Kevin is a newly licensed salesperson in Virginia. A buyer client asks him, 'What's the difference between a mortgage and what we'll be signing here in Virginia?' Kevin correctly explains that unlike a mortgage, a Virginia deed of trust involves three parties. Which of the following correctly identifies all three parties in the proper order?
Correct Answer
C) Trustor, trustee, and beneficiary
The three parties in a Virginia deed of trust are: (1) the trustor — the borrower who conveys legal title to secure the loan; (2) the trustee — the neutral third party who holds legal title during the loan term and has the power of sale upon default; and (3) the beneficiary — the lender whose loan is secured by the arrangement. This three-party structure is what distinguishes a deed of trust from a two-party mortgage.
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Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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