A new Maryland real estate salesperson is reviewing a residential purchase contract. The financing contingency refers to the buyer obtaining a loan secured by a 'deed of trust.' The salesperson's client asks who the 'beneficiary' is in a Maryland deed of trust. Which answer is correct?
Correct Answer
A) The lender, who holds the beneficial interest and receives loan repayments
In a Maryland deed of trust, the 'beneficiary' is the lender. The lender is called the beneficiary because it holds the beneficial interest in the deed of trust — it benefits from the borrower's loan repayments and has the right to direct the trustee to foreclose if the borrower defaults. The three parties are: trustor (borrower), trustee (neutral title holder), and beneficiary (lender). Understanding this terminology is essential for Maryland real estate practice.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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