Quick Tip for Understanding the Mortgage and Trust Deed Foreclosure

When dealing in foreclosure there are differences between a Mortgage and a Trust Deed (sometimes known as a Deed of Trust). Many starting in the business of investing, particularly in foreclosures, may not have heard of Mortgages and Trust Deeds.

Mortgages and Trust Deeds act similarly in that both are the security for a loan on a property. The mortgage and trust deeds do not contain the interest rate, payment plan or the likes – the note which is separate from the mortgage or trust deed contains this. However, you can have mortgages and trust deeds with a note as a part of the same paperwork even though they are actually different.

The biggest difference for us as investors to note between the mortgage and trust deed is how foreclosure is done. Generally the Mortgage is known as a judicial foreclosure and the Trust Deed is known as a non-judicial foreclosure. Judicial has a meaning tied to judge or in other words the mortgage is a judge foreclosure - again rewording this - judicial foreclosure involves a judge to decide the fate of the foreclosure. In a non judicial foreclosure there is no judge involved, generally.

The reason we need to know if a judge is involved or not is because the timeline for the foreclosure may change assuming a judge decides to give the home owner more time to fix the foreclosure. In the case of a non-judicial foreclosure the timeline for a foreclosure is usually more definite.

The most common documents that begin a foreclosure are known as a Lis Pendens and a Notice of Default. The Lis Pendens is associated with the Mortgage and the Notice of Default is associated with the Trust Deed. Both of these letters are usually registered at the county clerk’s office or county recorder’s office whichever you call them in your area. These letters are where most investors start into working on pre-foreclosures.

I have listed below a list of the states and how they foreclose as well how foreclosure starts. Keep in mind some of this may have changed and even though you see a "complaint" listed as the initial step you may still have a Lis Pendes involved in the foreclosure.

State; Instrument; Foreclosure Type; Initial Steps; # months
Alabama; Mortgage; Nonjudicial; Publication; 1
Alaska; Trust Deed; Nonjudicial; Notice of Default; 3
Arizona; Trust Deed; Nonjudicial; Notice of Sale; 3
Arkansas; Mortgage; Judicial; Complaint; 4
California; Trust Deed; Nonjudicial; Notice of Default; 4
Colorado; Trust Deed; Nonjudicial; Notice of Default; 2
Connecticut; Mortgage; Strict; Complaint; 5
Delaware; Mortgage; Judicial; Complaint; 3
Dis. Of Col.; Trust Deed; Nonjudicial; Notice of Default; 2
Florida; Mortgage; Judicial; Complaint; 5
Georgia; Security Deed; Nonjudicial; Publication; 2
Hawaii; Mortgage; Nonjudicial; Publication; 3
Idaho; Trust Deed; Nonjudicial; Notice of Default; 5
Illinois; Mortgage; Judicial; Complaint; 7
Indiana; Mortgage; Judicial; Complaint; 5
Iowa; Mortgage; Judicial; Petition; 5
Kansas; Mortgage; Judicial; Complaint; 4
Kentucky; Mortgage; Judicial; Complaint; 6
Louisiana; Mortgage; Exec. Process; Petition; 2
Maine; Mortgage; Judicial; Complaint; 6
Maryland; Trust Deed; Nonjudicial; Notice; 2
Massachusetts; Mortgage; Judicial; Complaint; 3
Michigan; Mortgage; Nonjudicial; Publication; 2
Minnesota; Mortgage; Nonjudicial; Publication; 2
Mississippi; Trust Deed; Nonjudicial; Publication; 2
Missouri; Trust Deed; Nonjudicial; Publication; 2
Montana; Trust Deed; Nonjudicial; Notice; 5
Nebraska; Mortgage; Judicial; Petition; 5
Nevada; Trust Deed; Nonjudicial; Notice of Default; 4
New Hampshire; Mortgage; Nonjudicial; Notice of Sale; 2
New Jersey; Mortgage; Judicial; Complaint; 3
New Mexico; Mortgage; Judicial; Complaint; 4
New York; Mortgage; Judicial; Complaint; 4
North Carolina; Trust Deed; Nonjudicial; Notice Hearing; 2
North Dakota; Mortgage; Judicial; Complaint; 3
Ohio; Mortgage; Judicial; Complaint; 5
Oklahoma; Mortgage; Judicial; Complaint; 4
Oregon; Trust Deed; Nonjudicial; Notice of Default; 5
Pennsylvania; Mortgage; Judicial; Complaint; 3
Rhode Island; Mortgage; Nonjudicial; Publication; 2
South Carolina; Mortgage; Judicial; Complaint; 6
South Dakota; Mortgage; Judicial; Complaint; 3
Tennessee; Trust Deed; Nonjudicial; Publication; 2
Texas; Trust Deed; Nonjudicial; Publication; 2
Utah; Trust Deed; Nonjudicial; Notice of Default; 4
Vermont; Mortgage; Judicial; Complaint; 7
Virginia; Trust Deed; Nonjudicial; Publication; 2
Washington; Trust Deed; Nonjudicial; Notice of Default; 4
West Virginia; Trust Deed; Nonjudicial; Publication; 2
Wisconsin; Mortgage; Judicial; Complaint; Varies
Wyoming Mortgage; Nonjudicial; Publication; 2