Another New Year! Happy Year of the Rabbit!
YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
(Real questions emailed/called in to us)
QUESTION: (Part 1 of 2)
In a Trust Deed, does the Trustee always have to be a separate escrow company? Or can a Lender hold the Trust Deed in their own escrow, or even hold the Note separately? Like when Bank of America makes a loan. Do they keep the Trust Deed in their own escrow account or just hold the Trust Deed?
ANSWER:
The Trustee is a third party whose function is to reconvey the loan when paid or help the lender take the property into foreclosure if delinquent. Many times it is designated by the lender. It can be the lender themselves or their affiliate company. With their approval, it can be an escrow company or title company. It can be any person or entity EXCEPT the Trustor/Borrower.
The Trust Deed is a document that accompanies the Promissory Note. They are both kept in the lender’s possession. The lender does not establish an “escrow account” to hold the Trust Deed.
QUESTION: (Part 2 of 2)
Who does the transfer of the deed back to the Borrower after the loan trust deed is paid off? The escrow company of the lender? Who does the actual reconveyance of the deed?
ANSWER:
Once the loan is paid off, the lender will ask the Trustee to issue the Reconveyance. Once this document is recorded it will remove the loan from the title ownership of the Borrower. There is NO DEED to transfer of ownership in this process.
EDUCATIONAL MOMENT:
Terminology makes a big difference! We want to talk about the same thing and be on the same page.
Deed – ownership deed, document to show ownership. This is given by the existing owner (or Seller) of the property to the new owner (or Buyer).
Trust Deed – mortgage document. This is given by the present owner of the property as collateral to a Lender he is borrowing money from. It is a document that accompanies the Promissory Note in a loan situation.
Trustee – the third party entity designated on the Trust Deed whose sole function is to act on the instructions of the Lender to reconvey and release a Trust Deed once it is paid off. This third party is designated by the Lender and it can be an escrow company, a title company, an individual, another corporate entity. Most of the time the Trustee has no idea that it was named until they are called on to fulfill their responsibility to issue the reconveyance of a loan. This Trustee can be substituted by the Lender anytime the loan is ongoing.
The Trustee is also responsible for the foreclosure process in the event the loan is in default, but that’s a story for another time.
Reconveyance – the release document. Once issued by the Lender and recorded, it states that the Trust Deed is “Paid In Full”
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~ Video of the Month ~
I am an avowed Lookie Loo! This kind of caught my eye…
“Take a tour of an ultra-narrow house that is only 8 feet wide and even more narrow on the inside”
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~ Quote of the Month ~
“Success isn’t permanent and failure isn’t fatal”
Mike Ditka, Football Coach
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My YouTube Offering for the Month
Did you know contracts are important?
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You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
Advance Disclosure:
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
Info @ VivaEscrow.com