SETTLEMENT AGREEMENT AND OPTION FOR RELEASE 

TillS SETTLEMENT AGREEMENT AND OPTION FOR RELEASE 

("Settlement Agreement") is entered into and made effective as of the .3o..,...day of 

November, 20 II ("Effective Date"), by and between the Federal Deposit Insurance 

Corporation as Receiver for JndyMac Bank, FSB ("FDIC-R") and Security Mortgage 

Funding Corporation ("SECURITY"). The FDJC-R and SECURITY may hereinafter be 

referred to individually as a "Party" or collectively as the "Parties". 

RECITALS 

1.1 WHEREAS, on or about December 28, 20 I 0, the FDIC-R filed a 

lawsuit against SECURITY entitled FEDERAL DEPOSIT INSURANCE 

CORPORA710N as Receiverfor INDYMAC BANK, F.S.B. v. SECURITY MORTGAGE 

FUNDING CORPORATION, in the United States District Court, Central District of 

California, Western Division, Case No. SA CV 10-01969. (hereinafter the "Action"). 

1.2 WHEREAS, SECURITY has denied the FDIC-R's allegations in the 

Action. 

1.3 WHEREAS, without admitting liability, the Parties desire to and have 

agreed to enter into this Settlement Agreement relating to the Action upon the terms 

and conditions hereinafter set forth. 

AGREEMENT 

NOW, THEREFORE, in consideration of the mutual covenants and promises set 

forth herein, and for other good and valuable consideration, the receipt and sufficiency of 

which are hereby acknowledged by the Parties, the Parties, intending to be legally bound, 

agree as follows: 

1.4 Recitals. The Recitals set forth above are incorporated into the body of 

this Settlement Agreement as though fully set forth herein. 

1.5 Payment of the Settlement Funds. SECURITY shall pay the total sum 

of Ninety Thousand Dollars ($90,000) (the "Settlement Funds"). Payment of the 

Settlement Funds shall be according to the payment schedule set forth in paragraph 1.8 

below. The Settlement Funds shall constitute the first $90,000 of payments due under 

the payment schedule. 

1.6 SECURITY's Release Option. SECURITY has the opportunity, but 

not the obligation, to obtain from the FDIC-R a release of any claims arising out of any 

SETTLEMENT AGREEMENT & OPTION FOR RELEASE 


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(b)(4),(b)(6) 

loans which it ever originated and were sold to Indy Mac Bank, F .S.B. by SECURITY 


(the"LOANS") (the "Release Option"). 


a. lfSECURlTY elects to invoke the Release Option, then 

SECURITY must notify the FDIC-R, in writing, no later than November 30, 2013, of its 

exercise of the Release Option. Timely notice shall be given via mail, facsimile or 

electronic mail to: Michael H. Delbick, Esq., Mortgage Recovery Law Group, LLP, 700 

North B~and ~oulevard, Suite 830, Glendale, CA 91203; facsimilej ---1 (b)(4),(b)(6) 

__ele_ctron&c mail _ __ . _ _ ---- - - - -­

b. If SECURITY elects to invoke the Release Option, then 


SECURlTY shall pay to the FDJC-R an additional One Hundred Ten Thousand Dollars 


($110,000) (the "Release Settlement Payment"). The Release Settlement Payment shall 


be in addition to the amount of the Settlement Funds and shall bring the total amount 


payable by SECURITY to the FDIC-R under this Settlement Agreement to Two Hundred 


Thousand Dollars ($200,000). Payment ofthe Release Settlement Payment shall be 


according to the payment schedule set forth in paragraph 1.8, below. 


c. If SECURITY gives (1) timely notice of SECURITY's 


intent to exercise the Release Option as set forth herein, and (2) pays the Settlement 


Funds, then and only then shall the release of claims provisions set forth below become 


effective. 


d. If SECURJTY elects not to invoke the Release Option, then 


SECURITY does not need to provide any further notice to the FDIC-R. If SECURITY 


has not effectively exercised the Release Option on or before November 30,2013, then 


effective December 1, 2013, the Release Option is automatically deemed rejected. 


e. If SECURJTY does not timely invoke the Release Option, 


then the ffiiC-R is free to pursue any claims against SECURlTY, including (but not 


limited to) the claims set forth in the Action, this Settlement Agreement and any other 


claims arising out of the LOANS. Should the FDlC-R pursue any claims against 


SECURJTY, the payments made by SECURITY under this Settlement Agreement will be 


offset against any future obligation or judgment. 


1.7 Payment Schedule. Payment to the FDlC-R by SECURITY ofthe 


Settlement Funds and, if applicable, the Release Option, shall be made according to the 


following schedule: 


For payment ofthe Settlement Funds: 

On or before January 30, 2012, SECURITY shall make a payment of Fifteen 

Thousand Dollars ($15,000). 

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On or before April I, 2012, SECURITY shall make an additional payment of 

Eleven Thousand Oollars ($1 I ,000). 

Beginning on or before May 1, 2012, SECURITY shall make an additional 

payment of Three Thousand Dollars ($3,000) each month for twelve (12) months, 

due on or before the first day of each given month, with the first such payment 

due on or before May I, 2012, and the last such payment due on or before April!, 

2013; 

Beginning on or before May I, 2013, SECURITY shall make an additional 

payment of Four Thousand Dollars ($4,000) each month for twelve ( 12) months, 

due on or before the first day of each given month, with the first such payment 

due on or before May l, 2013, and the last such payment due on or before April I, 

2014; 

If SECURITY exercises the Release Option, then for payment ofthe Release 

Settlement Payment: 

Beginning on or before May 1, 2014, SECURITY shall make an additional" 

payment ofFive Thousand Dollars ($5,000) each month for eighteen ( 18) months, 

due on or before the first day of each given month, with the first such payment 

due on or before May I, 2014, and the last such payment due on or before 

October I, 2015; 

1.8 Payments shall be made by wire transfer made payable to "Mortgage 

Recovery,: Law Groul Trust Account," Account Numberj ~outing __ .. (b)(4) u. •• -­

(b)(4) Number:/ u- ­ Reference: Security Mortgage Settlement. Should the due date 

for any payment set forth above fall on a weekend or holiday, the payment shall be due 

no later than the next business day. 

1.9 Payments ofthe Settlement Funds and, if applicable, the Release 

Settlement Payment are interest free if timely paid. If SECURITY defaults on any of 

its payment obligations under this Settlement Agreement and thereatler tails to cure the 

default as provided in Section [ J 5 below, thereafter an additional 10% interest will 

begin to accrue and be added to and due on any unpaid sums. 

1.10 Financial Documents: SECURITY has provided to the FDIC-R a current 

balance sheet and income statement (financial Documents) for November 20 I 0 

through July 31, 2011. SECURITY represents and warrants that all ofthe information 

set forth in SECURITY's Financial Documents provided, including the information in 

the Financial Documents and Tax 'Returns provided for previous years are true and 

correct. If the information in the Financial Documents or Tax Returns is not true and 

correct and/or if SECURITY otherwise breaches this representation and warranty, then 

SETII.EMENT AGREEMENT & OPTION FOR Rl'.!.EASE 

Pag~ 3 ofiO 
the FDlC-R is free to pursue any claims against SECURITY, including (but not limited 

to) the claims set forth in the Action, this Setllement Agreement, and any other claims 

arising out of the LOANS. Should the FDIC-R pursue any claims against SECURITY, 

the payments made by SECURITY under this Settlement Agreement will be offset 

against any future obligation or judgment. 

1.11 Ownership of Claims. The FDIC-R represents and warrants that none of 

the loans identified in the Action have been sold or otherwise transferred to a 

collateralized loan pool or other third party with the exception of lndyMac Federal 

Bank, One West, or one of their affiliates. The FDIC-R further represents and warrants 

that it has not assigned any rights it may have or may have had with respect to 

repurchase and indemnification rights associated with the LOANS, to any other person 

or entity, including, without limitation, IndyMac Federal Bank, OneWest Bank, or any 

of their affiliates. This representation and warranty is a material inducement for 

SECURITY entering into this Settlement Agreement and shall survive the execution 

and delivery of the Settlement Agreement. Should a claim (1) be asserted against 

Security based on a claim of ownership of one ofthe loans identified in the Action or 

(2) be made by IndyMac Federal Bank, FSB, One West Bank or any oftheir affiliates 

against SECURJTY with respect to repurchase and indemnification rights associated 

with the LOANS, SECURITY shall notify the FDIC-R of such claim, in writing, in the 

manner set fonh in Paragraph 1.7 above. Upon proper notification of such claim by 

SECURITY to the FDIC-R, SECURITY shall be relieved of any further payment 

obligation under this Settlement Agreement until such claim is withdrawn against 

SECURITY. Once such claim has been withdrawn against SECURITY, SECURITY 

shall resume all payment obligations under this Settlement Agreement when due, 

including payment of any amount then due under the Payment Schedule set forth in 

Paragraph I.8 above no later than sixty (60) days after SECURITY's receipt ofwritten 

notice to the persons and in the manner identified in Paragraph 1.14 that such claim has 

been withdrawn. 

1.12 Dismissal of Actions. The FDIC-R shall cause its attorneys, with 

cooperation as necessary from SECURITY's attorneys, to execute and file requests for 

dismissal of the Action, without prejudice. Dismissal ofthe Action without prejudice is 

a material term of the settlement. . 

1.13 Notice of Default. In the event SECURITY defaults by failing to make a 

timely payment to the FOIC-R as set forth in this Settlement Agreement, the FDIC-R 

shall give written notice of the default to SECURITY via mail, facsimile or electronic 

mail to: John Tate, Esq., Davis Wright Tremaine. LLP, 865 S. Figueroa St., Suite 

(b)(4),(b)(6) (b)(4),(b)(6) _ 2400,LosAngeles,CA 900!7,T:j · ·· ·· jF:j . ···lemail: ... 

(b)(4),(bj(6) 1- ······ · ·· I 

SETIIJOMENT AGREEMENT&. OPTION FOR RELEASE 


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1.14 Time to Cure. SECURITY shall have ten (10) business days from 

receipt of the notice of default to cure the default. If SECURITY fails to cure a default 

on the payment of the Settlement Funds within ten ( l 0) business days, the FDrC-R shall 

retain all consideration it received, and it may, in its sole discretion, pursue all legal and 

non-legal remedies to recover any portions of the Settlement Funds that have not been 

paid, and/or is free to pursue any claims against SECURITY, including (but not limited 

to) the claims set forth in the Action, this Settlement Agreement, and any other claims 

arising out of the LOANS. If SECURITY fails to cure a default on the payment of the 

Release Settlement Payment within ten (10) days, the FDIC-R shall retain all 

consideration it received, and it may, in its sole discretion, pursue all legal and nonlegal remedies to recover any portions ofthe Release Settlement Payment that have not 

been paid. Should the FDJC-R pursue any cl;iims against SECURITY, the payments 

made by SECURITY under this Settlement Agreement will be offset against any future 

obligation or judgment. 

1.15 Stay and Tolling Agreement. The parties agree that all claims arising 

from the LOANS between the fDIC-R and SECURITY (including but not limited to 

the loans identified in the Action, and all rights and defenses) are stayed until 

December 1, 20 13. However, in the event SECURITY breaches this Settlement 

Agreement in any manner prior to April I, 2004, fDIC-R has the option to terminate 

the stay following such breach and immediately pursue any and all claims arising from 

the LOANS or under this Seltlement Agreement. The parties furthe1· agree that the 

applicable statute oflimitations for any such claims shall be tolled from the Effective 

Date ofthis Settlement Agreement through December 15,2013. 

1.16 Each Party agrees that Section 664.6 of the Code of Civil Procedure of the 

State of California shall apply to this Settlement Agreement and requests that the court 

retain jurisdiction over the Parties to enforce this Settlement Agreement. 

1.17 The Jlarties shall bear their own costs and attorneys' fees incurred in the 

Actions. 

1.18 Conditional Release. 

a. The FDIC-R 's release of any claims arising out of the 

LOANS is conditioned upon SECURITY's (I) timely exercise ofthe Release Option and 

(2) the FDIC-R's receipt of the Settlement Funds. If the conditions herein for a release 

are met, FDIC-R agrees that the release set forth in Sections 1 .20, 1.21, 1.22, I 23, and 

1.24 shall become effective immediately without further action by either party. 

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b. If the conditions herein for a Release Option are met, then 

SECURITY agrees that the release set forth in Sections I .20, 1 .21, 1.22. 1.23, and 1.24 

shall become effective immediately without further action by either party. 

1.19 Unknown Claims. Except for the obligations arising under this 

Settlement Agreement, each Party acknowledges that this Settlement Agreement 

applies to all claims for injuries, damages, or losses of any type or nature {whether 

those injuries, damages, or losses are known or unknown, foreseen or unforeseen, 

patent or latent) which each Party may have against the other Party arising from the 

obligation to repurchase and/or indemnify for losses associated with the LOANS. Each 

Party hereby expressly waives application of California Civil Code §1542 and any 

other similar statute or rule with respect to the LOANS. 

1.20 Subject to the terms and conditions set forth in Paragraphs I.7 and 1.19, 

above, the Parties certify that they have read and understood the following provisions 

of California Civil Code §1542, which states in pertinent part as follows: 

"A GENERAL RELEASE DOES NOT EXTEND TO 

CLAIMS WHICH THE CREDITOR DOES NOT KNOW 

OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT 

THE TIME OF EXECUTING THE RELEASE, WHICH IF 

KNOWN BY HIM OR HER MUST HAVE 

MATERIALLY AFFECTED HIS OR HER 

SEITLEMENT WITH THE DEBTOR." 

1.21 Subject to the terms and conditions set forth in Paragraphs I. 7 and 1.19, 

above, the Parties mutually fully, finally, and forever release and discharge each other, 

and any and all of their respective past, present, and future affiliates, employees, 

members, partners, joint venturers, independent contractors, attorneys, insurers, 

investors, successors, assigns, representatives, officers, directors, shareholders, 

independent contractors, predecessors, successors and assigns, and any corporation, 

partnership or limited liability company which was or is at any time the parent or 

wholly owned subsidiary of such entity, and any such corporation's, partnership's or 

limited liability company's officers, directors, employees, or any corporation, 

partnership or limited liability company which was or is an affiliate of such entity by 

virtue of common ownership or control. and any such corporation's, partnership's or 

limited liability company's, officers, directors, and/or employees of and from any and 

all actions, causes of action, claims, demands, damages, debts, losses, costs, expenses, 

attorney fees or other liabilities of every kind and nature whatsoever, whether legal or 

equitable and whether known or unknown, arising out of, resulting from, or relating to, 

in any manner, the obligation to repurchase and/or indemnify for losses associated with 

the LOANS, the claims and causes of action that were or could have been asserted 

SETfLEMENT AGREEMENT&. OPTION FOR RELEASE 


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relating to the obligation to repurchase and/or indemnify for losses associated with the 

LOANS, or any facts or circumstances related to the obligation to repurchase and/or 

indemnify for losses associated with the LOANS. 

1.22 Indy Mac Only. Notwithstanding any other provision in this Settlement 

Agreement, the FDIC-R does not release, and expressly preserves fully and to the same 

extent as if the Settlement Agreement had not been executed any claims against 

SECURITY arising out of existing or failed financial institutions other than lndyMac 

Bank. 

1.23 FDIC-R Only. Notwithstanding any other provision in this Settlement 

Agreement, the FDlC-R does not release, and expressly preserves fully and to the same 

extent as ifthc Settlement Agreement had not been executed any action taken by any 

other federal agency. In addition, this Settlement Agreement does not purport to waive, 

or intend to waive, any claims which could be brought by the United States through 

either the Department of Justice or the United States Attorney's Office for any federal 

judicial district. In addition, the FDIC-R specifically reserves the right to seek court 

ordered restitution pursuant to the relevant provisions ofthe Victim and Witness 

Protection Act, 18 U.S.C. § 3663, e/ seq., if appropriate. 

1.24 Conditions of Execution. Each Party acknowledges and warrants that 

its execution of this Settlement Agreement is free and voluntary. 

1.25 No Admission. lt is agreed that no Party hereto admits liability or 

wrongdoing of any nature, and that this Settlement Agreement is made as a 

compromise of disputed claims. 

1.26 Fair Meaning. The Parties hereto fLirther agree that the language of all 

parts of this Settlement Agreement shall in all cases be construed as a whole, according 

to its fair meaning, and not strictly for or against any of the Parties. 

1.27 Governing Law. The Parties agree to submit to the Courts of the 

United Stales of American, Central District of California, for any dispute arising out of 

this Settlement Agreement, or related thereto, and consent to the jurisdiction of said 

Comts and further agree that any and all matters of dispute shall be adjudicated, 

governed and controlled under California law. 

1.28 Attorneys' Fees. Should any action be commenced to enforce, 

interpret, or seek damages, injunctive relief, or specific performance for violation of 

this Settlement Agreement, the prevailing party shall, in addition to any other available 

relief, be entitled to an award of reasonable attorney's fees and litigation expenses 

incurred in the prosecution or defense of the action, including any appeal. 

SETTLEMENT AGREEMENT & OPTION FOR RELEASE 


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1.29 Severability. The Parties hereto agree that if any provision of this 

Settlement Agreement is declared by any court to be illegal or invalid, the validity of 

the remaining parte;, terms or provisions shall not be affected thereby, and such illegal 

or invalid part, term or provision shall be deemed not to be part of this Settlement 

Agreement. 

1.30 Binding Effect. This Settlement Agreement shall be binding upon and 

inure to the benefit of the Parties and their respective heirs, personal representatives, 

successors, and assigns. 

1.31 Review and Understanding. The Parties have entered into this 

Settlement Agreement voluntarily, having fully read and fully understanding the 

meaning and effect of all of its terms and provisions, and fully understanding its and 

their costs and risks. Each Party has consulted with legal counsel concerning this 

Settlement Agreement and has conducted such inquiry as they deem necessary and 

advisable prior to entering into this Settlement Agreement. The Parties enter into this 

Settlement Agreement understanding that facts or other circumstances may exist which 

are presently unknown or undisclosed, or which are different from or other than those 

which they believe to be the case, and the Parties voluntarily assume all risks attendant 

to such unknown, undisclosed. different, or additional facts or other circumstances. 

1.32 Numbe•·· Whenevt:r applicable, the singular shall include the plural, 

and the plural shall include the singular. 

1.33 Counterparts/Execution. This Settlement Agreement may be executed 

in one or more counterparts, all of which shall form a single agreement. A Party's 

signature on this Settlement Agreement by facsimile shall be valid and effective for all 

purposes as an original signature, provided, however, that the original signature shall be 

produced upon request. 

1.34 Waiver. No tenn or condition of this Settlement Agreement shall be 

deemed to have been waived, nor shall there be an estoppel against the enforcement of 

any provision of this Settlement Agreemc11t, except by written instruments signed by 

the Pa.1y charged with the waiver or estoppel. No wrillen waiver shall be deemed a 

continuing waiver unless specifically stated therein, and the written waiver shall 

operate only as to the specific term or condition waived, and not for the future or as to 

any other act than that specifically waived. 

1.35 Headings. The headings of paragraphs herein are intended solely for 

the convenience of reference and shall not control the meaning or interpretation of any 

of the provisions of this Settlement Agreement. 

1.36 Subsequent Agreements. The Parties agree that, upon the reasonable 

SETILEMENT AGREEMENT & OPTION fOR RELEASE 


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request of the other Party, they shall execute, acknowledge, and deliver any additional 

instruments or documents that may reasonably be required to carry out the intentions of 

this Settlement Agreement, including such instruments as may be required by the laws 

of any jurisdiction, now in effect or hereinafter enacted, that may affect the rights of the 

Parties as between themselves or others with respect to their rights and obligations 

created by this Settlement Agreement. 

I .37 Entire Agreement. The Parties hereto further agree and promise that 

this Settlement Agreement sets forth the entire agreement between and among the 

Parties with respect to the repurchase and/or indemnification obligations in connection 

with the LOANS, and fuiJy supersedes any and all prior negotiations, agreements or 

understandings made between or among the Parties. This Settlement Agreement shall 

not be modified except in a writing signed by the Parties or their authorized 

representatives. 

IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties 

have executed this Settlement Agreement as of the date set forth in the opening paragraph 

of this Settlement Agreement. 

For: 	 Federal Deposit Insurance For: 

Corporation as Receiver. 

fo1· [ndyMac Bank, F.S.B. (b)(6) 

(b)(6) 

By~+ /By: 

Name: Rt·c_ ""~v~ S, c-i ~ \( Name: l,-j.fAJ r.JkvLl/E:...:N 

0 

Title: c._ 0(.) rr-i<e_ ~ Title: P~l/r?&NT 

Date: l - 9 \..2 Date: 

--·--·-·~ -·---·-·--·-· 

SETILEMENT AGREEMENT & OPTION FOR RELEASE 


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(b)(6) 

By:________-l 

Name: Maurice Wainer 

Title: Counsd for Plaintiff, Federal 

Deposit Insurance Corporation as 

Receiver tor lndyMac Bank. F.S.B. 

Date:_________ 

Title: Counsel for Defendant Security 

Mortgage Funding Corporation 

Date: .JA;;,l ID .:Jo IZ. 

I 

SEffi.EMENT AGREEMENT & OI'TION FOR RELEASE 

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