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Tri-party Custody Agreement

This is an actual contract by Indymac Bancorp.
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Sectors: Banking
Governing Law: California , View California State Laws
Effective Date: December 09, 1994
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TRI-PARTY CUSTODY AGREEMENT


* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
BY AND AMONG
CWM MORTGAGE HOLDINGS, INC.
INDEPENDENT NATIONAL MORTGAGE CORPORATION


and


INDEPENDENT LENDING CORPORATION
('Customer')


AND


LEHMAN COMMERCIAL PAPER INC.
('Lehman')


AND


STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
('Custodian')


DATED: December 9, 1994


This CUSTODY AGREEMENT is made and entered into as of the date written on the cover by and among Customer, Custodian and Lehman.


WHEREAS, Lehman has agreed to extend credit to Customer evidenced by a Promissory Note dated as of the date on the cover page (the 'Promissory Note') of Customer;


WHEREAS, Customer has or shall hereafter grant to Lehman a security interest in certain collateral as security for the due and punctual payment of sums due from Customer to Lehman;


WHEREAS, Customer intends to deliver certain items of such collateral to Custodian and Custodian is willing to hold such collateral in custody for the benefit of, and as agent for Lehman, in order to perfect the security interest in such collateral of Lehman. Except for the Custodian's obligations to take possession of such collateral as described herein, the Custodian shall not be responsible for the validity and perfection of such security interest; and


WHEREAS, the parties to this Agreement desire to set forth the terms and conditions under which Custodian will hold such collateral;


NOW, THEREFORE, the parties to this Agreement hereby agree as follows:


1. APPOINTMENT OF CUSTODIAN.


Lehman hereby appoints Custodian, and Custodian hereby accepts its appointment, to act as the agent of Lehman, and its participants (although Custodian shall solely deal with Lehman), for the purpose of taking custody of such present and future collateral and proceeds or substitutions thereof. With respect to each Mortgage Loan described in a Collateral Submission Summary, Custodian's appointment as Lehman's agent shall terminate upon (i) settlement of purchase of such Mortgage Loan by any bona fide purchaser ('Nonagency Purchaser') reasonably acceptable to Lehman and set forth on Schedule II attached hereto, as such schedule may be amended from time to time, (ii) payment in full of all outstanding Advances together with interest thereon or (iii) any release in accordance with Section 8 hereof.


2. DEPOSIT OF COLLATERAL.


Customer shall deposit with Custodian, and Custodian agrees to hold as agent for Lehman and its participants, such collateral as may have been, or may in the future be, so deposited hereunder. Custodian shall maintain such collateral so deposited in separate records and files.


3. INTERIM REQUIRED DOCUMENTS.


For each Mortgage Loan, Customer shall deposit with Custodian the following documents (the 'Interim Required Documents'), and/or all such other documents as Lehman may require from time to time for the purchase by a Nonagency Purchaser of the related Mortgage Loans, as the case may be, duly authorized and completed:


(a) the original note endorsed in blank, and without recourse;


(b) an assignment of mortgage (or, in the case of Cooperative Loans, an assignment of security interest) with assignee in blank but otherwise in recordable form, but not recorded, and all interim assignments (copies of which may be provided until originals are available), if any ('Assignment of Mortgage');


(c) a Collateral Submission Summary, along with a schedule of mortgages; and


(d) at the request of Lehman, all such other documents as Lehman may reasonably require from time to time for the purchase of Mortgage Loans by a Nonagency Purchaser, provided that the Custodian is advised of such documents.


4. WET INK FUNDING REQUIRED DOCUMENTS.


For each Mortgage Loan intended to be originated or financed by Customer through funds provided by Lehman, Customer shall deposit, or cause to be deposited, with Custodian the following required documents (the 'Wet Ink Required Documents'), duly authorized and completed:


(a) On or prior to each date on which Lehman advances funds to Customer (each such date, an 'Advance Date'), a schedule identifying each such Mortgage Loan;


(b) Within five (5) Business Days after the Advance Date:


(i) the original note endorsed 'Pay to the order of _______________' without recourse and signed in the name of the originator by an officer of the originator ('Mortgage Note');


(ii) an Assignment of Mortgage; and


(iii) a Collateral Submission Summary;


(c) at the request of Lehman, all such other documents as Lehman may reasonably require from time to time for the purchase of Mortgage Loans by
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a Nonagency Purchaser, provided that the custodian is advised of such documents.


5. SETTLEMENT ACCOUNTS; POSITION REPORTS.


(a) All proceeds from the sale of designated Mortgage Loans to an Agency or to a Nonagency Purchaser will either be sent directly to Lehman or to a demand deposit account (the 'Settlement Account') for and on behalf of Lehman (to the extent of its interest therein). Customer grants Lehman a continuing lien and first priority security interest in all cash and other proceeds contained in the Settlement Account to the extent of the Obligations.


(b) Upon the reasonable request of Lehman, with respect to the Settlement Account, Customer will submit to Custodian and Lehman a Position and Settlement report substantially in the form of Exhibit C hereto (the 'P&S Report').


6. CERTIFICATION OF DOCUMENTATION.


Custodian, upon receipt of all of the Interim or Wet Ink Required Documents, as the case may be (collectively, the 'Required Documents'), shall review such Required Documents, to verify whether all are complete, whether each such document purporting to be an original appears on its face to be so, and whether each such document purporting to be a certified photocopy or conformed copy appears on its face to be a true copy of its original. Custodian shall promptly notify Customer and Lehman of any documents which are missing, deficient or patently inconsistent. Customer shall promptly deposit such missing documents with Custodian or complete or correct the documents. When the Required Documents have been received in full and correct form, Custodian will: (i) promptly deliver a signed Collateral Submission Summary to Lehman; and (ii) upon request of Lehman, deliver copies of the Required Documents to Lehman. In making such verification, the Custodian may rely conclusively on the Collateral Submission Summary, the Required Documents (and the documents constituting the Custodian's mortgage file), and the Custodian shall have no obligation to independently verify the correctness of the Customer's certification on such Collateral Submission Summary or the effectiveness, sufficiency, validity, enforceability, collectability, recordability, or adequacy of such Collateral Submission Summary, Required Documents (and the documents constituting the Custodians mortgage file). Any submission of Required Documents to a Nonagency Purchaser pursuant to (ii)(a) above shall be accompanied by a completed Bailee's Letter signed by the Custodian in the form of Exhibit B hereto.


7. FURTHER OBLIGATIONS OF CUSTODIAN.


Custodian shall promptly notify Lehman if (i) Customer fails to pay any amount due to Custodian under this Agreement or otherwise, and such failure results in Custodian's accelerating the payment of any amount owed to Custodian by Customer, or (ii) Custodian has


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actual knowledge that any mortgage, pledge, lien, security interest or other charge or encumbrance (other than for the benefit of Lehman) has been placed on any account maintained by Customer with Custodian or on the Required Documents.


Custodian shall notify Lehman of all Mortgage Loans remaining in the Borrowing Base for more than 120 consecutive days. Such Mortgage Loans shall have an Advance Rate of 95% and to the extent such Mortgage Loans exceed 40% of the Maximum Credit shall have a Collateral Value of zero.


Custodian shall use reasonable care in accordance with the standards it customarily uses for its other clients engaged in similar transactions and shall hold the Required Documents in its fire rated storage vault under its exclusive custody and control, in accordance with customary standards for such custody, and shall maintain a fidelity bond plus document hazard insurance in a sufficient amount or be otherwise adequately self-insured to cover any and all transactions contemplated by this Agreement.


Custodian hereby represents and warrants to each party that Custodian is not controlled by, under common control with or otherwise affiliated with Customer, and covenants and agrees with Lehman that in the event any such affiliation occurs, Custodian shall promptly notify Lehman thereof.


Custodian, Customer and Lehman hereby represent and warrant to each party that this Agreement has been duly authorized, executed and delivered by each party and constitutes the legal, valid and binding obligation of each party enforceable in accordance with its terms.


8. RELEASE OF REQUIRED DOCUMENTS.


(a) Customer may from time to time request Custodian in writing to permit the withdrawal of certain Required Documents for the purpose of correction of errors therein or for permanent withdrawal, which request and withdrawal shall be made as follows. Any such requests to withdraw Required Documents for permanent withdrawal shall only be made to the extent that after such contemplated withdrawal, the Collateral Value of Mortgage Loans in the Borrowing Base equals or exceeds the aggregate dollar amount of all outstanding Advances as specified in Section 2.2 of the Pledge Agreement and Section 8(a) of the Facility provided that Lehman, and not Custodian, shall be responsible for monitoring Collateral Value. Notwithstanding the foregoing, Custodian may permit the withdrawal of ten Mortgage Loans per pool at any time for the purpose of correcting such Mortgage Loans without the written consent of Lehman. If more than twenty Mortgage Loans for a particular pool have been and remain released for correction at any time, any additional request for release in connection with such pool will require the consent of Lehman, which consent shall not be unreasonably withheld. Promptly upon completion of the


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correction of any such released Required Document and, in any event within 15 days, Customer shall return such documents to Custodian. Any request for release by Customer shall be in the form of the Request and Receipt form attached hereto as Exhibit D or such other form as may be mutually agreed upon. Custodian shall execute an acknowledgment of release of such Required Documents, shall return one original to Customer, shall forward one original to Lehman, and shall retain one original. Promptly upon completion of any such correction, Customer shall return such Required Documents to Custodian.


(b) In the event Customer desires to sell Mortgage Loans directly to an Agency or to a Nonagency Purchaser, or to request shipment of the Required Documents on behalf of a borrower to an Agency or to a Nonagency Purchaser, and written notice of such desire is provided to the Custodian, Custodian shall complete the endorsements and forward the Required Documents as instructed by Customer to effect such sale to the respective Agency or Nonagency Purchaser; provided, however, that any Required Documents that are unacceptable to the Agency or Nonagency Purchaser shall be returned directly to Custodian and held by Custodian for Lehman in accordance with this Custody Agreement. Any submission of Mortgage Loans to an Agency or Nonagency Purchaser shall be accompanied by a Bailee Letter signed by the Custodian (i) in the form of Exhibit B-1 hereto in the case of Mortgage Loans which are owned by Customer, and (ii) in the form of Exhibit B-2 hereto in the case of Mortgage Loans which are pledged to Customer (and such pledge has been assigned by Customer to Lehman).


The Custodian shall have no duty to monitor the delivery to it of such documents other than to note receipt of such on the Collateral Submission Summary, as applicable.


9. RIGHT TO INSPECT.


Upon reasonable prior written notice to the Custodian, Custodian shall permit (i) inspection at all reasonable times during regular business hours by Customer or Lehman (or by their respective agents, attorneys, or auditors when requested by Customer or Lehman) of the Required Documents and the records of Custodian relating to this Agreement and (ii) Customer or Lehman (or by their respective agents, attorneys, or auditors when requested by Lehman or Customer, as applicable, to make copies of the Required Documents and the records of Custodian relating to this Agreement.


10. DELIVERY OF REQUIRED DOCUMENTS TO LEHMAN.


If an Event of Default has occurred and is continuing, or upon resignation or termination of Custodian or other reasonable request, Custodian shall promptly deliver to Lehman or its designee any or all Required Documents and other items of collateral in Custodian's custody upon Lehman's written request. Lehman shall provide Customer with a copy of any such notice delivered to


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Custodian. Written instructions as to the method of shipment and shipper(s) the Custodian is directed to utilize in connection with the transmission of Required Documents in the performance of the Custodian's duties hereunder shall be delivered by Lehman to the Custodian prior to any shipment of any Required Documents pursuant to the request of Lehman hereunder. Lehman will arrange for the provision of such services at its sole cost and expense (or, at the Custodian's option, reimburse the Custodian for all costs and expenses incurred by the Custodian consistent with such instructions) and will maintain such insurance against loss or damage to the Required Documents as Lehman deems appropriate.


11. CUSTODIAN FEES.


It is understood that Custodian, or its successor, will charge such reasonable fees for its services under this Agreement as are set forth in a separate agreement between Custodian and Customer, the payment of which, together with Custodian's reasonable expenses in connection herewith, shall be solely the obligation of Customer.


12. TERMINATION.


Custodian may terminate its obligations under this Agreement upon 30 days prior written notice to Customer and Lehman. In the event of such termination, Customer shall appoint a successor custodian, subject to approval by Lehman, and Custodian shall promptly transfer to the successor custodian, as directed, all Required Documents and other items of collateral being held by Custodian under this Agreement. If, however, a successor custodian is not appointed by the Customer or Lehman within sixty (60) days, all duties and obligations of the Custodian shall cease and terminate. The Custodian's sole responsibility thereafter shall be to safely maintain all of the Custodian's mortgage files and to deliver the same to a successor custodian; provided, however, if the Customer and Lehman have not appointed a successor custodian within thirty (30) days after the expiration of the aforementioned 60 day period, Custodian shall deliver such documents to Lehman. Lehman and Customer may terminate Custodian's appointment hereunder upon fifteen (15) days prior notice to Custodian. If Lehman and Customer have not appointed a successor Custodian within thirty (30) days thereafter, Custodian shall deliver all Required Documents to Lehman.


13. REPRESENTATION BY CUSTOMER.


Customer hereby represents and warrants to Lehman that:


(a) the Collateral Value of all Mortgage Loans remaining in the Borrowing Base for more than 120 consecutive days does not exceed 40% of the Maximum Credit; and


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(b) In the case of originations by Customer, all other documents and requirements to create an enforceable first lien mortgage on the related real estate property have been completed and duly executed.


14. NOTICES.


All written communications hereunder shall be mailed, telecopied or delivered, if to Customer or to Custodian at its address as indicated on Schedule I, and if to Lehman, at its address at 3 World Financial Center, 9th Floor, New York, NY 10285-0900 or Telecopy: (212) 528-9284, Attention: Central Funding Department, or as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall be effective when delivered to the party to which such notice is to be given.


15. CONCERNING THE CUSTODIAN.


Custodian shall not be liable for any action or omission to act hereunder except for its own gross negligence or willful misconduct. In no event shall Custodian have any responsibility to ascertain or take action with respect to the Required Documents and other items of collateral, except as expressly provided herein. The Custodian may act in reliance upon any written communication of Customer and Lehman concerning the delivery of the Required Documents and other items of collateral pursuant to this Agreement reasonably believed by Custodian to be genuine and signed by the proper party. Custodian does not assume and shall have no responsibility for, and makes no representation as to, monitoring the value of the Required Documents and other items of collateral. In no event shall the Custodian or its directors, officers, agents and employees be held liable for any special, indirect, punitive or consequential damages resulting from any action taken or omitted to be taken by it or them hereunder or in connection herewith even if advised of the possibility of such damages.


16. REPRESENTATIONS BY CUSTODIAN.


Custodian hereby represents and warrants that it will not assert any lien, claim or adverse interest against the collateral. However, the Custodian makes no representations as to the title, or as to the validity or adequacy of the security afforded thereby or hereby (except as to Custodian's authority to enter into this Agreement), and Custodian shall incur no liability or responsibility in respect of any such matters.


17. DUTIES OF CUSTODIAN.


Custodian shall have no duties or responsibilities except those that are specifically set forth herein and no duties or obligations shall be implied in this Agreement against Custodian. Custodian shall be under no responsibility or duty with respect to the disposition of any Required Documents while such


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Required Documents are not in its possession. If Custodian shall request instructions from Lehman with respect to any act, action or failure to act in connection with this Agreement, Custodian shall be entitled to refrain from taking such action and continue to refrain from acting unless and until Custodian shall have received written instructions from Lehman without incurring any liability therefor to Lehman, Customer or any other person.


If the Custodian shall at any time receive conflicting instructions from Lehman and the Customer with respect to Custodian's mortgage files and the conflict between such instructions cannot
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