A deed of trust differs from a mortgage in that:
Why A deed of trust involves three parties (borrower, trustee, and lender); a mortgage involves two parties Is Correct
Answer B: A deed of trust involves three parties (borrower, trustee, and lender); a mortgage involves two parties
Exam Tip: Escrow & Title
Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.
Key Escrow & Title Terms in This Question
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Key Terms to Know
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
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