Selling mortgage notes

What is a deed of trust?

Updated 2026-10-19

A deed of trust is the document that secures a real estate loan with the property, much like a mortgage. It involves three parties: the borrower (trustor), the lender or note holder (beneficiary), and a neutral trustee who can sell the property under the deed's power of sale if the loan isn't repaid. If you hold a note secured by a deed of trust, you are the beneficiary, and that position passes to a buyer when you sell the note.

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Two documents, two jobs

Every real estate note deal has two core papers:

The promissory note: the borrower's written promise to repay, with the rate, payment and term.
The security instrument: the document that ties that promise to the property. In some states it's a mortgage; in others it's a deed of trust. Some states use both.

The note is the debt. The deed of trust is what lets the holder look to the property if the debt isn't paid.

The three parties

Party	Who it is	Role
Trustor	The borrower	Signs the deed of trust and pledges the property.
Beneficiary	The lender or current note holder	Receives the payments and benefits from the security.
Trustee	A neutral third party, often a title company or attorney	Holds the power of sale and releases the lien (a reconveyance) when the loan is paid off.

If you sold a property and carried the financing in a deed of trust state, you are probably the beneficiary on a deed of trust right now.

Deed of trust vs. mortgage

	Deed of trust	Mortgage
Parties	Three: trustor, beneficiary, trustee	Two: borrower (mortgagor) and lender (mortgagee)
Foreclosure	Usually allows a non-judicial sale by the trustee under a power of sale	Often foreclosed through the courts, though some states allow a power of sale in mortgages too
Payoff	The trustee records a reconveyance	The lender records a satisfaction or release
Transfer when the note is sold	Assignment of deed of trust, recorded with the county	Assignment of mortgage, recorded with the county

Which one you have depends on your state and on what was signed at closing. The recorded document itself will say.

What happens to the deed of trust when you sell the note

You endorse the note to the buyer, on the note or on an allonge.
You sign an assignment of deed of trust naming the buyer as the new beneficiary, and it's recorded with the county.
The borrower is told where to send payments from then on.
Some buyers also record a substitution of trustee so a trustee they work with is in place.

Buyers check that the deed of trust was recorded, that it's in the lien position you describe (first or second), and that every earlier assignment is on record. Gaps slow a sale down or change the price.

Quick check before you request offers

Find the recording information (book and page, or instrument number) for the deed of trust.
Confirm you're the beneficiary of record, or that every assignment to you was recorded.
Keep the original note safe. Buyers usually need it at closing.
Confirm property taxes and insurance are current.

Questions

Is a deed of trust the same as a mortgage?

They do the same job, securing a loan with real estate, but they work differently. A deed of trust has three parties, including a trustee, and usually allows a non-judicial sale. A mortgage has two parties and is often foreclosed through the courts.

Does a deed of trust show ownership of the property?

No. The borrower owns the property. The deed of trust is a lien that secures the loan. Ownership is shown by the deed the borrower received when they bought it.

Can I sell a note secured by a deed of trust?

Yes. Notes secured by deeds of trust are bought and sold the same way mortgage notes are: the note is endorsed to the buyer and the deed of trust is assigned and recorded.

Who is the trustee in a deed of trust?

A neutral third party named in the document, often a title company, an attorney or a trust company. The beneficiary can usually replace the trustee by recording a substitution of trustee.

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