With what type of loan security arrangement is the deed held by a neutral third party and returned upon payment of the mortgage in full?

The correct answer is a deed of trust. This type of loan security arrangement involves a deed being held by a neutral third party, known as a trustee. In a deed of trust, the borrower (also referred to as the trustor) transfers the title of the property to the trustee, who holds it on behalf of the lender until the borrower repays the loan in full. Once the mortgage is fully paid off, the trustee will return the title to the borrower, essentially releasing the security interest in the property.

The deed of trust creates a three-party relationship involving the borrower, the lender, and the trustee, allowing for a streamlined process in the event of foreclosure. If the borrower defaults on the loan, the trustee has the authority to sell the property without needing to go through a judicial foreclosure process, which can be quicker and less costly.

In contrast, a mortgage deed involves just two parties—the borrower and the lender—without the involvement of a neutral third party. An equity deed is not a recognized form of security interest in real estate. Lastly, a promissory note is a written promise to pay a specified amount of money, but it does not provide security for the loan by itself; security is typically established through either a mortgage or a