Home loans are secured by the home being purchased or refinanced.
U.S. home loans are secured by real property. Mortgages and deeds of trust document lenders' security interest in homes they finance. State law determines which loan documents are used; a deed of trust is used for "power of sale" states where attorneys and /or court proceedings are not required for transferring title to real estate. Mortgage companies, borrowers and a trustee execute the deed of trust document. Trustee companies hold title to properties "in trust" until borrowers pay off their home loans. Real estate trustees also prepare documents that release mortgage company liens against real property after a mortgage loan is paid in full.
Real Estate Trustees: Who are They?
Title companies, escrow companies, and trustee companies provide trustee services. Trustees are objective third parties serving the interests of mortgage lenders and mortgage borrowers. Some mortgage companies establish "in-house" trustee companies for processing mortgage documents and foreclosure proceedings. In-house trustee companies are separate businesses, but are affiliated with their "parent" mortgage companies. Title and real estate escrow companies acting as trustees function independently of mortgage companies.
Deed of Trust
Power of sale states use a deed of trust in place of a mortgage document. The company named as trustee generally oversees closing of a real estate loan and transfers title to real property from seller to buyer. The deed of trust names the mortgage lender, the borrowers and the trustee. The deed of trust establishes the mortgage lender's lien against the mortgaged property, and records in the county where the property is located.
Trustees and Foreclosure
Real estate trustees act on the "power of sale" provided by the deed of trust, when the terms of the deed of trust are violated. Power of sale documents authorize trustees to foreclose and sell mortgaged homes when homeowners don't make their mortgage payments. Trustees must be licensed in each state where they do business. Trustees also foreclose when non-monetary violations of the deed of trust occur. Examples include allowing a home to deteriorate, conducting illegal activities on the premises and using a home for purposes other than a residential dwelling.
Trustees Assist Homeowners
Trustees file a Notice of Default when starting foreclosure of a home loan. This notice names the borrowers of record, contains amounts owed and provides contact information for the trustee and mortgage lender. Contact the trustee for foreclosure information and making repayment arrangements with your mortgage lender. Trustee companies communicate between mortgage companies and homeowners, but legal constraints prevent trustees from "taking sides." Trustees conduct business according to real estate laws in the states where they do business.
Tags: deed trust, mortgage lender, mortgage companies, real property, trustee companies