A loan for the purchase of real property which is secured by the real property
A mortgage includes a deed of trust along with loan documents the lender (often a bank) receives from a third-party seller, which the bank will hold in trust. If the new owner fails to make payments on the loan, the deed of trust gives the lender the right to foreclose on that property by selling the property.
Should the borrower still owe money to the lender after the sale of the borrower’s property, in many states, the lender can obtain a deficiency judgment against the borrower to recover the balance still owed on the note. This often results in the debtor, who is already in financial decline, to file for bankruptcy protection.
