Posted by Julie/MI on 8/22/10 10:57am
Msg #349975
Deed of Trust vs. Mortgage
When I worked for Register of Deeds, we handled the Sheriff's sale paperwork.
Never, I repeat never did any equity (there WAS equity when I worked there in the 80s and 90's)go back to the mortgagor. The buyer took all.
Very often, the property WAS redeemed by the mortgagor as they DID have equity an were not going to let it go.
I wonder of Deed of Trust states differ in foreclosure than mortgage states.
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Reply by GA/Atty on 8/22/10 3:12pm
Msg #350001
Well - the buyer takes all the equity meaning the difference
in what he pays vs. what the actual value of the property is, right? I mean, in that sense, yes the equity goes to the buyer.
But I was referring to a situation where, for example:
Debt owed to mortgagee is $100k, Actual value of property is $125K, and buyer at foreclosure wins the bid at $115k.
In that situation, buyer pays $115k ($100k to mortgagee and $15k to mortgagor) and takes the $10k of additional equity.
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Reply by PAW on 8/22/10 7:57pm
Msg #350036
The biggest difference between DoT and Mortgages in foreclosure, is the process. In FL, for example, the foreclosure on mortgaged property is a judicial process.
Typically, a mortgage is a document in which the owner pledges his/her/its title to real property to a lender as security for a loan described in a promissory note. Mortgage is an old English term derived from two French words "mort" and "gage" meaning "dead pledge." To be enforceable the mortgage must be signed by the owner (borrower), acknowledged before a notary public, and recorded with the County Recorder or Recorder of Deeds. If the owner (mortgagor) fails to make payments on the promissory note (becomes delinquent) then the lender (mortgagee) can foreclose on the mortgage to force a sale of the real property to obtain payment from the proceeds, or obtain the property itself at a sheriff's sale upon foreclosure. However, catching up on delinquent payments and paying costs of foreclosure ("curing the default") can save the property. In some states the property can be redeemed by such payment even after foreclosure. Upon payment in full the mortgagee (lender) is required to execute a "satisfaction of mortgage" (sometimes called a "discharge of mortgage") and record it to clear the title to the property.
A purchase-money mortgage is one given by a purchaser to a seller of real property as partial payment. A mortgagor may sell the property either "subject to a mortgage" in which the property is still security and the seller is still liable for payment, or the buyer "assumes the mortgage" and becomes personally responsible for payment of the loan. Under English common law a mortgage was an actual transfer of title to the lender, with the borrower having the right to occupy the property while it was in effect, but non-payment ended the right of occupation. Today only Connecticut, Maine, New Hampshire, North Carolina, Rhode Island and Vermont cling to the common law, and other states using mortgages treat them as liens on the property. More significantly, 14 states use a "deed of trust" (or "trust deed") as a mortgage.
A deed of trust is a document which pledges real property to secure a loan, used instead of a mortgage in Alaska, Arizona, California, Colorado, Georgia, Idaho, Illinois, Mississippi, Missouri, Montana, North Carolina, Texas, Virginia and West Virginia. The property is deeded by the title holder (trustor) to a trustee (often a title or escrow company) which holds the title in trust for the beneficiary (the lender of the money). When the loan is fully paid, the trustor requests the trustee to return the title by reconveyance. If the loan becomes delinquent the beneficiary can file a notice of default and, if the loan is not brought current, can demand that the trustee begin foreclosure on the property so that the beneficiary may either be paid or obtain title.
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