Which document is typically used instead of a mortgage in some states?

In certain states, a Deed of Trust serves as a legal instrument that functions similarly to a mortgage but involves a different process and structure. In a typical mortgage, the borrower directly conveys an interest in the property to the lender as security for the loan. However, with a Deed of Trust, the borrower transfers the legal title of the property to a third party, known as the trustee, who holds it until the debt obligation is fulfilled. This arrangement can streamline the foreclosure process and allow for non-judicial foreclosure in some circumstances, which can be more efficient compared to the judicial foreclosure process required with a mortgage.

The other options, such as a Promissory Note, Loan Agreement, and Bond Agreement, serve different purposes in the lending process. The Promissory Note is the borrower's promise to repay the loan. A Loan Agreement outlines the terms of the lending arrangement but does not secure the property. A Bond Agreement pertains to a debt security that typically involves a bond issuer and is unrelated to securing real estate through a mortgage or deed of trust. Thus, the use of a Deed of Trust instead of a mortgage in some states reflects its unique role in securing real estate transactions.