Day 1 (“Circle Day”): Purchase of the Securities
- Servicer’s counsel confirms approval and receipt of all due diligence items from the defeasance checklist, including original signatures to the defeasance documents
- Buyer confirms they are in a position to fund into escrow on day 2
- Borrower authorizes Medalist Defeasance to “circle” or initiate the purchase of securities to settle day 3.
- Medalist Defeasance “circles” the portfolio of Securities through the outside broker-dealer and distributes final numbers to all parties via the final defeasance closing statement
- Servicer’s counsel distributes the defeasance Closing Instruction Letter; and
Day 2 (“Safety Day”): Close Underlying Transaction into Escrow
- Borrower and buyer facilitate closing the underlying transaction into escrow
- Title company confirms receipt by the close of business:
- Funds sufficient to close defeasance and underlying transaction from both buyer and buyer’s lender (if applicable)
- Original mortgage release or assignment documents
Day 3 (“Closing Day”): Settle Securities and Record Mortgage Documents
- When markets open, outside broker-dealer transfers the securities electronically to the securities intermediary for settlement
- Servicer’s counsel instructs the title company to disburse funds pursuant to the closing instruction letter to securities intermediary in order to settle the securities trades; **NOTE: This wire must be received by securities intermediary by 2:00pm ET. Otherwise, breakage costs may apply**
- Defeasance closes once all items are completed per the closing instruction letter.