Escrow & Title
A deed of trust differs from a mortgage because with a deed of trust:
AThe borrower retains all title rights and the lender has no claim
BTitle is conveyed to a neutral third-party trustee who holds it until the loan is repaid✓ Correct
CThe lender receives full title to the property as security
DThe borrower can never repay the loan early
Explanation
In a deed of trust, the borrower (trustor) conveys title to a neutral trustee to hold as security for the lender (beneficiary). Upon loan repayment, the trustee reconveys title to the borrower.
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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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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