Colorado is often described as a 'deed of trust state' rather than a 'mortgage state.' What is the primary practical advantage of using a deed of trust over a mortgage in Colorado?
Correct Answer
B) A deed of trust enables non-judicial foreclosure through the Public Trustee, which is generally faster than judicial foreclosure
The primary practical advantage of a deed of trust in Colorado is that it enables non-judicial foreclosure through the county Public Trustee under C.R.S. § 38-38-101 et seq. Because the lender does not need to file a lawsuit and obtain a court judgment, the Public Trustee foreclosure process is generally faster and less expensive than judicial foreclosure used in mortgage states. This benefits lenders by reducing the time and cost of recovering collateral after default.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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