What are the two primary security instruments in mortgage lending?

The correct choice identifies the two primary security instruments in mortgage lending as the mortgage and the trust deed.

In mortgage lending, a mortgage is a legal agreement in which the borrower conveys an interest in their property to the lender as security for the loan. This instrument creates a lien on the property, which means that if the borrower defaults on the loan, the lender has the right to take possession of the property through foreclosure.

A trust deed (or deed of trust) functions similarly but typically involves three parties: the borrower (trustor), the lender (beneficiary), and a third party (trustee). In this arrangement, the borrower grants the trustee the right to sell the property in case of default, rather than the lender directly foreclosing. Both the mortgage and trust deed serve as vital security instruments as they protect the lender's interest in the property, ensuring that they can recover the loan amount through the sale of the asset if necessary.

This understanding is essential in mortgage lending, as these documents establish the conditions under which the lender can claim the collateral should the borrower fail to meet the mortgage obligations.