Trust Deed Investing: Enforcing The Loan

While it’s true that investing in trust deeds is relatively safe compared with other investments, there is always the small chance that a borrower will default on his loan for one reason or another. Should such a situation arise there are ways in which the investor can resolve the matter and still come out on top. The process of foreclosure is the usual method of recovering property when a borrower cannot honor the terms of the loan. different states may have different policies and legal procedures regarding foreclosure so the following information may not apply specifically to you.

Judicial and non-judicial foreclosure are the two most popular methods used in trust deed investments. The judicial foreclosure will require a lawyer and court proceedings and will be expensive. A non-judicial foreclosure is quick and relatively painless financially since it can be handled by a title company or reputable, independent foreclusre company. This method or process of foreclosure is the one most used for trust deeds.

the foreclosure officer will need certain documents from the investor before the process can begin. for example, the original trust deed that has been recorded and original note. A statement as to the amount of the loan still owed, the due date of payments, unpaid balance of the principal and how much of the interest has beenpaid to date will also be required. Once these documents have been turned over tot he agent he can then begin the foreclosure process.

A foreclosure can be instituted for a number of reasons and not all of them are financial. A borrower who fails to honor the provisions of the trust deed, though he may have made payments on time could still find himself in foreclosure for violating the terms of the trust deed. and of course any failure to make payments in full and on time, or to default on insurance and taxes can also be land a borrower in foreclosure proceedings.

The following documents will be necessary to start the foreclosure process: Declaration of Default (DOD), Notice of Breach (NOB),  Subsection of Trustee and non-military affidavit.

The foreclosure officer prepares the above documents and they are then signed by all beneficiaries.

In a non-judiciary foreclosure, the property can be sold to the highest bidder by the trustee in a trustee sale. The entire foreclosure process takes roughly 110 days to complete.

foreclosure may begin but it rarely is seen through to the end. Usually the borrower sees how urgent the matter is and will do everything in his power to save his home and land from being taken away.

Occasionally a borrower will file for bankruptcy in order to avoid foreclosure. Once the petition is gfiled in court, the trustee is ordered to halt the foreclosure until such a time as it can be determnined what the outcome for the borrower will be. It is in your best interest to respond immediately if a borrower files for bankruptcy to ensure you receive what you are due. this would include any legal fees incurred and other costs associated with processing the foreclosure. also included should be any fees endured that relate directly to the response made to the bankruptcy as well.