Trust Deed Terminology and Definitions

Appraisal An estimated value placed on a property at a particular point in time. Also known as appraised value.
Beneficiary The beneficiary is the lender that can be an individual or a legal entity. Also known in a trust deed investment as a private money lender.

Deed of trust

A document signed by the borrower that, once recorded, acts as proof that a loan has been made on a property.  

First Trust Deed The first in line of trust deeds recorded on a property.
Hard Money Loans given at a higher interest to reflect perceived risk and added convenience of speed.
Interest Only No payments being made on a loan are being applied to principal.
Loan to Value (LTV) Also known as after repair value (ARV) in the real estate investment world, this ratio is used to determine risk and equity position in a property. If an investor can sell a fully repaired property for $100,000 and purchases a property at $70,000, the LTV is 70%. 
Points A percentage fee charged for origination of a loan. One point is equal to one percent.

Promissory Note

The Promissory Note is signed by the borrower and shows the terms of the loan.

Trustee

 

An individual or organization authorized to hold a trustee sale. 

 

Trustor The trustor is the borrower. 
Recording The act of writing or entering in a book of public record instruments affecting the title to real property
Recourse The right to claim against a prior owner of a property or note
REO Stands for Real Estate Owned or a property that has been taken back by the bank if not sold to third party at the trustee sale.
Usury California usury laws limit the amount an individual can charge for lending money without using a broker.
   
 
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