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Deed of Trust Questions

What is a deed of trust? What is a special warranty deed?

A deed of trust is a document allowing guarantee or collateral of a property as security while taking on the responsibility of a loan. A special warranty deed is a deed in which the grantor assures the property is not hampered or affected with any defects in title during the time the grantor has had ownership.

Do both concerned parties of a deed of trust need to sign off in case of a short sale? Does a deed of trust need to be sealed or notarized to be valid and legal?

Laws on short sales can vary from state to state. For example, under Texas law, both parties involved must sign off on the short sale for the title transfer to happen smoothly because it involves the transfer of property. Likewise in Virginia, there are certain requirements in order for a deed to be valid. The deed needs to be in writing and it must have the correct legal consideration and description. The deed requires the signature of the grantor and should be notarized. A seal (usually an ink or embossed stamp) should be present on all the official documents notarized by a notary. This makes the deed valid.

How does recording a deed of trust affect an individual’s credit standing?

Recording a deed of trust can have an effect on your credit rating if you have a debt that is attached or related to the property referred by the deed of trusts. If the payments on the debt are reported to the credit reporting agencies by the creditor, it could help your credit rating. But if the debt payment is not reported by the creditor then the credit would remain unaffected.

How do I obtain a copy of my deed of trust? Should I approach the bank?

A deed of trust is recorded in the county land records, depending on the country where the property is. You can request a copy from the land records clerk’s office. There is no requirement to go the bank. You will need a copy of your promissory note, but your lender can provide this for you. You can send a brief letter requesting a full copy of your loan documents.

What are the options if the bank has lost the deed of trust and other related papers of a mortgage?

If the bank has lost or misplaced your deed of trust documents and mortgage deed of trust, they may not have a valid lien on your property and may not be able to take action against you. In a case like this the following two options are available. One option would be to file a suit against the bank and request the court to release the property and transfer title. This would be a proactive approach. Another option would be to continue mortgage payments. If the bank pursues foreclosure it should be possible to contest the foreclosure based on lack of documentation. This would be a reactive approach.

In a note/deed of trust mortgage which component is the loan? Does a default on an obligation such as payment of taxes or insurance considered as default on loan repayment?

A note is considered the loan or an evidence of the loan. The deed of trust provides the lien on the property and guarantees payment of the note. The legal documents for the note and deed of trust are drafted in co-relation to one another. This implies that if you default on one, you would default under the other one.

Is a deed of trust a contract? If it is, would a grantor receive consideration? Can the grantor be someone other than the borrower?

In principle a deed of trust is a means to convey a security interest of a property that is given as a guarantee or collateral for a mortgage contract. It is similar to a contract but is not itself a contract. Sometimes a person apart from the actual borrower can pledge a different property on the loan with a deed of trust issued on the second property. This is done very rarely.

The grantor does not need to get consideration for the deed of trust since it is not a contract. The grantor would be merely a co-signor. If it were a contract, the consideration would have been the loan being granted to the borrower.

A deed of trust is a means to guarantee or provide a security on a loan obligation. As any legal document it needs to be written, signed and notarized to be valid. One still may have more questions on the deed of trust with respect to their unique scenario which can be clarified with the help of legal counsel.
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