Finance

A deed of trust in Rhode Island differs from a mortgage in that:

AA deed of trust requires a court order to foreclose while a mortgage does not

BA deed of trust involves three parties (trustor, trustee, beneficiary) and may allow non-judicial foreclosure✓ Correct

CA deed of trust is used only for commercial properties

DThere is no practical difference between the two instruments in Rhode Island

Explanation

A deed of trust involves three parties: the trustor (borrower), trustee (neutral third party holding title), and beneficiary (lender). In states where used, it can allow non-judicial foreclosure through the trustee.

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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.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.