Escrow & Title
Under Arizona law, the 'deed of trust' differs from a mortgage primarily because:
AA deed of trust has a lower interest rate than a mortgage
BA deed of trust involves three parties (trustor, trustee, beneficiary) and allows non-judicial foreclosure (trustee's sale), while a mortgage involves two parties and typically requires judicial foreclosure✓ Correct
CA mortgage is used only for commercial properties in Arizona
DA deed of trust does not create a lien on the property
Explanation
In Arizona's deed of trust structure: the trustor (borrower) conveys legal title to a trustee (often a title company) who holds it for the beneficiary (lender). If the borrower defaults, the trustee can conduct a non-judicial foreclosure (trustee's sale) without court involvement, which is faster and less expensive than the judicial mortgage foreclosure process.
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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