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Loan and Mortgage Terms Glossary

Deed Of Trust:

A deed that establishes a trust. It is used in some loan transactions in place of a mortgage. In a trust deed the property on which money has been lent is conveyed as collateral to a trustee, who holds it in trust for the benefit of the holder or holders of the loan notes. A trust deed is often used where several notes are held by different individuals. The trust deed states the authority of the trustee and any conditions which must govern the actions of the trustee in dealing with the property. These include the condition that the trustee shall reconvey the title of the property to the buyer of the property when the debt has been repaid. The trustee also has power to sell the property and pay the debt in the event of a default on the part of the debtor.

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