Determining Servicers and Lenders in Foreclosure Actions, Statutory Trusts, and Contacting Bigger Banks

Hey, welcome to this week’s weekly Q & A. This is a holiday week, so we’ve just got a couple of light questions that I want to go over. 

When you see something like this (foreclosure plaintiff)

“US BANK NATIONAL ASSOCIATION, NOT INDIVIDUALLY BUT SOLELY AS TRUSTEE FOR BLUEWATER INVESTMENT TRUST 2017-1”

OR 

“US BANK NATIONAL TRUST, N.A. AS TRUSTEE FOR LSF11 MASTER PARTICIPATION TRUST”

Does this mean that the servicer is US Bank and the lender is Bluewater Investment Trust / LSF 11 Master Participation Trust? Or is it the other way around? 

The answer is that in this case, US Bank is the servicer. Sometimes loans are sold and still serviced depending on the size of the institution and what they’re selling.

Whenever you see something like this, and here’s the other thing, all this stuff is pretty public information. You can find it. If you Google things like this, you’ll find “Here’s our Bluewater Investment Trust.” You can see the agent name is US Bank Trust National Association, and you can find other things happening in here. Drill down, and you’ll get more details.

So it’s a security. They pool up all these loans together, and then they sell it. Then they put it in a trust and sell it to other investors, but then they still manage it and the different pieces of it. You can learn more about the statutory trusts here, but you’ll find individual foreclosure actions like this one here out of Bangor, Maine, and that’s basically the deal.

In cases like this, like here’s Bank of America NA as an interested party, maybe they have a second on the thing and US Bank Trust NA as trustee for, in this case, it’s the LSF 11. The trust is the entity that holds the assets, and then the other parties mentioned here, that’s the servicer. I hope that makes sense. 

The next question’s kind of a follow on there from the same member. 

Ok. I know all the banks that have huge REO portfolios in my area because I go to the foreclosure auctions every week (for years); these banks are not headquartered in my state, though. 

That’s okay. So when I go into BankProspector, you can see down below, if we go into any of the individual lenders like this, we’ll go view the record, and we’ll scroll down. We do have a full list of all of the locations. At the bottom of any bank record, you can come in here, and you can find a list of all of the different offices that there are for that lender and the types of offices that they are. Just because they’re not headquartered in your area, that doesn’t mean that you shouldn’t contact them. You should still contact them. If they have lending offices in your area, then they don’t need to be headquartered there. If they have lending offices in your area, then you should reach out to them. 

Many of them are special servicers, as mentioned previously, but many are also big banks (US Bank, TD Bank, Bank of America, etc.). I know you say contact smaller banks and work your way up, but I know for a fact, based on the foreclosed buybacks at the auction, which banks have inventory and which ones don’t. 

Well, you can know for a fact which banks have inventory just by checking their records in here. Every single bank, every single credit union, the total volume of REO that they have by type is listed in BankProspector. So if they have REO like here, we’re in Washington, here’s commercial REO. These banks definitely have this REO because they’ve reported it. So if I click in here, I can see, okay, they’ve got a little bit of commercial REO and really nothing else.

If I look back, they’ve had the same, and this is probably one property that they’ve just had on their books for the whole time. Rather than relying on anecdotal or experiential information, where you will see these different lenders taking it back, look at the data that says which ones have REO, and then you’ll know for sure.

As far as contacting bigger or smaller banks, that’s really going to be up to you. I’ve done work for a lot of the big banks, major regional and national players. I’m not saying don’t ever contact them. What I’m saying when I’m telling you to go for smaller banks is that especially when you’re figuring out how things work, you are going to have a lot more success, especially if you’re looking at smaller deals, if you’re dealing with local community and regional banks.

Do Bank of America, TD Bank, Sovereign Bank, Citizens Bank have larger volumes? Absolutely they do. And they also have bigger, more complex organizations that you have to work your way through. So it can take a little bit of time. So when we’re talking about our small banks, small community banks, and local lenders, it’s really easy to find the people who are in charge. When we’re talking about large sprawling organizations, finding the individuals who are responsible for individual properties can be a bit more challenging.

Will the process be the same? 

It’ll be a much bigger process. It’ll mean that you’ll have more conversations with more players. It’ll mean that you should be prepared to do bigger deals. But these aren’t hard and fast rules. These are guidelines. These are things that we tend to see.

If you feel like you’re ready to go tackle the big guys, then you should absolutely go do that. No reason why you shouldn’t do that, especially if you’ve got the capital, if you’re an investor yourself, or if you’ve already established a name, and they can check you out, like if you’re a broker or some other service provider.

The hurdle, the barrier to entry, is higher with the bigger lenders like that. So I’m not saying don’t contact them. I’m saying know all this before you do so. I hope that all makes sense.

Thanks for being a member. Hope this was helpful today, and I can’t wait to get your questions for next week.