A press release on pr.com 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.

I do not forsee trust deeds replacing the stock market due to the state of affiars in the mortgage market, but because traditional land titles have been always the mainstay of personal wealth in virtually every country or state in the world, people will continue to put their trust in it, even as the credit crunch continues.