First Tuesday Real Estate Online Practice Exam

The main difference lies in how the loan is secured and how foreclosure is carried out. In a mortgage, the lender has a lien on the property as security, but the borrower generally keeps title, and foreclosing typically requires court action (a judicial foreclosure) if the loan is in default. In a deed of trust, the property is instead placed in the hands of a trustee to hold as security for the lender; if the borrower defaults, the trustee can sell the property through a power of sale without going through the courts (a non-judicial foreclosure) in many cases. This distinction explains why deeds of trust often lead to faster, cheaper foreclosures, while mortgages involve a court process. The other choices mix up roles or imply fixed durations or foreclosure rules that aren’t universally true.