What distinguishes a mortgage from a deed of trust?

A mortgage and a deed of trust are both instruments used to secure a loan with real estate, but they have distinct features that set them apart.

The correct choice emphasizes that a mortgage secures a loan with real estate while outlining the role of a third-party trustee in a deed of trust. In a mortgage, the borrower (the mortgagor) directly conveys an interest in the property to the lender (the mortgagee) as security for the loan. If the borrower defaults, the lender may initiate foreclosure proceedings to recover the owed funds by selling the property.

In a deed of trust, however, the structure includes a trustee who holds the title to the property on behalf of the lender until the loan is repaid. This means that in a deed of trust, there are three parties involved: the borrower, the lender, and the trustee. This tri-party arrangement allows for a more streamlined foreclosure process, as the trustee can act on behalf of the lender, potentially leading to quicker resolution in the case of default.

This distinction is critical for understanding how these two financing tools operate within real estate transactions. The other choices, while touching on aspects of mortgages and deeds of trust, do not correctly identify the significant difference in terms of the roles