- The difference between a mortgage and deed of trust is that a mortgage involves two parties: the lender and the borrower, whereas a deed of trust involves three parties: a borrower, a lender and a trustee. If a borrower defaults on a mortgage, the lender institutes a judicial proceeding to recover the property. If a borrower defaults on a deed, the lender notifies the trustee, who starts foreclosure proceedings on the property. This is considered a nonjudicial or "non-court" proceeding and generally takes less time than a mortgage proceeding.
- States use either the trust deed method of securing property or the mortgage method. Florida is a mortgage state. If a lender makes a loan in Florida, the borrower signs a promissory note which is the "promise to pay" and the lender records a mortgage as security for the promissory note. Florida does not recognize deeds of trust such as a corporation assignment deed of trust, and if a lender uses a deed to secure a loan, he would not be able to foreclose on it because the state doesn't recognize it as a security.
- You can verify the security document such as a mortgage or deed of trust by contacting your local title company or going direct to the county recorder where the property is located. You should ask for a property profile, which will show the ownership of record and any recorded documents on the property such as a deed of trust or mortgage. Title companies provide this service free of charge.
- If you live in Florida and your loan is secured by a corporation assignment deed of trust, the lender will not be able to foreclose on it, since foreclosures in Florida are performed through the court and not with the use of trustees, who are part of a deed of trust foreclosure process. You should notify the lender that the security instrument -- corporation assignment deed of trust -- is incorrect and possibly unenforceable.
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