define an Assignment Deed of Trust
A deed of trust is the equivalent of a mortgage in many states. It is a document that creates a legal obligation between a borrower and a lender and involves real property, such as a house or other property. A third party, usually an escrow or title company, holds the deed until the debt is resolved or the borrower defaults.
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Purpose
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A deed of trust is for the benefit of all parties. The lender secures property that ensures that she is covered if the borrower is unable to make payments, or otherwise defaults on the loan. The borrower receives funds necessary for whatever purpose he has stated to the lender. The third-party escrow or title company receives a fee for the service provided to both parties.
Definitions
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The borrower is generally referred to as the title holder or trustor. The lender is generally referred to as the beneficiary. The third party referred to as the trustee.
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Assignment
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Assignment is when the borrower signs over all rights associated with a deed of trust to a third party. Most commonly, rights are transferred to the title or escrow company, but in cases of default and foreclosure, the deed of trust may be transferred to the lender or an entity unrelated to the original transaction.
Jurisdiction
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A deed of trust rather than a mortgage is recognized in the following states:
Alaska, Arizona, California, Colorado, Georgia, Idaho, Illinois, Mississippi, Missouri, Montana, North Carolina, Texas, Virginia and West Virginia
Features
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A deed of trust functions like a mortgage, but there are two substantial differences. First, a mortgage does not require an escrow service or title company to be involved, therefore there is a direct relationship between the borrower and lender. Second, foreclosure procedures are more efficient and less costly overall with a deed of trust than with a mortgage.
Trustee
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The trustee is a neutral actor and is bound to very specific rules of action. If either side fails in its obligations to the other, the trustee corrects the injury by either returning the deed to borrower or allowing for sale and conveyance to the lender.
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References
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