America's Wholesale Lender

Remember America's Wholesale Lender? It was a trade name used by Countrywide, which was later acquired by Bank of America. Bank of America has discontinued using the name, which is exactly why Pam Williams, regional escrow manager for Lawyer's Title, questioned a transaction where America's Wholesale Lender issued a short pay approval letter. A single call to Bank of America's Fraud Investigator confirmed Pam's suspicions were correct.

The transaction was unique from the beginning. The property owner filed a lawsuit against America's Wholesale Lender alleging fraud, slander of title, unfair business practice, wrongful foreclosure and quiet title. The owner sought to recover monetary damages, injunctive relief and quiet title as the result of alleged injuries caused by America's Wholesale Lender.

The owner and America's Wholesale Lender entered into a settlement agreement. The settlement agreement stated America's Wholesale Lender would accept $122,000 as payment–in–full for the existing lien as long as the owner signed a new note and deed of trust in the amount of $130,000 with an interest rate of 5.5 percent for 30 years. The new agreement, in effect, was refinancing the existing loan.

The attorney representing the owner in the quiet title action contacted a local loan officer to assist with a refinance of the subject property. The loan officer was put in touch with Maurice Van Eck, vice president at America's Wholesale Lender, who agreed to pay him an origination fee of 2 percent of the loan amount for his services. He opened escrow with Lawyer's Title in Irvine, Calif. The loan officer ordered a payoff from Bank of America and promptly forwarded it to the escrow officer. The escrow officer opened her file, ordered her title report and waited for further instructions.

Van Eck contacted the escrow officer to coordinate the delivery of the new loan documents. The escrow officer received the documents and began reviewing them only to find the loan package was different than any she had seen. Included in the package she found:

• An original, fully executed Substitution of Trustee where America's Wholesale Lender appointed CTC Real Estate Services as the trustee of the Deed of Trust. The Substitution was executed on July 23, 2011 by Maurice Van Eck, vice president of America's Wholesale Lender.
• Short Payoff Approval: Demand Statement issued by America's Wholesale Lender. This was also signed by Van Eck.
• Closing Instructions issued by America's Wholesale Lender for the new loan in the amount of $130,000. Signed by Dennis L. Bell, president.
• Settlement Agreement between the owner and America's Wholesale Lender. The Settlement Agreement was signed by Van Eck.

The escrow officer contacted the loan officer to find out what was going on since she thought this was just a refinance. The loan officer was also unsure of what was happening. He contacted Van Eck for clarification.

Van Eck explained to the loan officer this was a short pay of the existing lien and America's Wholesale Lender agreed to provide the owner with new financing based on the Settlement Agreement. Next, the loan officer told Van Eck he instructed escrow to put the file on hold since the loan instructions indicated the owner was paying him a 1.5 percent origination fee and not the 2 percent initially promised by America's Wholesale Lender. The loan officer explained he had not entered into an agency agreement with the owner to pay his fee and, as a licensed real estate agent, the owner knew an agreement was required to pay the origination fee. Van Eck told the loan officer America's Wholesale Lender would not be paying his fee and said it would need to be paid by the property owner. The loan officer told Van Eck the file could not be closed until he worked this out with the owner.

In the meantime an attorney for one of the owners called the escrow officer to find out how the transaction was going. The escrow officer explained she was told this was a refinance file and she had a payoff demand from Bank of America showing a total payoff amount of $373,748.80. The attorney asked her how she got in touch with Bank of America.

She explained her title report indicated there was a lien on the property. A search on MERS revealed the property was being serviced by Bank of America so she had ordered a payoff from them. The payoff demand reflected an unpaid balance of $365,663.34. The attorney reiterated this was a short pay transaction and confirmed the escrow officer had a copy of the settlement agreement.

The escrow officer felt very uneasy so she contacted Pam Williams, her regional escrow manager, who reviewed all of the documentation. In spite of the fact that nothing seemed right, the Settlement Agreement was fully executed and filed with the courts. Most troubling was that MERS reflected Bank of America as the current servicer of the loan, who issued a payoff demand – while America's Wholesale Lender issued the short pay approval letter. Based on the payoff demand, if we closed and paid the short pay amount there would still be a shortfall of $113,663.34.

Pam reviewed the documents closer and noticed the wiring instructions for the short pay instructed escrow to send the funds to a bank account at TD Bank. Why would America's Wholesale Lender have an account at TD Bank and not Bank of America? Pam asked the escrow officer to set up a conference call with the owner's attorney.

Pam explained to the attorney her concerns and the discrepancies she found. The attorney became extremely nervous and said he had nothing to do with the situation aside from just being an "agent" and everyone needed to communicate with Van Eck at America's Wholesale Lender. In the meantime the loan officer was assisting in his due diligence on the file, ensuring the transaction moved forward.

The loan officer raised the same concerns Pam had with Van Eck. What was Van Eck's response? "Stay out of it. If I need your help I shall ask. Otherwise, do not contact the parties; all that does is cause problems."

Pam realized these deals had too many red flags. She decided to do a search to see if there were any other pending transactions similar to this one and found four more. She started contacting the escrow officers to let them know we would be unable to close these deals unless we received short pay approval directly from Bank of America.

Right after Pam spoke to the escrow officer handling two of Van Eck's deals, Van Eck called to check in and see how the deals were going. The escrow officer advised him he needed approval from Bank of America. Van Eck didn't even hesitate and blurted out, "Well, then you can just SHOVE IT." and hung up on her. Whoa!

Pam escalated the files to Tena Jones, from the Southern California Escrow Administration for Lawyer's Title, who contacted the National Escrow Administration. The National Escrow Administration gave Tena the name and phone number for a fraud investigator at Bank of America. Pam and Tena contacted the fraud investigator who confirmed Bank of America had not entered into a Settlement Agreement with the borrowers on these properties. He also confirmed Van Eck did not work for America's Wholesale Lender which had been purchased by Bank of America.

These fraudsters were operating under this well–known, common name in an attempt to obtain payoffs for loans they did not own. According to the settlement agreement America's Wholesale Lender corporate offices are located in New York. Funny, they must have moved from Calabasas, Calif.

After the principals in the transactions were all notified we would not close their refinances without approval from Bank of America, they all revealed they had plans to immediately sell their properties once the refinances went through. Van Eck helped them all find buyers to purchase the properties for amounts much higher than their new loan amounts. One of the borrowers wanted us to release the original, forged Substitution of Trustee and Reconveyance from our file so he could record it. He did not want to delay his sale since he stood to make over $500K. The loan officer told one of our escrow officers they were getting ready to open eight more transactions just like these.

Verifying the short pay agreement is our basic policy and procedure, and saved us from closing a fraudulent transaction. The fact that MERS reflected Bank of America as the current servicer meant we needed proof America's Wholesale Lender was authorized to negotiate the short sale, receive the payment and release the lien of record. Clearly, America's Wholesale Lender was not authorized. For Pam's efforts she was rewarded $1,000 and a letter of recognition from the Company.

Running Out Of Time

In the state of Texas a law firm can enter into a fee attorney agreement with a title company to act as the settlement agent for a real estate transaction in exchange for a portion of the title premium. The transaction is closed in the name of the title company, which enables it to offer convenient locations for potential customers. The law firm still has the ability to offer other legal services in their area of expertise. As a part of the agreement the title company often provides the fee attorney office with the use of their escrow processing.

One of our Alamo Title offices in the Houston area was expecting an earnest money deposit for a commercial transaction being opened. The deposit was due on June 23, 2011. The buyer was being represented by a commercial fee attorney for Alamo Title, but in this transaction they were only acting as the buyer's counsel and not as the settlement agent.

On June 23rd, the assistant at the fee attorney's office e–mailed a wire confirmation to all parties involved indicating Alamo Title had received $15,000 in earnest money. The confirmation was purportedly issued by Tonya Cupial, escrow assistant at Alamo Title's Houston office.

One of the real estate agents e–mailed Tonya asking her for a copy of the receipted Earnest Money Contract. Tonya didn't know what she was referring to since she did not have a contract or $15,000 for the subject property. Tonya immediately contacted her Operational Accounting Center (OAC). She asked them to check to see if they had received a $15,000 wire from the buyer, and to send a copy of the confirmation if they had. The OAC could not find anything.

Next Tonya contacted her IT department to have them check everyone's system to see if anyone from their office sent the wire confirmation. IT confirmed no one from the Alamo Title branch sent the wire confirmation. After further review, Alamo Title was able to determine it was the assistant at the fee attorney's office who altered a previously issued, valid confirmation by changing the date, amount and remitter information.

Patti Kazole, the branch manager from Alamo Title, called the fee attorney's office and asked to speak with the owner. She had to leave a message. Next, Escrow Administrator Laurie Hines called and also had to leave a message. On the third day, County Manager Richard Adams called. A representative at the fee attorney's office told Richard the attorney was in court, so Richard left a message. The owner did call Richard back and told him he was only on a short break. Richard asked the owner if he had received a message from Patti and Laurie. The owner confirmed he had. Richard told the owner they had something very important to discuss with him and he needed to call them back. The owner promised he would call. He never did.

Alamo Title did receive the earnest money deposit, but it came from the law firm's Interest on Lawyer Trust Accounts (IOLTA) account. Since the owner never called back to explain his assistant's actions, the Company had no choice but to cancel the firm as a fee attorney office on behalf of Alamo Title. The Company has been left with nothing but speculations on why the assistant took such a big risk and why it took days to receive the funds. Does this mean the law firm is overdrawn on their trust account or did they simply fail to get the money from the buyer in time? Surely the State Bar of Texas will find out since the Company has reported this incident.

In addition to cancelling this fee attorney, the Company has implemented even stronger security measures on the wire confirmations which go out to prevent others from altering them. It was Tonya who acted quickly to ensure the principals knew the notification was fraudulent and assisted us in identifying a procedure which needed improvement. For her actions, she has been rewarded $1,000 and a letter of recognition from the Company.