AITD (ALL INCLUSIVE TRUST DEED)
AITD is a well known acronym. It means All Inclusive Trust Deed. When you work 12 hours a day with this kind of product you start using acronyms to make your work better. If you want to expand your knowledge visit our page about All Inclusive Trust Deed.
An AITD is also known as a wrap-around loan. This means that a preexisting loan is absorbed into a fresh loan that is made by a property’s seller. AITD is a “Subject To” transaction in which the seller also carries back from the buyer a promissory note as part of the purchase price secured by a junior trust deed on the property.
Generally, the buyer makes payments to the seller (or collection account) in an amount sufficient to pay any senior loan and the seller. The seller (or the collection account) is then required to make payments on any senior loan with the balance going to the seller on the junior loan.
Deed Of Trust vs. Mortgage
What is the difference between a mortgage and a deed of trust?
The fundamental difference between deed of trusts and mortgages is the utilized procedure that is followed if the borrower neglectes his or her obligation to pay off the loan and breaks the agreement. Concerning mortgages, if a borrower “defaults”, such as by failing to make monthly payments or meet other conditions of the loan, such as carrying homeowner’s insurance and maintaining the house in good repair, the lender have to bring a court action in order to foreclose on the property. Nevertheless with a trust deed, if the homeowner does not pay the loan, the foreclosure process is usually much faster and less complicated than the formal court foreclosure process.
As a technical matter, a mortgage involves a relationship between
- the lender and
- the borrower/homeowner
Nevertheless a deed of trust involves three parties:
- the homeowner,
- the lender,
- title insurance company which is holding legal title to the real estate until the loan is fully repaid.
When the loan is fully paid, the title company transfers property title over to the homeowner. If the homeowner neglectes his or her obligation, then the lender simply complies with the rather straight forward provisions of the law of the state where the property is located, gives the appropriate notices, and then turns the property back to the lender.
If you are ever worried about a near foreclosure, you would be well served by consulting with an attorney in the state where the property is located.
What is a deed of Trust ?
A deed of trust, also known as a trust deed, is a unique form of loan
recorded within public records as a deed that has a lien on the property. Trust
deeds are used by borrowers instead of conventional mortgages. This is usually
done in order to obtain greater flexibility on the loan that would be available
under the rules and regulations in standard lending institutions such as banks.
With a deed of trust, there are three main parties involved. These parties
include the trustor - which is the person who is borrowing the money - the
beneficiary - also known as the lender - as well as a neutral third party. This
third party is the trustee, who temporarily holds part of the property title
until the loan is paid in full.