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How to I process investor buy-outs?

Buyouts Process Playbook

Purpose

A buyout occurs when a Mortgage Investment Corporation (MIC) or another party buys out an investor's portion of a mortgage. The purpose of this process is to ensure accurate and efficient handling of buyouts, including proper documentation, financial reconciliation, and investor communication. This process ensures compliance with internal policies, prevents errors in fund transfers, and maintains clear records for all stakeholders.

Steps to Process a Buyout

1. Receive buyout request and create ticket (HS)

  • Buyout requests are received via email, fax or result from another process.

  • On the Mortgage record, create a General Servicing ticket (Category: Investor Buyouts).

2. Add a Deferred Payment (MA)

  • Locate the mortgage file in Mortgage Automator.

  • Assign your name as the Servicing Specialist.

  • Navigate to the Payments, Adjustments & Charges section.

  • Click the +Adjustment button and add a Deferred Payment.

  • Select the payment that matches the effective date of the Buyout (the upcoming month's payment).

  • Ensure that the Date Recorded matches the payment date (e.g., March’s payment should be recorded as March 1st).

  • Check "Keep original amortization" (if this option is unavailable, it is an interest-only loan).

  • Click Confirm.

3. Update the Discharge Section (MA)

  • Set the Date to the effective date of the Buyout (1st of the upcoming month).

  • Remove the Per Diem Distribution to the investor being bought out.

  • Preview the Investor Statement.

4. Review the Investor Statement (MA)

  • In the Preview window, select the Buyout Investor Payout Statement from the template dropdown.

  • Review the statement to ensure the following details are correct:

    • Investor’s balance

    • Monthly payment

    • Total payout amount (excluding per diem charges)

  • Confirm the statement, sign it, and download it to your desktop.

  • send it to your Manager for approval.

5. Approve the Investor Statement (HS)

  • On the General Servicing ticket (Category: Investor Buyouts), generate an Approval ticket (Category: Investor Buyouts), assign to your Manager for approval.

  • You will be notified when the approval ticket is closed.

    • If the ticket is approved, follow step 6 onwards.

    • If the ticket is denied, make necessary corrections and resubmit for approval.

6. Finalizing the Buyout (MA)

  • Once the Manager approves, delete the Deferred Payment in MA.

7. Sending the Statement to the Investor (Adobe)

  • Open the Investor Statement in Adobe Sign.

  • Click Request Signatures.

  • Add the Investor’s email address and include a message regarding the Buyout.

  • Click Specify Where to Sign.

  • Place the signature field on the designated signature line (ensure correct fields for signature, name, and date).

8. Save executed document to document records (HS)

  • << hoping all this can come from the MA update, once the investor switch takes place >> Once the Investor signs the Buyout Statement, open HS:

    • Adjust the MIC mortgage amount to include the Investor’s portion being bought out.

    • Update the interest rate to the face rate (if MIC is now the sole investor).

    • Adjust the monthly payment to reflect the MIC’s new payment amount.

    • Update the Lender Loan-to-Value (LTV) to reflect the full LTV (if MIC is the only investor).

    • If it becomes a MIC standalone, ensure only one investor line is active, and set their position to SA (Standalone).

  • Save all updates in the Lender's tab.

  • Create a document record for each of the following documents:

    • the approved Buyout Statement and

    • the signed Investor Statement

9. Create an accounting admin ticket

  • Create an Account Admin ticket (Category: Investor Buyout).

    • If MIC is buying out investor, assign to Senior MIC Accountant

    • Otherwise, assign to yourself, and the ticket owner will be cleared.

    • Update the ticket description with the following:

      • Please see attached the signed Investor Statement and Buyout Approval email regarding the above-mentioned file. Please complete the following:

        1. Transfer Funds:

          • Transfer $XXX Principal from MIC to Trust.

          • Transfer $XXX for the monthly payment.

          • Transfer $XXX for any additional funds required.

        2. Process Transfer from Trust to Investor:

          • Transfer the principal amount (less the upcoming payment) to the Investor.

          • Exclude the upcoming payment as the PAD will still be processed mid-month.

        3. Update Mortgage Automator:

          • Process the Investor switch to reflect the MIC as the sole investor (if applicable).

        4. Confirm Updates in HubSpot:

          • The Lenders tab in HubSpot has been updated accordingly.

  • Associate both the signed Investor Statement and the Manager’s Buyout Approval document records to the new ticket.

11. Final Confirmation

  • Once Accounting confirms the fund transfer, they will close their ticket and you will be informed.

  • Create a task on the Investor Buyout ticket for your Manager to register the transfer.

  • Once the task is complete, your Manager should @mention you in a note.

  • Close the Investor Buyout ticket.