Secured Borrowings

9 Months Ended

Sep. 30, 2012

Secured Borrowings

Secured Borrowings

15.Secured Borrowings

Pursuant to certain master repurchase agreements, ClearPoint was extended secured mortgage warehouse lines of credit in order to fund mortgage originations.  These lines of credit carry floating rates of interest and are collateralized by ClearPoint’s mortgage loans. Further information on these lines of credit is set forth below:

(In thousands of dollars)

		September 30, 2012					December 31, 2011
Description	Current Year Expiration Date	Facility Limit			Outstanding Balance		Facility Limit			Outstanding Balance
Credit Facility No. 1	March 10, 2012	$	—		$	—	$	75,000		$	68,756
Credit Facility No. 2	November 14, 2012	45,000			33,054		75,000			49,704
Credit Facility No. 3	November 14, 2012	45,000			33,521		100,000			92,802
		$	90,000	(1)	$	66,575	$	250,000	(1)	$	211,262
Accelerated Purchase Facility	March 10, 2012	—			—		50,000			2,349
Total		$	90,000		$	66,575	$	300,000		$	213,611

(1)Committed capacity under the facilities was $0 million and $100 million as of September 30, 2012 and December 31, 2011, respectively.

Although originally scheduled to expire in September 2012, the lenders under Credit Facilities No. 2 and No. 3 have provided multiple short-term extensions.  The warehouse lines currently expire on November 14, 2012.  On November 8, 2012, the Company announced that it was pursuing a sale of the ClearPoint business.  Refer to Note 27 herein for additional information.  ClearPoint intends to continue negotiating extension terms in order for these credit facilities to be available through completion of any potential sale transaction.

The lender to Credit Facility No. 1 and the Accelerated Purchase Facility elected not to renew it and instead agreed to a 120-day extension.  The advances under these lines were paid in full as of April 24, 2012, and pursuant to an amendment to the master repurchase agreement, those warehouse covenants are no longer in force, and ClearPoint has no further continuing reporting or notice obligations to this lender.

If ClearPoint does not sell loans it originates from funds advanced under ClearPoint’s mortgage warehouse lines of credit within certain periods of time, the lenders can incrementally curtail, or reduce, such advances.  Under these circumstances, ClearPoint would be required to repay the curtailed amounts to the lenders prior to receiving any proceeds from the sale of the loan.

ClearPoint is required, among other things, to comply with certain financial covenants, including maintaining (i) a minimum tangible net worth ratio, (ii) a maximum leverage ratio, (iii) certain levels of profits/losses, and (iv) a minimum level of liquid assets.  If ClearPoint fails to comply with these covenants, the lenders could declare the credit lines to be in default and require the payment of all amounts then outstanding under the lines.  Also, the applicable agreements contain “cross default” provisions, so that a default under one agreement triggers a default under the others.