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Bank Foreclosure Process: Mortgage or Deed of Trust?

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One of the most confusing aspects of a bank foreclosure is finding out whether you have a mortgage or a deed of trust. Confused? Don’t be. With a little help from these great bank foreclosure tips, you can quickly determine if you have a mortgage or a deed of trust and why it matters when facing a bank foreclosure.

Bank Foreclosure Process

Some states require a foreclosure to be handled in court (also called a “judicial foreclosure"), while other states allow “non-judicial” foreclosures. Either way, the process for a bank foreclosure varies depending upon whether you have a mortgage or a deed of trust. For example, even if your state requires judicial foreclosures, there is still a lot less wiggle room if you have a deed of trust versus a mortgage.

If you have a deed of trust, it typically indicates less lead time when facing foreclosure because the deed of trust commonly names a “trustee” who immediately takes possession of the property in the event of a default. This acceleration may result in much less advance warning of an imminent bank foreclosure in the event of a default.

On the other hand, if you have a mortgage, you may have more time to plan and prepare other options for avoiding foreclosure, especially if you reside in a non-judicial state.

Determining if You Have a Mortgage Deed or Trust

There are several steps you can take to determine if you have a mortgage deed or a trust.

  • Read your loan paperwork. Hopefully you retained a copy of the mortgage and other documents from the closing of the home. Review them carefully to see if the words “mortgage” or “deed of trust” are mentioned.
  • Call your mortgage company or lender to confirm whether you have a mortgage or a deed of trust. Simply ask which one you have and request a copy be sent to you for verification. They should be able to provide confirmation and it is your legal right to request this information in a timely manner.
  • Visit Legal Services or a local credit counselor. If you are unable to obtain reliable information (something that is increasingly difficult due to the banking crisis, assumption of loans and frequent transfer of paperwork, and lack of proper documentation), then contact your local legal services or credit counseling service for assistance.

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Read about how you can get foreclosure help through the 2009 Economic Stimulus bill provisions.

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