What is the main difference between a "mortgage" and a "deed of trust"?

The main difference between a mortgage and a deed of trust lies in the parties involved and the structure of the agreement. A mortgage is a loan secured by real property that typically involves only two parties: the borrower (who receives the funds) and the lender (who provides the funds). In contrast, a deed of trust involves three parties: the borrower, the lender, and a trustee. The trustee holds the title to the property on behalf of the lender until the borrower repays the loan in full.

This three-party system in a deed of trust often allows for a simpler and faster foreclosure process if the borrower defaults, as the trustee can act on behalf of the lender. Meanwhile, the mortgage process may require court involvement to foreclose, thus taking longer and being potentially less straightforward.

The other options do not accurately reflect the inherent differences between these two financing methods. For example, both mortgages and deeds of trust can include down payments, have various interest rate structures, and can be utilized for both residential and commercial properties.