Harbor Bancorp & Subsidiaries - Page 18

                                       - 18 -                                         
          the loan.  (Matthews & Wright repaid this loan later in 1986                
          using funds received from the sale of the Bonds to the investing            
          public.)  The money from Security Pacific, less an amount paid to           
          redeem a relatively small amount of the Ironwood bonds,                     
          ultimately went to the Heritage National Bank of Austin, Texas              
          (Heritage).  Heritage deposited $17,778,146.53 of these funds               
          into the "developer loan fund" account of Whitewater, Ltd.  Of              
          this amount, $1,425,000 was used to purchase land for the                   
          Whitewater project.                                                         
               Whitewater, Ltd., had agreed to provide credit enhancement             
          for the Whitewater bonds by obtaining a letter of credit.  To               
          arrange for this letter of credit, Whitewater, Ltd., entered into           
          an agreement with MCFC No. 47 and gave MCFC No. 47 a                        
          reimbursement note, secured by a First Deed of Trust on the                 
          Whitewater project.  On the same day, pursuant to a "deposit                
          agreement", Whitewater, Ltd., transferred the $17,778,146.53 from           
          its developer loan fund at Heritage to Unified's account at                 
          Heritage.  This transaction was made pursuant to an understanding           
          that Unified would disburse the Bond proceeds, as needed, for               
          construction.  This deposit agreement was not revealed to the               
          Housing Authority or its counsel.  Using the bond proceeds from             
          Whitewater's developer loan fund, Unified then purchased                    
          Whitewater, Ltd.'s reimbursement note, secured by the First Deed            
          of Trust, from MCFC No. 47 for $16,110,817.98.  MCFC No. 47 used            
          this $16,110,817.98 to purchase a "Settlement Annuity Contract"             




Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011