Deal counsel built for your
warehouse & repo facilities.

A secured warehouse line of credit is a revolving loan against mortgage loans, which the originator pledges as UCC Article 9 collateral but still owns. A repurchase facility documents each funding as a sale of loans, or of participation interests in them, under a bank-form or SIFMA master repurchase agreement (MRA). The borrower must repurchase them by a set date or on demand. The terms decide title, margin rights, and bankruptcy treatment, and many bank warehouse lines are written as repurchase agreements.

Recharacterization is the risk that a court treats a documented sale of mortgage loans as a secured loan, raising questions about ownership, creditor priority, and bankruptcy remedies. Goldsmith Associates analyzes the MRA, the pricing side letter, the custodial agreement, and any account control agreement as one facility. That way, margin, curtailment, and default terms never undercut the borrower’s structure.

A gestation repo finances loans designated for an agency pool from custodial certification until the Fannie Mae, Freddie Mac, or Ginnie Mae security is issued, and settles with the investor. A gestation sublimit sets how much of the line those pooled loans may use, usually with its own agreement, custodial terms, pricing, and dwell limit.

The custodial agreement makes the document custodian hold each note for the bank or buyer. The bailee letter preserves that interest, while the note travels to the takeout investor. A deposit account control agreement, or DACA, governs deposit-account proceeds. A joint securities account control agreement, or JSACA, governs the account where pooled securities settle. For eNotes, control of the authoritative copy, held in an eVault and reflected in the MERS eRegistry, replaces possession. The borrower should negotiate release deadlines, and when the bank may take exclusive control.

Goldsmith Associates represents mortgage bankers in renewals, sublimit increases, new product additions, covenant waivers, and forbearance with their warehouse banks and repo buyers. Renewal is where tangible net worth, liquidity, leverage, and profitability covenants are reset. It is also where cross-default and key-person clauses are narrowed before they travel across every line.

Goldsmith Associates represents mortgage bankers and other originators as borrowers. The work covers warehouse lines of credit, master repurchase agreements, gestation facilities, and pricing side letters with their warehouse banks and repo buyers. Jason Goldsmith, Managing Member, leads the practice from Dallas, and can be reached at 214.414.9451 or info@goldsmithpllc.com.

The repo safe harbors apply when a transaction qualifies as a repurchase agreement under Bankruptcy Code section 101(47), and the buyer is a repo participant or financial participant. That usually means a repurchase date within one year or on demand. The buyer may liquidate, terminate, or accelerate under section 559, and set off under section 362(b)(7), without stay relief. Any surplus after the repurchase price and liquidation expenses belongs to the borrower’s estate, subject to setoff. An ordinary warehouse loan generally falls outside these exceptions. Longer-dated structures may rely on the securities-contract safe harbor in section 555, with damages measured under section 562.

The pricing side letter is incorporated into the facility agreement. It typically sets the commitment, purchase price percentages or advance rates, the margin over Term SOFR, pricing floors, funding fees, sublimits, aging limits, curtailment schedules, and financial covenants. The allocation varies by facility, so Goldsmith Associates reconciles the side letter, the master agreement, and every amendment before funding or renewal.

An advance rate, or purchase price percentage, sets how much of each loan’s contract value is funded. The haircut is the unfunded portion, carried by the borrower as the bank’s cushion. Margin call terms decide who marks the collateral to market, how fast a deficit must be cured, and whether a dispute pauses the call, while aging curtailments require paydowns as loans sit unsold.

MSR financing and servicing-advance facilities need facility, collateral, and agency documents matched to the rights being financed. For Fannie Mae, a servicing-rights pledge requires prior written consent and an acknowledgment agreement. A transfer of servicing-income interests, by contrast, requires a subordination-of-interest agreement. Freddie Mac and Ginnie Mae set their own consent and acknowledgment rules. Servicing-advance collateral needs separate analysis of each agency’s superior rights.