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

The primary difference between a mortgage and a deed of trust lies in the number of parties involved in the transaction. A mortgage is a legal agreement between two parties: the borrower (who takes out the loan) and the lender (who provides the loan). In contrast, a deed of trust involves three parties: the borrower, the lender, and a trustee. The trustee holds the legal title to the property on behalf of the lender until the borrower pays off the loan. This structure allows for a streamlined foreclosure process, as the trustee can initiate the foreclosure without going to court, which is often required in mortgage scenarios.

This distinction in the number of parties is fundamental because it affects the legal process surrounding the mortgage or deed of trust, particularly in terms of foreclosure procedures and property rights. Understanding these differences is critical for anyone working in real estate finance or brokerage, as it influences the legal frameworks governing property transactions. The other options either mischaracterize the parties involved or the levels of paperwork and transferability, which do not accurately reflect the fundamental distinction between mortgages and deeds of trust.