Difference bewteen Mortgage and Trust Deed State?????

[david barnes]

I will be becoming a very successful real estate investor. At this time I am acquiring my learning skills to get into the market. One of the major decisions I need to make is which State I will be working.

My home is in Texas which is obviously a Deed of Trust State however my roots are from Massachusetts which is a Mortgage State. I have good knowledge of both residential areas and am considering starting in one of the two. However I can not find alot of information on the pros and cons between the two types of systems.

Could someone please give me a very detailed list or a place to find that list. Thank you.

[david barnes]

just to clarify; I understand the definition of the two systems. I just don't have a knowledge of which system is more advantageous to investors and why.

thank you!

[tedjr]

I like the deed of trust in that there is no need to go to court to foreclose that I believe you need to do with a mortgage. I too am confused and actually use the term morgage to mean a deed of trust or just a loan. Maybe you could teach us all the difference and I hope others will help too.

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas  78737

512-301-9171 home
512-587-6177 mobile

[david barnes]

OK, from what I understand, there are the two systems in the USA. Deed of Trust and Mortgage. Some states use one or the other and some states use both (very few states use both, I beleive it is three).

The mortgage state requires the judicial system to enforce these contracts. In these systems you do not have title companies. Instead you call these professionals mortgage attorneys. In these states I do know that forclosing takes far longer then Deed of Trust states because the courts move so slowly. Problem is, that can be a good thing for an investor that needs time to buy-out the loan.

Deed of Trust states do not work through the judicial system, they use title companies as Trustees. Different states implement different time requires between Notice of Default and Forclosure sale. For example, there was a time not long ago that Texas had that time set at 3 days!!!!  That law made Texas a hot spot for Investors. The State was sued several times over it and I beleive it has now changed.

Again, my questions are, which systems is better for investors and a list (which I'm sure is long) of why.

Please be advised I am new and learning so, some of the info here may not be totally accurate but I beleive it is.

I sure wish we could get some knowledgable replies going. thank you for yours.

[Shawn M. Audlin]

I've recently moved from Baltimore, MD, which was a state that has both.  So I can offer my two cents on the advantages and disadvantages. First I wanted to say that mortgage states also have title companies.  All of my transactions I've used them, if you're looking at foreclosures, I would however hire a real estate savvy attorney.  

As you mentioned the foreclosure process takes a long time with mortgage states, it can be very frustrating but also very profitable.  Also with regard to tax liens there is a fairly significant process to go through.  The advantages as you said are, more time to line up $$, and because of how involved it is some investors look for investments elsewhere.  I am just moving to Texas and am really liking the simplicity of the deed of trust.

 I feel it really depends on the type of investing your doing.  Decide that and really target what price/type of houses you want to invest in and the decision may become apparent.

Hope this helps some, Shawn