Question

The trust deed and note on a conventional loan is held by the:

Selections

A. Lending institution

B. Federal Government

C. The seller

D. The trustee

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Answer: A

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5 Keys Summary

• For a conventional loan secured by a trust deed (deed of trust), the promissory note and the beneficial interest are held by the Lending institution, which is the payee/creditor/beneficiary.

• The promissory note serves as the written evidence of the debt and outlines the repayment terms, and the lending institution is the payee who will be repaid.

• The lending institution, as the beneficiary in the three-party trust deed arrangement, holds the financial rights and benefits associated with the loan.

• While the trustee (a neutral third party) holds “naked legal title” to the real property, they hold it as collateral security for the debt on behalf of the lender, not the note itself.

• Conventional loans are mortgage loans not insured or guaranteed by a governmental agency (like the FHA or VA) or the federal government.

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