List of US states that use trust deeds, list of states that use both deeds of trust and mortgages and a list of states that use mortgages.

Trust Deed States

North Carolina
Washington DC

States that use Both Deeds of Trust and Mortgages

West Virginia

* Georgia uses a security deed
** Custom dictates which document is used

Mortgage States

North Dakota
Rhode Island
New Hampshire
South Carolina
New Jersey
New Mexico
New York

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Trusts and probates
Written by Administrator   
Sunday, 07 June 2009
ImageFormulating the way your assets are distributed to your relations is something that you really are advised to do while you’re living and healthy; not something to only start thinking about when you are about to kick the bucket. One of the things you can do is formulate your estate planning, or the way your wealth is distributed to your loved ones - via trusts.

With the economic crisis affecting almost every corner of the globe, the increased uncertainty and risk of litigation in a challenging economic climate should be compelling enough for the financially healthy person to make use of existing asset protection strategies under his/her State’s law by appointing existing professional trustee companies that are licensed, audited, and regulated for this purpose.
Nevada takes a positive step in regulating trust companies
Written by CR Melon   
Sunday, 12 April 2009

ImageThe Nevada state Senate has taken a positive step in the right direction by passing a bill requiring new trust companies to have a minimum capital of $1 million by 2012. At the same time, the bill also allows existing trust companies the grace proviso to raise their minimum capital to at least $500,000 by 2012. Trust companies in Nevada are widely relied on to handle anything from trust deeds, commodity investments, to family trusts.

Currently, trust companies in Nevada have only to maintain a capital of $300,000 in order to operate, and this was viewed as inadequate, according to George Burns, commissioner of the Financial Institutions Division. Burns’ proposal was passed almost unanimously with a 6-0 vote with one member absent.

White Paper Offered to Help Choose Trust Deed Firms
Written by CR Melon   
Tuesday, 24 February 2009

Trust deed investmentsWhite Paper Offered for Financial Professionals; "Nine Things" Aims to Help CPAs, Planners Choose Trust Deed Firms Wisely

A leading trust deed investment firm has prepared a new white paper to help financial professionals evaluate trust deed investment providers on behalf of their investor clients. "Nine Things to Consider When Evaluating Trust Deed Investment Resources" provides a list of factors to consider when matching a trust deed investment provider or deal with a specific client or investor group.

Sacramento, CA (PRWEB) February 24, 2009 -- Sterling Pacific Lending, Inc dba Sterling Pacific Financial, a leading trust deed investment firm, has prepared a new guide for financial professionals to help them evaluate trust deed investment providers on behalf of their investor clients.

Offered at no charge to CPAs, financial planners, investment advisors and other financial professionals, "Nine Things to Consider When Evaluating Trust Deed Investment Resources" (see link at the end of this release) provides a list of factors to consider when matching a trust deed investment provider or deal with a specific client.

"With over a decade of success in this category, we're of course ardent advocates of trust deed investments as an alternative option to public securities -- especially in the current economy," said Joshua Fischer, managing director and principal of Sterling. "However, we also know there is significant variety among trust deed investment choices and providers. Helping advisers understand the differences is one way we can help trust deed investors meet their goals."

One recommendation is to understand the risk profile of a trust deed investment provider's approach and match it to the risk preferences of the investor or group of investors -- because even though trust deed investments as a group are relatively low risk, there are gradations that advisers and investors should consider.

For instance, offerings restricted to first deeds of trust and the lowest loan-to-value (LTV) ratios keep risk to an absolute minimum. "Even the most conservative trust deed investments can generate stable income and stay well ahead of inflation, with yields of 9% or more," said Fischer. "It's a reassuring solution for rebuilding portfolios without putting principal at unnecessary risk."

Moreover, further diversification can be achieved by working with trust deed investment companies that offer mortgage pools. "A mortgage pool combines the collective investment advantages of a mutual fund with the inherent stability of trust deed investing," said Fischer, adding that "mortgage pools are especially attractive for retirement investors looking for growth, income and principal preservation." Advisers can look for these kinds of products when evaluating trust deed investing options for their most risk-sensitive clients. On the other end of the spectrum, investors willing to fund riskier developments or take on second position deeds can be rewarded with higher potential returns -- as high as 15% or more currently.

Are Trust Deed Investments Replacing the Stock Market?
Written by Trust Deeds   
Sunday, 22 February 2009

stocks-then-deeds-nowA press release on claims investors seem to be capitalizing on the credit crunch and tightened credit standards by using trust deeds as an alternate form of financing debt. From the article:

A Seattle based real estate investment firm announced today that it has been receiving numerous inquires from real estate investors recently for trust deed investments. Trust deed are typically in the form of hard money and used by corporations and developers to securely finance real estate projects. Investors seem to be capitalizing on the credit crunch and tightened credit standards of most banks by trying to fill in the liquidity gap. The credit crunch has not alleviated the need for capital to complete necessary projects and corporations are actively seeking out alternative sources of financing for their projects.

With the stock market producing negative returns, trust deeds can make sense for investors looking for security and a fixed rate of return. Hard money investments are typically short-term in nature and are placed at a very low loan-to-value ratio (typically a maximum 65% LTV) providing for security even in a declining real estate market. Interest rates can be in the neighborhood of 12%.

Trust deed investments are an alternative source of financing during the credit crunch, said Joel Barth, a real estate broker and officer in Seattle. The loans are popular among borrowers because they represent short-term loans, which can close much more quickly than traditional forms of financing. Time is often of the essence in closing on a lucrative real estate investment opportunity. For investors, trust deeds are popular because their investment does not fluctuate like the stock market and in the event of default they can usually recoup the majority of their investment by selling the underlying property.

TD Roundup
Written by CR Melon   
Thursday, 06 November 2008

court-house-steps-auctionTwo articles were of interest this week: From the article: Auction on the Courthouse Steps - This week, our neighbor's property came up for public auction. We were curious, so we went to see what happened. It was cold and windy and the three auctioneers had to hold onto all of their papers tightly.

Each auctioneer was from a different company. They stood apart from each other, against different sections of the black iron gate and arch of the San Jose Superior Court building. Technically, this sale was "on the courthouse steps" but actually we were at the back of the court building. The real courthouse steps are usually crowded with potential jurors waiting to go through security screening.

From the article: Surprisingly, in some states, you can stop house foreclosure up until the day before your house is sold at the sheriff’s sale. How can you do this? Many states have what is called a right to cure. A right to cure is essentially a right to cure the loan. What does that mean? It means that you have the right to get the loan current with your bank. This means that you will need to pay all back payments, late fees, attorney’s fees and any other necessary fees to get the loan back in good standing with your bank.

Are You Ready to Be the Bank?
Written by CR Melon   
Wednesday, 20 August 2008

Be the bankerThe Seattle times give some advice on Trust Deed Investing in their weekly investment column. From the article:

"Question: A family friend who is in the mortgage business told me about something called a "trust deed." It pays really great interest, like 12%, but I can't tell if it's a stupid investment or not. Before I fall for something, I wanted your opinion. — Peter in Modesto, Calif.

Answer: Trust-deed sales effectively make you — or you and a group of others — the banker in someone else's property deal. The trust deed itself is the document that a land owner provides as security for financing; effectively, you are getting a promissory note, where your loan is secured by the property.

Payouts on trust deed deals frequently run in the 10% to 13% range.

For an average investor, trust deeds have a lot of risk. That said, they have yet to be featured as a "stupid investment," because I haven't seen a lot of trust-deed failures, despite sales-practice concerns that prompted the California Department of Real Estate to issue a "What You Should Know" brochure in 2007.

What is clear is that trust-deed investing is tricky stuff, even before factoring in the current credit crunch and real estate meltdown. Put your money into the wrong deal and you're looking at the kind of failure that has driven some banks to the brink, having an ownership stake in a property that is losing value and that you have to take back from the borrower through foreclosure.

You don't have a bank's deep pockets or ability to withstand losses.

What's clear about trust-deed investing is that there's a lot to know in order to get comfortable with it, starting with the experience and integrity of the loan broker but extending to what happens if the deal goes sour. Because of the dollars involved, this typically isn't something the average investor considers, but if you're starting at the point of "something called a trust deed," it's clear you don't know enough to make it a smart investment for you."

Manipulating Trust Deeds Factors: Creative Financing
Written by Trust Deeds   
Monday, 14 April 2008

ImageWhen some financing markets get a little difficult for a potential buyer to qualify for a real estate loan, some lenders get creative in their approach to lending and qualifying a buyer.

They want to make money on the investments they have available to them and they need to get the money available to them lent as soon as they can.

As an example, perhaps a lender has a commitment of say $10,000,000.00 with a proposed rate of return to investors of 7% per annum. And further suppose that the current fixed mortgage rate by the typical lender (competition) is at 6-¾%.

One way the lender could market this higher interest rate is to exaggerate the underwriting guidelines to increase borrower´s debt ratio´s, or, extend the term of the loan to 45 years which would decrease the principal & interest payments thus reducing the borrower´s debt ratio´s to ease his qualifying.

In the above scenario, the lender could also offer a 100% loan-to-value program and do one of several ways to entice a borrower:

1. An 80% / 20% loan. Whereby the lender offers an 80% loan-to-value 1st trust deed at 6% interest amortized over 30 years and a 20% 2nd trust deed at 9% interest amortized over 15 years.

2. A 75% / 25% loan. Whereby the lender offers a 75% loan-to-value 1st trust deed at 6% interest amortized over 30 years and a 25% 2nd trust deed at 9% interest amortized over 15 years. (This could be a "NO INCOME QUALIFYING LOAN") fully assumable to a qualified buyer.

3. A 70% / 15% / 15% loan. Whereby the lender offers an 70% loan-to-value 1st trust deed at 6% interest amortized over 30 years, a 15% 2nd trust deed at 9% interest amortized over 30 years, and the seller to carry back a 15% equity position loan at whatever agreed term structured between buyer and seller. (This could be a "NO INCOME QUALIFYING LOAN") fully assumable to a qualified buyer.

4. Or just about any other combination of structuring that the lender could arrange in order to be competitive at the time in order to lend the available funds to homeowners.

It would be nice to think that all one has to do is just apply for a loan and that they would automatically be approved, no matter what their job stability is, their credit history, income is and if they have the ability to repay a loan. Well, this is real life, and things do not happen that way in the mortgage banking industry.

Seven Essential Elements of Trust Deed Investments
Written by Trust Deeds   
Friday, 11 April 2008

ImageThe information that follows will assist you in considering the seven essential elements of a loan transaction which you should understand before funding a loan or purchasing a promissory note.

Just read on!

  1. Knowledge, experience, and integrity of the mortgage loan broker (MLB) through whom the transaction may be made or arranged
  2. Market value and equity in the Property and the security for your loan
  3. Borrower's financial standing and creditworthiness
  4. Escrow process involving the funding of the loan or the purchase of the note
  5. Documents and instruments describing, evidencing, and securing the loan
  6. Loan servicing provisions, authority and compensation
  7. Recovering your investment when the borrower fails to pay

1. Knowledge, experience, and integrity of the MLB through whom the transaction may be made or arranged

Before placing your trust and money with an MLB, you would be wise to call: (1) the Department of Real Estate (DRE) to determine if the MLB and his or her loan representatives are properly licensed, how long each has been licensed, and whether any of the licenses have been disciplined; and (2) the local Better Business Bureau to ask if any complaints have been lodged.

Ask the MLB to provide a professional profile for your review and information as to the approximate number and percentage of loans, if any, negotiated by the MLB which resulted in foreclosure (commenced and/or concluded) during the past few years.

Ask the MLB if he or she is the borrower or if he or she has any relationship to the borrower (e.g., if the MLB is a relative, a shareholder, an officer, a director, or a partner of the borrower). When the MLB is the borrower or related to the borrower, we refer to the transaction as "self-dealing."