Mortgage versus Deed of Trust

Underwriting & Legal

Mortgage versus Deed of Trust

August 1, 2018

What is the difference between a mortgage and a deed of trust?

“Mortgage” is a generic term meaning the same as “lien”. The word is commonly used in connection with liens voluntarily placed on real property, either as security for a purchase money loan or as security for a loan to borrow against the value of the property. True mortgages can only be foreclosed judicially, meaning by way of a law suit, and they are rarely seen in Texas.

A deed of trust is also a lien. What distinguishes a DT from a mortgage is that a DT creates a power of sale in the form of a “trustee”. the landowner is a grantor of the DT and the trustee is the grantee. The trustee has no duties or powers whatsoever unless the debt falls into default and the lender (the “beneficiary” of the DT) requests the trustee to foreclose the lien. The DT lien can be foreclosed non-judicially, a process which is faster and much less expensive than a judicial foreclosure.