Another Ruse: Realtors Gleeful over Equator Short Sale Platform

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Editor’s Comment:

Banks have adopted a technology platform to process short sale applications. It is called Equator, presumably to imply that it equates one thing with another, and produces a result that either gives a pass or fail to the application. In theory it is a good thing for those people who want to save their homes, save their credit (up to a point) and move on. In practice it essentially licenses the real estate broker to take control over the negotiations and police the transactions so that the new “network” rules are not violated. This reminds me of VISA and MasterCard who control the payment processing business with the illusion of being a quasi governmental agency. Nothing could be further from the truth, but bankers react to net work threats as though the IRS was after them.

Equator is meant as another layer of illusion to the title problem that realtors and title companies are trying to cover up. The short sale is getting be the most popular form of real estate sale because it is a form of principal reduction where there is some face-saving by the banks and the borrowers. The problem is that while short sales are a legitimate form of workout,  they leave the elephant in the living room undisturbed — short sales approved by banks and servicers who have neither the authority nor the interest in the loan to even be involved except as an agent of Equator but NOT as an agent of the lenders,  if they even exist anymore.

So using the shortsale they get the signature of the borrower as seller which gives them a layer of protection if they are the bank or servicer approving the short-sale. But it fails to cure the title defect, especially in millions of transactions in which Nominees (like MERS and dummy originators) are in the chain of title. 

The true owner of the obligation is a group of investor lenders who appear to have only one thing in common— they all gave money to an investment bank or an affiliate of an investment bank, where it was divided up and put into various accounts, some of which were used to fund mortgages and others were used to pay fees and profits to the investment bank on the closing of the “deal” with the investor lenders. As far as the county recorder is concerned, those deposits and splits are nonexistent. 

The investor lenders were then told that their money was pooled in a “Trust” when no such entity ever existed or was registered to do business and no attempt was made to fund the trust. An unfunded trust is not a trust. This, the investor lenders were told was a REMIC entity.  While a REMIC could have been established it never happened  in the the real world because the only communications between participants in the securitization chain consisted of a spreadsheet describing “closed loans.” Such communications did not include transfer, assignment or even transmittal or delivery of the closing papers with the borrower. Thus as far as the county recorder’s office is concerned, they still knew nothing. Now in the shortsales, they want a stranger the transaction to take the money and run — with no requirement that they establish themselves as creditors and no credible documentation that they are the owner of the loan.

This is another end run around the requirements of basic law in property transactions. They are doing it because our government officials are letting them do it, thus implicitly ratifying the right to foreclose and submit a credit bid without any requirement of proof or even offer of proof.

It gets worse. So we have BOA agreeing to accept dollars in satisfaction of a loan that they have no record of owning. The shortsale seller might still be liable to someone if the banks and servicers continue to have their way with creating false chains of ownership. But the real tragedy is that the shortsale seller is probably getting the shaft on a false premise — I.e, that the mortgage or deed of trust had any validity to begin with. 

The shortsale Buyer is most probably buying a lawsuit along with the house. At some point, the huge gaps in the chain of title are going to cause lawyers in increasing numbers to object to title and demand that it be fixed or that the client be adequately covered by insurance arising from securitizatioin claims. Thus when the shortsale Buyer becomes a seller, that is when the problems will first start to surface.

Realtors understand this analysis whereas buyers from Canada and other places do not understand it. But realtors see shortsales as the salvation to their diminished incomes. Thus most realtors are incentivized to misrepresent the risk factors and the title issues in favor of controlling the buyer and the seller into accepting pre-established criteria published by the members of Equator. It is securitization all over again, it is MERS all over again, it is a further corruption of our title system and it is avoiding the main issue — making the victims of this fraud whole even if it takes every penny the banks have. Realtors who ignore this can expect that they and their insurance carriers will be part of the gang of targeted deep pockets when lawyers smell the blood on the floor and go after the perpetrators.

Latest Changes to The Bank of America Short Sale Process

by Melissa Zavala

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

Using the Equator system

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. Many folks already know that Equator is the online platform used by 5 major lenders (Bank of America, Wells Fargo, Nationstar, GMAC, and Service One). If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

And, my hat goes off to Bank of America for really raising the bar when it comes to short sale processing online. And, believe me, after processing short sales with Bank of America in 2007, this change is much appreciated.

New Bank of America Short Sale Process

Effective April 13, 2012, Bank of America made a few major changes that may make our short sale processing times more efficient.  The goal of these changes is to make short sale processing through Equator (the Internet-based platform) at Bank of America so efficient that short sale approval can be received in less than one month.

First off, Bank of America now requires their new third party authorization for all short sales being processed through the Equator system. Additionally, the folks at Bank of America will be working to improve task flow for short sales in Equator by making some minor changes to the process.

According to the Bank of America website,

Now you are required to upload five documents (which you can obtain at http://www.bankofamerica.com/realestateagent) for short sales initiated with an offer:

  • Purchase Contract including Buyer’s Acknowledgment and Disclosure
  • HUD-1
  • IRS Form 4506-T
  • Bank of America Short Sale Addendum
  • Bank of America Third-Party Authorization Form

And, now, you will have only 5 days to submit a backup offer if your buyer has flown the coop.

The last change is a curious one, especially for short sale listing agents, since it often takes awhile to find a new buyer after you learn that the current buyer has changed his or her mind.

Short sale listings agents should be familiar with these changes in order to assure that they are providing their client with the most efficient short sale experience possible.


Best Form: Request For Production

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SEE 9.06.2011 Chase RICO-Request-for-Production

EDITOR’S NOTE: Jeff Barnes has put together what I would call the gold standard in a request for production in a mortgage case. It will no doubt lead to an early settlement. But if it went all the way, it would reveal the facts necessary to question the perfection of the lien, the transfer of the obligation, the owner of the obligation, the owner of the lien, the right to foreclose and the wrongful, intentional misconduct by intermediaries who inserted themselves into the foreclosure process simply by barring the investors from ever knowing there was anything going on.

Here are some notable excerpts:

Documents to be produced:

1. All Assignments, Allonges, and the like which purport to assign any interest in any mortgage instrument or note of any of the Plaintiffs to any person or party.
2. All documents setting forth any servicing agreement between the Defendants and any entity with reference to the mortgage loans of the Plaintiffs.
3. All Pooling and Service Agreements, Custodial Agreements, Deposit Agreements, Master Purchasing Agreements, Issuer Agreements, Commitment to Guarantee Agreements, Release of Document Agreements, Master Agreements for Servicer’s Principal and Interest Custodial Account, Servicer’s Escrow Custodial Account Agreements, Release of Interest Agreements, or Trustee Agreements relating to the mortgages loan of the Plaintiffs.
4. All documents setting forth the entire chain of title to the mortgage instruments and notes of the Plaintiffs from the original lender to the present.

8. All policies of insurance, including but not limited to private mortgage insurance, insurance in favor of any trustee or loan trust, LPMI policies, NIM policies, UCC Eagle 9 mezzanine policies, ISDA swap policies, master and bulk supplemental policies, mortgagee title policies, or any other insurance which provides benefits to either of the Defendants or any party in privity with either of the Defendants or the original lender or successor thereto or securitized trust upon default by the borrower in connection with the Plaintiffs’ mortgage loans.
9. All documents setting forth any claims made against any policy of insurance the subject of request number “8.” above.
10. All documents setting forth any payments made or received in connection with any claim the subject of request number “9.” above.
11. All documents setting forth any denial or reservation of rights as to any claim made in connection with any policy of insurance the subject of request number “8.” above.
12. All documents demonstrating any funding of any of the Plaintiffs’ mortgage loan the subject of this action by any certificated or uncertificated security.
13. All documents concerning any consideration exchanged between any persons or parties in connection with the assignment or sale of any part of, or right under, or right incident to any of the Plaintiffs’ mortgage loans (e.g. assignment or sale of mortgage, assignment or sale of note, assignment or sale of servicing rights, assignment or sale of right to income stream from borrower payments, assignment to a mortgage pool, assignment to any SIV, CMO, CDO, MBS, or CDS, [as defined herein infra], and the like).

16. All documents identifying any descriptions or legends of all codes utilized within any mortgage servicing or accounting system identified within your response to request number “15.” above.
17. All documents evidencing all payments made by the Plaintiffs or any third party on or toward their loan obligations at any time.
18. All documents setting forth any credits applied against any balance due on the Plaintiffs’ mortgage loans at any time, including amount of credit, date credit applied, source of credit, and obligation to which credit was applied (e.g. principal, interest, late fees, etc.)
19. All documents setting forth the disposition of all payments made by the Plaintiffs or any third party in connection with the Plaintiffs’ mortgage loans, including but not limited to documentation setting forth amounts assigned to or credited against principal, interest, insurance escrows or payments, tax escrows or payments, late fees, or any other charges.

36. All documents setting forth the present physical location of the original mortgage instrument and the original note for any of the Plaintiffs’ mortgage loans claimed to be owned by any of the Defendants.
37. All documents setting forth the name, address, and telephone number of the physical custodian of the original note and original mortgage instrument for any of the Plaintiffs’ mortgage loans claimed to be owned by any of the Defendants.
38. All documents setting forth the assignment of either the mortgage instrument or note for any of the Plaintiffs’ mortgage loans, which are claimed to be owned by any of the Defendants, to any particular Specialized Investment Vehicle (SIV), Collateralized Mortgage Obligation (CMO), Collateralized Debt Obligation (CDO), series of mortgage-backed securities or certificates (MBS), or collateral default swap (CDS).
39. All documents setting forth the full name, current address, and telephone number of each holder of or investor in any SIV, CMO, CDO, MBS, or CDS which is collateralized in whole or in part by any of the Plaintiffs’ mortgage loans or any right incident thereto or thereunder.
40. All documents which identify the full name, current address, and telephone number of all persons who authorized the filing of any foreclosure action or threat of any foreclosure against any of the Plaintiffs.

49. IRS Form 1099-OID for each of the Plaintiffs’ mortgage loans.
50. IRS Form 1066 with accompanying Schedule Q for each of the Plaintiffs’ mortgage loans.
51. All servicing contracts between any insurance tracker and any loan servicer as to the Plaintiffs’ mortgage loans and/or any securitized mortgage loan trust into which any of the Plaintiffs’ mortgage loans were assigned or placed, including all addenda and schedules thereto or identified therein including but not limited to Service Level Agreements (SLA), Return To Lender (RTL) documents, and any listing of Unable To Locate (UTL) Documents.
52. All documents identifying the Operations Account Manager (OAM) for the specific account(s) related to the Plaintiffs’ mortgage loans.
53. All documents concerning or relating to any reports of transactions between financial and foreclosure-related systems as to the Plaintiffs’ mortgage loans including but not limited to reports provided by Fidelity systems and/or tracked in web-based filing cabinets (including but not limited to Balboa_IT_CCS) and in any system including but not limited to AXSPoint, COOL, or otherwise.
54. All reports of any experts, accountants, and the like upon which any of the Defendants intend to rely in the trial of this cause or at any hearing, and all documents upon which Defendants intend to rely or which Defendants intend to introduce into evidence in support of any Motion or at the trial of this cause.

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