James is a Maryland real estate salesperson helping a buyer client understand the closing documents. The buyer asks why the security instrument is called a deed of trust rather than a mortgage. James correctly explains that the key legal difference is that a deed of trust, unlike a mortgage, does which of the following?
Correct Answer
B) Transfers legal title to a neutral trustee, enabling non-judicial foreclosure upon default
The fundamental legal distinction of a deed of trust is that the borrower conveys legal title to a neutral third-party trustee at closing. This title transfer is what enables non-judicial foreclosure (trustee's sale) upon default, because the trustee already holds title and can conduct a sale without a court order. This is the primary reason deeds of trust are preferred in Maryland — they allow faster, less expensive foreclosure than mortgages.
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