Exhibit 10.18  SETTLEMENT
AGREEMENT  This SETTLEMENT AGREEMENT (this Agreement),
dated as of October 30, 2009, is by and among Impac Mortgage Holdings
Inc., a Maryland corporation (IMH), Impac Funding Corporation, a
California corporation (IFC), Impac Warehouse Lending Group, Inc.,
a California corporation (IWLG and collectively, with IMH and IFC, Impac)
and UBS Real Estate Securities Inc., a Delaware corporation (UBS).  RECITALS  WHEREAS, Impac and UBS are parties to an Amended and
Restated Master Repurchase Agreement dated as of September 11, 2008 (the ARMRA)
among IMH, IFC and IWLG as the Sellers thereunder, and UBS as the Buyer
thereunder (capitalized terms used and not defined herein having the meanings
ascribed thereto in the ARMRA);  WHEREAS, there exists an unpaid and unsatisfied
Repurchase Price owing to UBS by Impac under the ARMRA as of the date hereof,
consisting of $139,754,978.81 in outstanding Purchase Price (the Outstanding
Purchase Price) together with accrued and unpaid Price Differential
thereon that as of the date hereof equals at least $244,116.78 (the Outstanding
Price Differential and together with the Outstanding Purchase Price, the Outstanding
Repurchase Price);  WHEREAS, the Repurchase Obligations (which include the
Outstanding Repurchase Price) and other Seller-Related Obligations under the
ARMRA are secured by the Mortgage Loans and other Purchased Assets and
Purchased Items pursuant to Section 6.02 of the ARMRA;  WHEREAS in order to provide for a workout and satisfaction
of the Repurchase Obligations (including the Outstanding Repurchase Price)
under the ARMRA, and other Seller-Related Obligations, if any, secured pursuant
to the ARMRA, Impac and UBS desire to enter into this Settlement Agreement and
to effect the various transactions, agreements and transfers contemplated and
described herein, including without limitation, executing and delivering,
simultaneously with the execution and delivery hereof, the Credit Agreement (as
defined herein) pursuant to which IMH, IFC, IWLG and Integrated Real Estate
Services Corporation (a subsidiary of IMH) (IRES) jointly and
severally are issuing the Term Notes (as defined therein) to UBS, along with
Impacs effecting and evidencing hereunder an irrevocable transfer and conveyance
to UBS of all Impacs right, title and interest in and to the Mortgage Loans
and other Released Assets as described in Section 1(a)(ii) hereof.  NOW, THEREFORE, for and in consideration of the
premises, and of the mutual covenants and agreements contained herein and in
the Credit Agreement, the parties hereto agree as follows:


1.Payments and Actions of
Impac.  (a)Impac hereby agrees that, simultaneously
with the execution and delivery of this Agreement by the parties hereto and in
each case as a condition to the effectiveness of UBSs undertakings and
agreements hereunder (including the Release of Claims by UBS described in Section 3
below):  (i)it shall transfer or cause to be
transferred in immediately available funds an amount equal to $20,000,000, free
of any lien, claim or encumbrance (Adverse Claim), to a bank account
designated by UBS (the Designated Account) for the exclusive benefit
of UBS;  (ii)it shall release in its entirety to UBS,
and otherwise agree, that it has assigned, conveyed and transferred to UBS,
free and clear of any Adverse Claim, (A) all of its right, title and
interest in and to the Mortgage Loans listed or described on Exhibit A
to this Agreement (the Applicable Mortgage Loans), the Servicing
Rights related to the Applicable Mortgage Loans, the REO Properties listed or
described on Exhibit A to this Agreement and/or related to the
Applicable Mortgage Loans, other Additional Purchased Items (if any) related to
the Applicable Mortgage Loans, any mortgage guaranties or insurance (whether
issued by governmental agencies or otherwise and including, without limitation,
any title insurance) with respect to any of the Applicable Mortgage Loans
and/or the aforementioned REO Properties, together with any claims thereunder and
any past or future collections thereunder, and any other assets or property in
each case listed or described on Exhibit A to this Agreement,
together with any proceeds thereof, including any and all Income derived from
or related to the Applicable Mortgage Loans (including, without limitation, all
such Income on deposit in the UBS Cash Account or any other account
contemplated under the ARMRA)(and with such assignment, transfer and conveyance
being effected pursuant to and evidenced by the ARMRA, to the extent
applicable, in addition to being confirmed and evidenced hereby), and (B) for
the avoidance of doubt and not in limitation of the foregoing, all of its
right, title and interest, if any, in the UBS Cash Account and the amounts, if
any, evidenced thereby and/or held therein, together with any proceeds thereof
(the foregoing assets and property described in clauses (A) and (B) above
being the Released Assets);  and  (iii)it shall have executed and delivered to
UBS that certain Credit Agreement dated as of the date hereof among IMH, IFC,
IWLG, IRES and UBS (the Credit Agreement), shall have issued to UBS
the two separate Term Notes thereunder (as defined therein), and shall have
otherwise satisfied any conditions precedent to the effectiveness of such
Credit Agreement to be satisfied by it as stated therein (other than the
effectiveness of this Agreement), such satisfaction to be evidenced by the
execution and delivery by UBS to Impac and IRES of a signed execution version
of such Credit Agreement.  (b)Subject to and conditioned on the
effectiveness of the Release of Claims by UBS as described in Section 3
below, Impac agrees that it shall have no interest in any of the funds or
assets transferred pursuant to or as described in this Section 1 or evidenced
thereby on or after the date of such transfer.  2


2.Actions of UBS.UBS hereby agrees that, simultaneously with the
execution and delivery of this Agreement by the parties hereto and as a
condition to the effectiveness of Impacs undertakings and agreements hereunder
(including the Release of Claims by Impac described in Section 3 below),
it shall have executed and delivered to Impac the Credit Agreement and shall
have otherwise satisfied or caused to be satisfied any conditions precedent to
the effectiveness of such Credit Agreement to be satisfied by it as stated
therein (other than the effectiveness of this Agreement), such satisfaction to
be evidenced by the execution and delivery by Impac and IRES to UBS of a signed
execution version of such Credit Agreement.  3.Mutual Releases.Upon the completion of all of the actions
described in Section 1 and Section 2 hereof in accordance with the
terms thereof, such completion to be evidenced by the transfer of funds
described in Section 1(a)(i) and the simultaneous delivery and
release by each party to the other of an executed counterpart hereof, and
subject to the rights of the parties to enforce the terms of this Agreement and
the Credit Agreement,  (i) UBS hereby forever releases, waives,
discharges and agrees and covenants not to sue, and is deemed to have forever
released waived, discharged and agreed and covenanted not to sue, each of IMH,
IFC and IWLG and any of their respective current, former or future
predecessors, successors, parents, subsidiaries, branches and affiliates, or
any current, former or future officers, directors, employees, members,
stockholders, agents, attorneys, representatives, assigns and heirs of each of
the foregoing persons or entities, and  (ii) each of IMH, IFC and IWLG hereby
forever releases, waives, discharges and agrees and covenants not to sue, and
is deemed to have forever released waived, discharged and agreed and covenanted
not to sue, UBS and any of its respective current, former or future
predecessors, successors, parents, subsidiaries, branches and affiliates, or
any current, former or future officers, directors, employees, assigns and heirs
of each of the foregoing persons or entities,  in each case in respect of any actual or
potential claims, counterclaims, demands, allegations, rights, obligations,
duties, debts, liabilities, liens, encumbrances, trespasses, levies, promises,
covenants, contracts, agreements, understandings, damages, injuries, losses,
actions, causes of action, setoffs, offsets, indemnities, costs, expenses,
charges, attorneys fees, judgments, orders and liabilities of any kind or
nature whatsoever, whether in law or in equity, known or unknown, contractual,
statutory, tort or otherwise based, concealed or revealed (any of the
foregoing, Claims) relating in any way to or arising out of the ARMRA
(including the Fee Letter), the Old Repurchase Agreement, transactions under
the ARMRA and the Old Repurchase Agreement, the Mortgage Loans, the other Purchased
Assets, the Purchased Items and the Additional Purchased Items, and any other
documents or instruments relating thereto, and including, in respect of UBS,
Claims against Impac in respect of the Outstanding Repurchase Price, other
repurchase obligations or any provision of the ARMRA (including the Fee Letter)
or the Old Repurchase Agreement providing for the survival of indemnification
or any other obligations, except to the limited extent described in the last
sentence of this paragraph below (the agreements of UBS and Impac stated in
clauses (i) and (ii) above in respect of such Claims being their
respective Release of Claims). 
For the avoidance of doubt (and in no way to suggest that any parties
hereto believe that any such Claims exist or will exist), the parties further
agree that the aforementioned Release of Claims shall also extend to any Claims
arising out of or  3


attributable to any prior arrangements or
discussions among the parties or affiliates thereof concerning the transfer or
potential transfer of the Platform (as defined in the ARMRA) or assets and
liabilities relating thereto, and Impac also agrees that its agreement in this
regard is made for the further benefit of any person or entity with whom UBS or
any affiliate thereof may negotiate or arrange for a transfer of or investment
in the Platform or assets and liabilities thereof or relating thereto.  The parties hereto intend that their respective
Release of Claims each be a complete and absolute bar to any and all such
Claims and to be binding on any parties in interest claiming through them and
any of their successors and assigns.  Notwithstanding the
foregoing, nothing herein shall constitute a Release of Claims in respect of
the indemnification provisions of Impac in favor of UBS or any other
Indemnified Party under Section 11.01 of the ARMRA; provided, that,
such indemnification obligations of Impac shall be preserved only to the extent
that they arise from or are attributable to (1) any claim, assertion or
action (in each case in writing) made by or arising through a mortgagor or
other person obligated in respect of any Mortgage Loan (including any actual or
purported amendment, modification, consent or waiver in respect thereof), the
basis of such claim, assertion or action relates to any action, inaction or
omission of Impac or any employee or agent thereof and such action, inaction or
omission (or any similar action, inaction or omission) of Impac or any employee
or agent thereof was determined to have occurred (whether in part or in full)
in any court proceeding, arbitration or similar proceeding or was alleged in
any court proceeding, arbitration or similar proceeding which was terminated in
connection with a settlement which has been consented to by Impac, such consent
not to be unreasonably withheld (and it being further understood that such
surviving indemnification obligation of Impac in favor of UBS shall not cover
any damages, costs or losses in respect of such claim, assertion or action to
the extent such damage, cost or loss is attributable to actions, inactions or
omissions of UBS or any employee or agent thereof, but with it being understood
that any UBS failure to take action in respect of or make objection to any such
above-described action, inaction or omission of Impac or its employees or
agents, regardless of whether known to UBS or not, shall not constitute an
action, inaction or omission of UBS or its employees or agents for this
purpose), or (2) the asserted status or condition, including as to
environmental matters, of any Mortgaged Property or REO Property, and such
asserted status or condition relates to or is attributable to (A) any
period covering the financing of such Mortgaged Property or ownership of such
REO Property by Impac or (B) any action, inaction or omission of Impac or
any employee or agent thereof.  4.Status Under UCC Section 9-620.With respect to
UBSs election to receive the release and conveyance of Released Assets
pursuant to Section 1(a)(ii) above in partial consideration for its
Release of Claims, this Agreement shall constitute a proposal under UCC
Sections 9-620 and 9-621 to take such Released Assets, together with the cash
and other rights pursuant to this Agreement, and Impacs acceptance of and
consent to such proposal.  The parties to
this Agreement agree that the acceptance of such proposals will not eliminate
or satisfy the obligations to UBS under this Agreement, and agree that such
acceptance shall be deemed to occur after default for the purposes of UCC Section 9-620.  5.Representations and
Warranties.(i) Each of the parties hereto hereby
represents and warrants that each of the following statements is true, accurate
and complete as to such party as of the date hereof:  4


(a)Such party has carefully read and fully
understood all of the terms and conditions of this Agreement and the Credit
Agreement;  (b)Such party has consulted with, or had a
full and fair opportunity to consult with, an attorney regarding the terms and
conditions of this Agreement and the Credit Agreement;  (c)Such party has had a full and fair
opportunity to participate in the drafting of this Agreement and the Credit
Agreement;  (d)Such party is freely, voluntarily,
knowingly and intelligently entering into this Agreement and the Credit
Agreement;  (e)Such party is not prohibited from
entering into this Agreement and the Credit Agreement, all necessary consents
for entering into this Agreement and the Credit Agreement and for the
performance of its obligations hereunder and thereunder have been obtained, and
there are no pending actions orinvestigations the outcome
of which could adversely affect such partys ability to perform its obligations
hereunder;  (f)In entering into this Agreement and the
Credit Agreement, such party has not relied upon any representation, warranty,
covenant or agreement not expressly set forth herein or therein;  (g)Each of this Agreement and the Credit
Agreement has been duly authorized and validly executed and delivered by such
party and constitutes such partys legal, valid and binding obligation,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law; and  (h)Such party is duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation
and has the full power and legal authority to execute this Agreement and the
Credit Agreement, and to consummate the transactions contemplated hereby and
thereby, and to perform its obligations hereunder and thereunder.  (ii) Each of IMH, IFC and IWLG hereby represents and warrants that
it has not settled or released, in part or in full, any claim that it may have
under or related to any mortgage guaranties or insurance (whether issued by
governmental agencies or otherwise  and
including, without limitation, any title insurance) with respect to any of the
Released Assets.  6.Governing Law.THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES
THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.  5


7.Submission to
Jurisdiction, Etc.Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself to the exclusive
personal jurisdiction of the Supreme Court of the State of New York sitting in
New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State court or, to the fullest extent permitted by applicable law, in
such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that a party may
otherwise have to bring any action or proceeding relating to this Agreement
against another party or its respective properties in the courts of any
jurisdiction.  8.Entire Agreement.This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and it supersedes all prior and
contemporaneous agreements and understandings relating to the same.  9.Modifications.No part or provision of this Agreement may be amended, modified, waived,
discharged or terminated except by mutual written agreement of all of the
parties hereto.  10.Section Headings
and Defined Terms.The section
headings and defined terms set forth in this Agreement are for convenience only
and shall have no bearing on the characterization of any agreement or
qualification of any agreement.  11.Counterparts.This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which when taken together shall constitute
one and the same instrument.  This
Agreement may be executed and delivered by facsimile or by email in portable
document format (pdf).  Any facsimile or
email signatures shall have the same legal effect as manual signatures.  12.Further Assurances;
Repurchase Obligation; Etc..(a) Each
of IMH, IFC and IWLG hereby agree to execute and deliver all such other
documents and to take all such other action as may be reasonably requested by
UBS, without further consideration, in order to effectuate the terms hereof,
including without limitation (i) preparing, executing and filing in the
appropriate jurisdictions any mortgage assignments, assignments of title and
other documents as may be necessary or advisable (in the reasonable
determination of UBS) in connection with the transfer of anyMortgage Loan
or REO Property contemplated under Section 1 hereof and the assignment and
perfection of any related mortgages in respect of the same, (ii) delivering
or transferring to UBS images of each credit file relating to obligors on
Mortgage Loans, (iii) delivering or transferring to UBS an accurate data
tape in respect of such Mortgage Loans, obligors and REO Property, as
applicable, (iv) assisting UBS with reasonable requests to resolve
documentation issues that may arise in connection with any attempt by UBS to
further sell or transfer the Mortgage Loans and/or REO Property, (v) entering
into mutually acceptable termination arrangements with the Custodian in respect
of the Custodial Agreement and (v)taking commercially reasonable efforts to deliver the
documents which are listed on Exhibit B hereto (the Exception
Report Documents), at the direction of UBS, as soon as possible after  6


the date hereof.  In connection
with the foregoing undertakings, Impac hereby authorizes UBS to execute, from
time to time on its behalf, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the foregoing, and Impac hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof.  This power of attorney is
a power coupled with an interest and shall be irrevocable.  (b)If IMH, IFC and IWLG fail to deliver any
Exception Report Document within 60 days of the date hereof, then IMH, IFC and
IWLG shall be jointly and severally obligated to, and shall, repurchase the
Mortgage Loan related to such Exception Report Document for a purchase price
equal to (i) the outstanding principal amount of such Mortgage Loan as of
the date of such repurchase (plus accrued interest thereon) multiplied by (ii) a
fraction, the numerator of which is equal to the Outstanding Repurchase Price
(as defined in the second WHEREAS clause hereof) minus $55,000,000 and
the denominator of which is the aggregate outstanding principal amount of all
Mortgage Loans being transferred to UBS on the date hereof (as set forth on Exhibit A
hereto).  (c)Each of IMH, IFC and IWLG hereby agree
that after the date hereof, it shall not, and shall not permit any subsidiary
thereof to, contact or direct any other Person to contact (in each case,
whether in writing, by electronic mail, telephonically or otherwise and whether
directly or indirectly) any Mortgagor with respect to a Mortgage Loan
transferred to UBS hereunder in order to propose, solicit, or offer a
refinancing or modification with respect to such Mortgage Loan, or any sale of
the related Mortgaged Property or for any other reason, in each case, unless
UBS has consented to such contact in writing; provided, that, the foregoing
shall not preclude IMH, IFC or IWLG or any subsidiary thereof or their agents
from engaging in promotions and solicitations to the general public by
newspaper, radio, television or other media which are not directed specifically
toward such Mortgagors.  13.Binding Effect.This Agreement shall be binding upon each of the parties hereto as well
as the successors and assigns of each of the parties hereto.  In the event of a conflict between the terms
of this Agreement and the terms of the Credit Agreement, this Agreement shall
prevail.  14.No Third Party
Beneficiaries.This Agreement and the provisions hereunder
are made solely for the benefit of the parties hereto and may not be relied
upon or enforced by any other person (except and only to the extent expressly
stated otherwise herein).  15.Confidentiality.The parties hereto agree to keep confidential, and not
to publish, disclose or otherwise divulge to any person or entity the existence
or any terms of this Agreement (and to cause its officers, directors,
employees, agents and representatives to keep confidential, and not to publish,
disclose or otherwise divulge to any person or entity the existence or any
terms of this Agreement), except that such parties are permitted to disclose
the existence and terms of this Agreement (i) to such of its officers,
directors, employees, agents and representatives as need to know such information
in connection with the performance of their respective responsibilities in such
capacities, and (ii) to the extent required by applicable laws and
regulations, by any subpoena or similar legal process, or by order of any court
of competent jurisdiction.  UBS
recognizes that IMH will be required to file this Agreement with the Securities
and Exchange Commission and hereby consents to that filing.  IMH shall not issue any press release
associated with the transactions contemplated hereby and by the Credit
Agreement  7


without UBS first having an opportunity and review and approve the
content of such press release, which approval shall not be unreasonably
withheld or delayed.  In connection with
any such press release, IMH agrees to use its best efforts to deliver a draft
thereof for purposes of UBS review and approval at least two business days in
advance of the date of intended publication.  16.Costs and Expenses. 
Each party hereto agrees to bear its own costs and expenses (including
the fees and expenses of counsel or special counsel to such party) in
connection with the preparation, negotiation and execution of this Agreement
and the Credit Agreement.  For the avoidance
of doubt, the foregoing sentence shall not be deemed a limitation in respect of
the survival of certain indemnification obligations of Impac as described in
the last paragraph of Section 3 above.  17.Waiver. 
In connection with Impacs Release of Claims against UBS hereunder,
Impac hereby waives the benefits of Section 1542 of the California Civil
Code and any other law prohibiting the waiver of claims that are not know at
the time of the giving of such waiver.  [signatures follow]  8


IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first written above.  IMPAC
  MORTGAGE HOLDINGS, INC.By:
  /s/ Ronald MorrisonName: Ronald MorrisonTitle: Executive Vice President  IMPAC
  FUNDING CORPORATIONBy:
  /s/ Ronald MorrisonName: Ronald MorrisonTitle: Executive Vice President  IMPAC
  WAREHOUSE LENDING GROUP, INC.By:
  /s/ Ronald MorrisonName: Ronald MorrisonTitle: Executive Vice President   UBS
  REAL ESTATE SECURITIES INC.By:
  /s/ Robert CarpenterName:  Robert
  CarpenterTitle: 
  Executive Director   By:
  /s/ Arnold JohnName:  Arnold
  JohnTitle: 
  Executive Director


EXHIBIT A  [see attached]


EXHIBIT B  [see attached]