Deed of Trust and the Other Guy, and Naked Rights
We were talking the other day and a few folks had the impression the lender was the only party involved (other than themselves) in their mortgage security, and that the nice mortgage company would send back their title when they paid off the loan.
'Sort of sounds correct, doesn't it?
Illustration of the borrowers and the lender ... when the mortgage is paid off...under mortgage theory.
But there's another party involved whenever a Deed of Trust is used (and generally is used in most Utah transactions)...other than the mortgage lender.
The deed of trust is a mortgage instrument creating security and third party oversight.
When a debt is secured by a mortgage, the borrower delivers his promissory note and mortgage to the lender, who keeps them until the debt is paid.
But when a note is secured by a deed of trust, three parties are involved: the borrower (the trustor), the lender (the beneficiary), and the neutral third party (the other guy--the trustee).
The lender makes a loan to the borrowers, and the borrower give the lender a promissory note and a deed of trust. In the deed of trust document the borrower conveys title to the trustee, to be held in trust until the note is paid in full.
This could be considered a distinguishing feature of a deed of trust.
The deed of trust is recorded in the county where the property is located and a copy goes to the lender and the trustee for safekeeping.
This "title" the borrower gives to the trustee is sometimes referred to as a naked title...or a bare title.
It's naked or bare because as long as the borrower makes his payments, there's nothing the trustee can do with the "naked" or "bare" title because there are no rights in it -- it is naked. It is bare.
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Almost sounds like real estate sex.
Mercy ........................
Trustor: One who creates the trust; the borrower.
Beneficiary: One for whose benefit the trust is created; the lender in a deed of trust transaction.
Trustee: One who holds property in trust for another party.
Naked Title: Title that lacks the rights and privileges generally associated with ownership.
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Mike B. Class Star®
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