Seven Essential Elements of Trust Deed Investments

  1. Knowledge, experience, and integrity of the Mortgage Loan Broker through whom the transaction may be made or arranged.

Before placing your trust and money with an MLB, you would be wise to contact:

(1) the Bureau of Real Estate (CalBRE) to determine if the MLB and his or her loan representatives are properly licensed, how long each has been licensed, and whether any of the licenses have been disciplined; and

(2) the local Better Business Bureau to ask if any complaints have been lodged.

  1. Market value and equity of the property and the security for your loan.

  2. Borrower’s financial standing and credit worthiness.

  3. Escrow process involving the funding of the loan or the purchase of the promissory note.

  4. Documents and instruments describing, evidencing, and securing the loan or purchase of the promissory note.

  5. Loan servicing provisions, authority and compensation.

  6. Recovering your investment when the borrower fails to pay.

Reviewing, analyzing, and understanding the seven essential elements of trust deed investments should assist you in
evaluating the risk involved. Trust deed investments can provide an excellent return but remember, the risk of a trust deed investment is yours. Therefore, you may wish to discuss the investment with an Mortgage Loan Broker and/or other qualified professional before committing your funds.

Reference: Guy Puccio, James Nordell and George Pfeiffer, Esq. (2014).  Brochure,  Trust Deed Investments. What you should know.  California Bureau of Real Estate.  Prepared by Parklway Land, Inc.