The Players

• A borrower receives his money from a lender, while the trustee holds onto the deed of trust.while lot of cash image by Pix by Marti from Fotolia.com
  
  Each party involved in a deed of trust plays a different role. The borrower is the person who needs the loan and signs over their property to secure the loan. The beneficiary (lender) is the person who lends the money. The trustee is the person who secures the deed of trust and, if need be, forecloses on the property if the loan is not paid back to the beneficiary. The beneficiary may obtain either the title of the property or the amount owed after the property is sold if the loan is not paid back.
  
  

Purpose

• The purpose of a deed of trust is to secure a loan.dollar sign neon image by Christopher Martin from Fotolia.com
  
  A deed of trust allows one individual to use his property to secure a loan, however it still allows that individual to use, or live in, the property. The actual deed of trust is a written document that gives ownership of the property to a trustee. The trustee is responsible for holding onto the deed until the full amount of the loan is paid back. After the loan is paid back, the trustee must give ownership of the property back to the original owner. If the loan is never paid back, the trustee may foreclose on the property in order for the lender to be paid back.
  
  

The Document

• A deed of trust is a written document between the lender, borrower and trustee.Young freckled woman sitting at the table with document image by Vasiliy Koval from Fotolia.com
  
  In order for a deed of trust to be legal, it must contain certain information on the actual written document. This information includes, but is not limited to, the parties involved in the deed (the borrower, the beneficiary and the trustee), the original loan amount, the legal description of the property and any details relating to late fees. In the event that the borrower cannot pay the loan back, the beneficiary (lender) does not have to file a lawsuit to recoup the loan. However, the lender does have to provide evidence to the trustee that the loan has become delinquent before she can collect, and she may only collect the amount owed to her.
  
  

Notice

• If the borrower cannot pay back the loan, the trustee or the lender must first notify the borrower before foreclosing on the property. The note must contain the amount owed, and the date in which it must be paid. However, the borrower will be granted an opportunity to pay off the debt before his property is sold. If the borrower can pay off the debt in full, the property cannot be sold. The borrower has at least 30 days from the mailing of the original note to pay any outstanding debt and 60 days to vacate the property if the debt cannot be paid.
  
  

Mortgage Versus Deed Of Trust

• Montana is one of several states that uses deeds of trust instead of mortgages.montana image by Dawngo from Fotolia.com
  
  Both a mortgage and a deed of trust serve the same purpose: to secure a loan. However, a mortgage only involves two parties (the lender and the borrower) while a deed of trust involves three. A lender in a mortgage scenario must go through the court system in order to recoup if the borrower cannot pay back the loan. This process is known as a judicial foreclosure. Some states use deeds of trust instead of mortgages. These states include California, Georgia, Idaho, Mississippi, Missouri, Alaska, Arizona, Texas, Virginia, West Virginia, North Carolina and Montana.