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# Mike Heayn: Mortgages versus deeds of trust, and why the difference matters
- URL: https://www.smdp.com/mike-heayn-send-comments-to-editor-smdp-com-real-estate-101-making-sense-of-terminology/
- Published: 2007-08-08T15:00:00.000Z
- Updated: 2026-10-25T00:34:10.000Z
- Author: Guest Author
- Tags: Opinion, Santa Monica, #archive-import

*By MIKE HEAYN is a Washington Mutual multi-family loan consultant. He (310) 428-1342, or e-mailed at*

DID YOU EVER HEAR SOMEONE walking around talking about debt instruments? Most people outside of the finance world would answer no. In real estate, a debt instrument is the formal document used to secure the debt onto the property or other collateral. Most people have heard of the term “mortgage,” but in fact, most states do not use a mortgage debt instrument. Instead, the most common debt instrument is a deed of trust.

Two types of residential real estate debt instruments exist. Each creates a debt that is guaranteed by a property. They are a mortgage or a deed of trust. The main difference between the two are the number of parties involved. A mortgage involves two parties: A creditor and a borrower. On the other hand, a deed of trust involves three parties: A mortgagee, mortgagor and a trustee.

The word mortgage is said to come from France. It is believed that the word mortgage comes from the old French words mort — meaning “dead” and gage — meaning “pledge.” Sir Edward Coke, in regards to the meaning of the word mortgage, said, “... is taken from him for ever, and so dead to him upon condition. And if he doth pay the money, then the pledge is dead as to the \[mortgagee\].” What Coke was saying is that if you do not pay the debt before death, the land or collateral is returned to the party which lent you the money to purchase it. On the other hand, if you pay the lender in full for the land the pledged debt is dead. States that use a mortgage as a debt instrument have to begin the foreclosure process by waiting for court approval. As anyone who has ever partaken in jury duty can tell you, the court system tends to be notoriously slow. Therefore, a true mortgage foreclosure usually takes significantly longer than foreclosure through a deed of trust. This can be a welcome relief to some homeowners, but ultimately, they are just delaying the inevitable losing of their homes. For those who like the idea of a mortgage instrument, you will find that only 14 states use it as a type of debt instrument.

A few states give the option of either a deed of trust or mortgage, but most lenders will choose the deed of trust. A deed of trust involves a third party not found on a mortgage and that is the trustee. A trust works like this. You have a trustor who forms the trust, a trustee who oversees the trust and a beneficiary who, as you can guess, gains whatever benefit the trust was setup for. In real estate, the trustee is a neutral third party, usually a title company, who holds the deed. If you payoff the loan in full the deed is given to you. However, if you fail to pay the debt and the lender calls due the promissory note, which is what you sign promising to make timely payments, the trustee will begin the foreclosure process. Each state has a different foreclosure process, but the benefit to lenders is that they do not have to wait for court approval when using a deed of trust.

Usually they have to give the borrower a period of time to cure the debt by either making up the payments or paying the loan in full. Since the process is easier, faster, and more transparent most states, including California choose to use a deed of trust.

In the end, as a borrower, whether you have a deed of trust or mortgage is unimportant. What matters is making the monthly payments without getting into trouble. In today’s world, the term mortgage is often used in place of the words deed of trust even by real estate professionals. However, the irony is that most states do not even offer mortgages. Regardless of the type of security instrument, if you are having problems paying a debt as agreed, speak to the lender early and see what they can do to help. Most lenders are in the business of loaning money, not foreclosing on real estate.

*Originally published in the Santa Monica Daily Press print edition on August 8, 2007.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/080807.pdf?ref=smdp.com)