In a Washington State deed of trust, which party holds legal title to the property as a neutral intermediary while the loan is being repaid?
Correct Answer
A) The trustee holds legal title on behalf of the beneficiary
In a Washington deed of trust, the trustor (borrower) conveys legal title to the trustee, a neutral third party, who holds it on behalf of the beneficiary (lender). This three-party arrangement is the foundation of Washington's deed of trust system under RCW 61.24 and enables non-judicial foreclosure because the trustee already holds title and can conduct a trustee's sale without court involvement.
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Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
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.
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