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. |
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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. |
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Promissory Note |
The Promissory Note is signed by the borrower and shows the terms of the loan. |
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Trustee |
An individual or organization authorized to hold a trustee sale.
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| 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. |