What does a deed of trust accomplish?

A deed of trust is a legal document used in real estate transactions that establishes a three-party agreement among the borrower, the lender, and a trustee. The primary function of a deed of trust is to convey the title of the property to a trustee, who holds it as security for the repayment of the loan. This means the trustee holds the title to the property until the borrower fulfills their obligation of repaying the debt. If the borrower defaults, the trustee has the authority to sell the property to recover the loan amount, thus facilitating the foreclosure process. This arrangement provides a layer of security for lenders, ensuring that they have a claim to the property if the borrower fails to make the required payments.

The other options do not accurately reflect the purpose of a deed of trust. While preventing foreclosure can be a consequence of fulfilling the loan obligations, it is not a direct function of the deed itself. Similarly, guaranteeing a mortgage at a fixed interest rate is related to the terms of the loan, but does not pertain to the deed of trust. Lastly, while a deed of trust is related to property ownership, it does not serve as proof of ownership in the way a title deed does, as the title is held by the trustee until the debt is rep