What's a Foreclosure Trustee?

In a nonjudicial foreclosure, the third party who typically handles the foreclosure process is called a "trustee." In theory, a foreclosure trustee is a neutral party, but the lender or loan servicer usually chooses the trustee, who is often affiliated with the lender or the lender's attorney.

Few states have laws addressing the neutrality of foreclosure trustees. So, trustees generally look out for lenders' rather than borrowers' interests in foreclosures because they have a financial incentive to do so.

Mortgages vs. Deeds of Trust

A lender usually requires a borrower to sign either a mortgage or a deed of trust in a home loan transaction. This document creates a security interest in the borrower's property. When you give a lender a security interest in your property, the property becomes collateral for the debt.

Mortgages and deeds of trust often have many of the same general provisions. For example, most mortgages and deeds of trust require the borrower to have homeowners' insurance and maintain the property in good condition. Also, both mortgages and deeds of trust give the lender the ability to sell the home through a process called "foreclosure" if the borrower fails to make payments or breaches the contract in some other way.

Deeds of Trust Involve a Trustee, Mortgages Don't

While mortgages and deeds of trust are similar in many ways, one significant difference between these documents is the parties involved. A deed of trust usually has three parties: the borrower, the lender, and a trustee. A mortgage involves only two parties: a borrower and a lender.

The other major difference between mortgages and deeds of trust is how the foreclosure process works. Mortgages are ordinarily foreclosed judicially (though not always), while deeds of trust are usually foreclosed nonjudicially.

Trustee vs. Lender Responsibilities

The lender makes the loan and manages the mortgage account. (Sometimes, a loan servicer manages the account on behalf of the lender.) The trustee comes into play if you fall behind in loan payments and go into foreclosure. Again, in states where lenders use deeds of trust or a similar instrument containing a power of sale clause, a lender may foreclose out of court in a process called a "nonjudicial foreclosure." A trustee typically manages the nonjudicial foreclosure process.

What Does a Trustee Actually Do?

A foreclosure trustee is, in theory, a neutral third party appointed to oversee and administer the foreclosure process. The trustee's main responsibility is to ensure the foreclosure is conducted in accordance with state laws and contractual requirements. The trustee's duties include initiating foreclosure proceedings upon the lender's request, scheduling and conducting a public auction (a trustee's sale), and distributing the sale proceeds appropriately.

Throughout the process, the trustee is supposed to be fair toward both the borrower and the lender. However, in practice, the trustee might have an ongoing relationship with the lender. (That is, the lender probably hires the trustee to conduct all of the property foreclosures for that lender.)

Who Can Be a Foreclosure Trustee?

Depending on state law, a trustee might be an individual, like an attorney, or a business entity, like a bank or a title company. Sometimes, state law limits who may provide foreclosure trustee services.

Trustees are frequently companies established specifically for the purpose of handling the various requirements during the foreclosure process. Some companies that act as foreclosure trustees have the word "service" or "services" in their company name. But even if a foreclosure trustee company uses the word "services" in its name, trustees are not loan servicers.

State Law May Determine Who Can Conduct Nonjudicial Foreclosures

State law can limit who may act as a foreclosure trustee. In many cases, the state requires the trustee to have some type of presence in the state. Below are some examples of limits states have put on trustees.

• Under Utah law, attorneys and title companies with offices in the state can conduct nonjudicial foreclosures. (Utah Code § 57-1-21 (2025).)
• Nevada law limits foreclosure trustees to attorneys, title insurers, trust companies, and escrow agents, among others. (Nev. Rev. Stat. § 107.028 (2025).)
• In Virginia, foreclosure trustees must be state residents, or if the trustee is a corporation, its principal offices must be located within the state. (Va. Code § 55.1-317 (2025).)
• In Washington, the foreclosure trustee is required to have a physical presence in the state with telephone service at that address. (Wash. Rev. Code § 61.24.030 (2025).)

The reason for putting these types of restrictions on who may act as a foreclosure trustee is simple: Foreclosure trustees must provide information to homeowners about the foreclosure, how much they need to pay to reinstate the loan, and to whom the money is owed. If the trustee isn't local, it can be difficult, if not impossible, for borrowers to get in contact with the trustee and have a chance at saving their homes and stopping the foreclosure.

What Is a Substitution of Trustee in a Foreclosure?

Generally, the original trustee appointed in the deed of trust won't handle a foreclosure if you fall delinquent in payments. So, the loan servicer will appoint a new trustee (a "substitute trustee") to manage the foreclosure process.

In most cases, a notice of substitution of trustee gets filed in the land records shortly before a foreclosure starts. So, if you get a copy of a document appointing a substitute trustee, a foreclosure could be about to begin.

Who Appoints a Trustee in a Foreclosure?

The lender picks the foreclosure trustee. The lender also pays the trustee's fees, which might be limited by state law. In most states, the lender can add the trustee's fees to the borrower's debt because they are considered costs of the foreclosure process.

Is the Trustee Neutral or Lender-Biased?

Trustees are supposed to act as impartial administrators in nonjudicial foreclosures. The trustee isn't supposed to advocate for either side and generally must use diligence and fairness when conducting the foreclosure.

But because the lender usually chooses the trustee, who might also be affiliated with the lender or the lender's attorney, trustees often have a financial incentive to favor the lender's interests (or at least lean that way) in a foreclosure.

Can Homeowners Challenge a Trustee?

Lenders have the legal right to foreclose if you don't make your payments, but they must follow the law when it comes to foreclosure procedures. You are well within your legal rights to make sure the trustee has the proper authority to conduct the foreclosure. Check your state's statutes to determine if your state has a law restricting who may act as a foreclosure trustee. (For more information on how to locate your state's laws, see our Laws and Legal Research page.) You can also get this information by talking to a local foreclosure lawyer.

If you're a homeowner facing foreclosure from an improper trustee, you might be able to bring your foreclosure to a halt, if only temporarily, by challenging the trustee's authority to foreclose. Ultimately, the lender could restart the foreclosure after hiring a proper trustee to foreclose, so raising this issue won't stop the foreclosure forever. But it might give you some extra time to stay home.

You also have the right to challenge trustee misconduct, such as not conducting the sale fairly or engaging in self-dealing. You might be able to get an injunction to stop the sale or entitled to damages if the misconduct results in harm. But trustees generally don't owe a duty to the borrower other than what's required by state law and the deed of trust.

Can a Trustee Stop Foreclosure?

A foreclosure trustee generally doesn't have the authority to stop a foreclosure based on their own discretion. The trustee's role is to administer the foreclosure in a neutral manner under the law and according to the lender's instructions. But in some cases, the trustee can halt the sale, such as if the borrower files for bankruptcy or if a court orders it to stop the sale.

The trustee doesn't have the independent power to stop or reverse a foreclosure simply because you think the process is unfair, you have a hardship, or you have a dispute with the lender. The trustee is governed by state law and the terms of the deed of trust. If you think a foreclosure is improper, you might need to get a court to weigh in on the matter or file for bankruptcy, depending on the circumstances. Talk to a foreclosure lawyer if you want to challenge the foreclosure or a bankruptcy attorney if you potentially want to file for bankruptcy.

In one state, Colorado, the law is unique because that state has public trustees (rather than private foreclosure trustees). Under Colorado law, the public trustee may stop a foreclosure sale if the borrower has submitted a complete loss mitigation application or has been offered and accepted a loss mitigation option and is complying with its provisions.

State Variations in Trustee Powers

Some states regulate trustees more than others. In Colorado's public trustee system, trustees are public officials with narrowly defined, statute-based powers. In other states, private trustees are (again) selected by the lender and are only limited by the relevant foreclosure statutes and the terms of the deed of trust.

States like California limit trustee liability and don't recognize duties beyond complying with the state foreclosure statutes and the loan contract. In an opinion from California's Fourth Appellate District (Citrus El Dorado, LLC v. Chicago Title Company, 32 Cal.App.5th 943 (2019)), the court decided that the trustee's duties did not include verifying that an assignment of the loan used in the foreclosure was valid. The court noted that a trustee under a deed of trust "is not a true trustee with fiduciary obligations, but acts merely as an agent for the borrower-trustor and lender-beneficiary."

Generally, a trustee's duties include only those needed to administer the foreclosure after a borrower's default.

Talk to a Local Foreclosure Attorney

Keep in mind that any given foreclosure or legal situation has many potential claims and defenses. A lawyer can tell you about possible foreclosure defenses that might be available in your particular situation.