A lender is comparing two security arrangements for similar homes. One uses a mortgage, and the other uses a deed of trust with a trustee and a power-of-sale provision. Which statement best describes a common difference between the two?
Correct Answer
A) A deed of trust is commonly associated with nonjudicial foreclosure procedures
A deed of trust commonly includes a trustee and a power-of-sale procedure that is often used for nonjudicial foreclosure, although exact procedures depend on state law. By contrast, a mortgage is more commonly associated with a court-supervised foreclosure process.
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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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