Posted by Brent_IL on August 23, 2003 at 15:06:40:
There’s a big difference between the two. The laws of your state address the differences. You’d need to check.
I don’t understand the part about the lender having a trustee. A lender has a note with a security document that assigns a particular property as security for the note. If a lender has a beneficial interest in the trust they are something other than a lender.
Has any one else dealt with this? - Posted by keith stickley
Posted by keith stickley on August 22, 2003 at 22:26:46:
Hi.
First post went un-answered. Is anyone out there doing subject to deals in Trust Deed states (Nevada)? How do you deal with the trust deed when there is a 3rd party since there is not a “mortgage” per say.
Keith
keith@keithmagic.com
Re: Has any one else dealt with this? - Posted by Joe Kaiser
Posted by Joe Kaiser on August 23, 2003 at 23:24:47:
A mortgage is a two party agreement between a borrower and
lender.
A deed of trust is a three party agreement between a borrower,
lender, and just for kicks, a trustee.
Although there’s not actually called “borrower” or “lender” in
either situation.
In practice, the actual difference is minimal. Because the deed of
trust contains a power of sale and a built in “neutral” 3rd party, it
can be foreclosed nonjudicially (without a lawsuit).
Whereas, a mortgage would typically require the filing of a
foreclosure lawsuit should the lender decide to foreclose.
How this affects your sub2 deal? It doesn’t.
The trustee only comes into play when the loan needs to be
foreclosed or gets paid off. Most of the trustees named in deeds
of trusts are title companies who don’t even know they’re
mentioned.
Since the lender can swap out trustees anytime, they typically go
with the title company and make a chance when and if needed.
Short story . . . it just doesn’t matter.
Joe
Re: Has any one else dealt with this? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 23, 2003 at 11:28:01:
Keith Stickley---------------
You probably need to take some courses on real estate. Here in CA the community colleges offer low cost classes for those planning to take the state real estate salesperson licence. A good source of information. Also, buy books.
I say this because you are missing basic information. I don’t think it is wise to rush out and start doing deals when you don’t know much about real estate.
Trust deed and mortgages are both “security instruments.” They tie a promisory note to a specific piece of real estate as security for the repayment of the note. No pay? Foreclosure. This can only happen because the instrument allows it.
Good InvestingRon Starr*****
Re: Has any one else dealt with this? - Posted by keith stickley
Posted by keith stickley on August 23, 2003 at 13:18:40:
Hmmm… I am well aware of the trust deed as a security instrument. My actual question (and maybe I did not state it clearly) is if there is any difference in the process of doing sub to since there is a 3rd “nuetral party” as trustee for the lender. Does that clear it up?
keith
Re: Has any one else dealt with this? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 24, 2003 at 01:19:29:
Keith Stickley------------
I see.
I think there is no difference. At leaste in CA, where I live, the trustee has little function. The trustee is the person to reconvey a deed of trust when the loan is terminated. The trustee is also the person who does a foreclosure action against the property owner when the loan payments are delinquent. However, often this role is fulfilled by a specialized, trustee sales company or an attorney. And the beneficiary of the deed of trust–lender–has the right to substitute in a different trustee at any time. So, the beneficiary could appoint himself/herself as trustee and reconvey the deed of trust. I do this with loans when I make them. Then I can get the trustee’s reconveyance fee, rather than the title company. There is a document called “substitution of trustee and full reconveyance” which combines the two documents. The recorders charge twice as much to record it.
So, since the trustee has little function, there is no reason to deal with the trustee when doing a subject to deal.
Good InvestingRon Starr*****