In Maryland, what is the primary security instrument used to secure a real estate loan?
Correct Answer
A) A deed of trust with a neutral third-party trustee
Maryland primarily uses a deed of trust as its security instrument for real estate loans. Under a deed of trust, the borrower (trustor) conveys title to a neutral third-party trustee, who holds it on behalf of the lender (beneficiary) until the loan is repaid. This structure enables non-judicial foreclosure through a trustee's sale, which is far more common in Maryland than judicial foreclosure.
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Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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