Opinion ID: 801993
Heading Depth: 3
Heading Rank: 2

Heading: Morgan Stanley Sells the Loan to Okun

Text: Morgan Stanley intended to resell its loan. Proving unsuccessful with third-party buyers, however, it agreed to sell the loan to Okun. Okun purchased the loan through an entity he controlled, IPA Lender. On August 11, 2006, Morgan Stanley assigned the Note, Mortgage, RSA, and escrow accounts to IPA Lender. The Mortgage assignment stated that Morgan Stanley: [G]rant[ed], bargain[ed], s[old], convey[ed], assign[ed], transfer[red], and set over, without recourse, representation, or warrant, all of [its] right, title, and interest, of any kind whatsoever, including that of mortgagee, beneficiary, payee, assignee, or secured party . . . , in and to the . . . [Mortgage] . . . ; Together with the bonds or notes or obligations described in said Mortgage . . . , and the monies due and to grow thereon with the interest, and any and all other related security instruments which secure the indebtedness and/or obligations secured by said Mortgage . . . . (emphasis added). IPA Fund Manager—still managed by Okun and his associate, Lara Coleman—executed Borrowers’ Escrow Instructions in connection with the sale, which, in pertinent part, provided: In connection with the sale of the Loan by [Morgan Stanley] to [IPA Lender], [IPA Fund Manager] hereby releases all escrow, reserve and/or impound accounts (“Escrows”) of any nature related to the Loan and transfers all of such Escrows to . . . [Morgan Stanley] to have and to hold the same forever. 8 No. 11-2891 Lara Coleman, Okun’s associate and a manager at IPA Lender, was the only signatory on these instructions. According to the Investors, this provision modified Sections 3.4 and 5.1 of the RSA, which stated: Borrower understands and agrees that, in connection with any sale of the Loan pursuant to Section 18.1 of the Security Instrument, all of Lender’s interest in the Reserves and the Reserve Escrow Accounts will by assigned to the transferee of the Loan. . . . Upon the earlier of (a) Borrower’s completion of all Repairs to the satisfaction of the Lender . . . or (b) payment in full of all sums evidenced by the Note, Lender shall disburse to Borrower all remaining funds in the Replacement Reserve, and the Tenant Improvements and Leasing Commission Reserve. When Morgan Stanley sold the loan to IPA Lender, it held several escrow accounts totaling $1,361,184.63. Morgan Stanley “netted” the escrow funds against the purchase price of the loan, meaning that it credited this amount against the amount IPA Lender owed. Simply put, Morgan Stanley permitted IPA Lender to use the reserve funds to pay part of the purchase price and, thereafter, was uninvolved with the Investors’ loan.