UBS, Lehman Lead Unique IndyMac Contest

Asset Backed Alert, Harrison Scott Publications Inc. (December 8, 2006)

Lehman Brothers is threatening to unseat UBS as the most favored among five banks that
underwrite subprime-mortgage securitizations for IndyMac.

The two banks are running neck-and-neck in a unique point-based contest that IndyMac
uses to pick the institutions that will distribute those issues each year. The winner of the
current showdown will run the books on the Pasadena, Calif., lender's next offering in its
"INABS" series, via the IndyMac Home Equity Mortgage Loan Asset-Backed Trust.

IndyMac expects to issue $5 billion of bonds through that platform in 2007, up from $4.2
billion in 2006 and $3.2 billion in 2005. Considering that the most recent issue in the
program topped $1.3 billion, the lead underwriter for the next deal - scheduled for early
2007 - stands to pocket up to $3 million of fees.

That institution will also be part of a five-bank group that will manage all of the lender's
INABS issues next year, as will the existing syndicate members with the next three
highest scores. The final spot will go to a newcomer, as IndyMac usually drops the
lowest-scoring bank from its syndicate.

UBS, the previous contest winner, still leads the scoring. It's followed by Lehman, RBS
Greenwich Capital, Credit Suisse and Morgan Stanley, in that order. But only the thinnest
of margins separates UBS and Lehman, and IndyMac has not finished its tabulations yet,
said Andrew Sciandra, who came up with the idea for the annual runoff in 2004.

Meanwhile, it looks like Deutsche Bank will replace Morgan Stanley in the number-five
slot. While banks in the rotation have the most chances to score points throughout the
year, Deutsche has the edge so far in 2006.

Morgan Stanley's tally dipped after IndyMac's main contact there, banker Forchi Chen,
transferred from New York to a sales-related position in Hong Kong. While Morgan
Stanley's Albert Han is putting forth a solid effort for the company now, the transition
hasn't been seamless, said Sciandra. "Forchi knew us well," he said. "He spent a lot of
time with us, meeting with investors. Albert will get there in time."

The IndyMac executives noted that Deutsche was dropped from their syndicate in 2004,
following the departures of several key staffers from the bank's underwriting area. But
bankers Ryan Stark and Randall Johnson stepped up Deutsche's focus on the lender and
arranged a string of meetings with investors this year. "They're definitely acting like a
bank that wants to get back in the rotation," Sciandra said.

IndyMac's point person at UBS is Patrick Fitzsimonds. Scott Stimpfel fills that role at
Lehman. IndyMac also works closely with Credit Suisse's Elton Wells and Greenwich's
Adam Smith.
Bear Stearns, Goldman Sachs and Merrill Lynch are strong contenders to join that group
in 2008, although IndyMac doesn't plan to include more than five underwriters in the
syndicate.

IndyMac awards points to banks for their efforts to distribute its bonds to wider investor
bases, conduct pertinent research, come up with useful new deal structures and fund its
other loan products. The last category, added this year, gives banks credit for purchasing
packages of prime-quality mortgages from the lender - credits that the buyers often
securitize via IndyMac's SEC-registered shelf entities or through their own issuing
vehicles.

That factor helped Lehman immensely this year, since it purchased $13 billion of
IndyMac's credits. Deutsche was the next largest buyer, taking $5 billion.

Underwriters also accumulate points for running smooth operations and offering
IndyMac "corporate support," such as warehouse financing and equity-analyst coverage.

Sciandra runs a trading team at IndyMac that sells or securitizes some $25 billion of
mortgage-related credits that the lender originates each quarter, including prime-quality,
subprime and alternative-A loans. He's closely assisted by senior trader Jim Shirreffs and
senior analyst Bernard Guanio.