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Mortgage vs. Deed of Trust Comparison

Mortgage

Deed of Trust

There are two parties in a mortgage. The lender is called the mortgagee, and the borrower is called the mortgagor.

There are three parties in a Deed of Trust. The lender is called the beneficiary, the borrower is called the trustor, and the third party is called the trustee, whose main purpose is to sell the property in case of a default.

A mortgage requires a lender to foreclose through the judicial process. It requires the lender to sue the borrower and prove there is a debt, they own it, and that the borrower defaulted. The borrower has the right to defend themselves against false claims and present their own claims against the lender. This arrangement places the burden of proof on the lender.

A deed of trust foreclosure does not have to go to court. The lender simply has to claim the borrower defaulted, and instruct the trustee to sell the property at public auction. The borrower’s only recourse is to file a lawsuit against the lender, which places the burden of proof on the borrower. This allows a corrupt lender to take advantage of a struggling borrower who cannot afford to go to court. This arrangement denies due process and the right to defend themselves for most borrowers.

A mortgage provides greater judicial protection for the borrower.

A deed of trust generally removes judicial protection from the borrower and gives the lender the ability to foreclose or force other actions (deed in lieu of Foreclosure, short sale, etc.) with minimal or no judicial protection or oversight.

A mortgage can be placed on any size of property.

A deed of trust can have an acreage limitation (For instance, 40 acres in Idaho and Montana).

Mortgages are designed to protect borrower investments and livelihoods while providing an avenue to the lender to recover their investment if the borrower refuses to pay.

Deed of trusts were designed to allow lenders to loan money on smaller pieces of property and give them a greater security for their money by allowing them to circumvent the judicial system.

The mortgage is a document given to the lender that creates a lien on the property. The borrower holds the title to the property, and the lender holds a lien against it.

With a deed of trust, the trustee holds the title to your property until you pay off the loan. When you pay off the loan, the lender tells the trustee to give you the title. In essence, you (the borrower) are just a renter until you have paid off the loan. In many situations, a renter actually has more rights than a borrower with a deed of trust.

The Nickersons agreed to mortgages on their over 50 acre Idaho ranch and over 200 acre Montana ranch. Closing agents assured the Nickersons that is what they were signing and had received.

In Idaho, the title company filed different documents in the county records than what the Nickersons agreed to and signed at closing. In Montana, Wells Fargo used a Deed of Trust form. They actually changed the title on the standardized form to Mortgage to deceive the Nickersons. Wells Fargo also deleted the paragraph defining who the trustee is, and fraudulently stated the property is not more than 40 acres.

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