California Trust Deeds: Modern Mortgages in California

By: Clint Jhonson

If you are familiar into financial activities, particularly loans, for sure, you are very familiar about mortgages or home loans. Mortgages are very common. In fact, they have their own industry not just in the country but also in the whole world. But in the state of California, financial practitioners have a different system for mortgages. In fact, they also have a different name for such loans. California trust deeds or California deeds of trust are simply referred to as the state's mortgage instruments.

In general, trust deeds originated in Scotland as a system wherein loans are secured. As you see, all over the world, people normally borrow money for various purposes. The Scottish financial experts found a way to safeguard investors and lenders from borrowers who always fail to repay debts and commitments. Apparently, many financial practitioners have been inspired by the Scottish deeds of trust system. In the developed and rich nation of the United States, California is the pioneer in the adoption of this lending practice. Thus, there are California trust deeds or deeds of trust.

What is the difference of California trust deeds or California deeds of trust from mortgages? California trust deeds are loans using homes or lands as collaterals or securities. That means, when the borrower fails to repay the loan in time or in full within an agreed upon period, the lender would have the option to take the ownership of the collateral. California deeds of trust are like that, but there is more to its features. California deeds of trust or California trust deeds keeps the titles of the collaterals. Ownership or names in the titles are not changed, but there is an agreement that in the event the borrower fails to repay the loan within the maturity date, the California trust deeds or the California deeds of trust would have the right to immediately implement foreclosure.

California trust deeds even differ in implementation across the state. There are portions of the state that require the processing of trust deed notes while in some, such notes are not necessary. Trust deed notes are special documents, more like notes, that serve as proofs that the borrower has made a transaction with the California deeds of trust. In the event of complete payment or settling of the loan amount, the note would be marked 'paid in full,' which would then serve as a clearance for the redemption of the title used as security.

It is not surprising that in the near future, more states would follow suit. California deeds of trust or California trust deeds are indeed a different but effective loan processing framework.

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