INDYMAC MORTGAGE HOLDINGS INC
S-3, 1999-01-28
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>
 
   As filed with the Securities and Exchange Commission on January 28, 1999
 
                                                          Registration No.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
 
                               ---------------
                                   FORM S-3
                            REGISTRATION STATEMENT
                                      and
                                POST-EFFECTIVE
                                AMENDMENT NO. 1
                                     Under
                          The Securities Act of 1933
 
                               ---------------
                        INDYMAC MORTGAGE HOLDINGS, INC.
            (Exact name of registrant as specified in its charter)
                             155 North Lake Avenue
                              Pasadena, CA 91101
<TABLE>
      <S>                                                  <C>
                 Delaware                                      95-3983415
      (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                       Identification No.)
</TABLE>
                                (800) 669-2300
             (Registrant's telephone number, including area code)
 
                               ---------------
 
                               MICHAEL W. PERRY
                        IndyMac Mortgage Holdings, Inc.
                                   President
                             155 North Lake Avenue
                          Pasadena, California 91101
                                (800) 669-2300
           (Name, address and telephone number of Agent for Service)
 
                               ---------------
 
  Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
                               ---------------
 
  If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
 
  If any of the securities being registered on the Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
 
                               ---------------
<TABLE> 
<CAPTION> 
                               CALCULATION OF REGISTRATION FEE
======================================================================================================
                                                                             Proposed
                                                              Proposed       maximum
                                                              maximum       aggregate      Amount of
        Title of each class of          Amount to be       offering price    offering     registration
     securities to be registered         registered         per unit(1)      price(1)        fee(2)
- ------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>            <C>            <C>
                                         
Common Stock, $.01 par value.........  7,000,000 shares        $11.125      $77,875,000      $21,650
======================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457, based on the average of the high and low sales
    prices of the Common Stock on January 25, 1999 as reported on the New York
    Stock Exchange.
(2) Paid by wire transfer to the Securities and Exchange Commission's account
    at Mellon Bank.
                               ---------------
  The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
 
  This Registration Statement is also a Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form S-3 (No. 333-61625) effective
September 1, 1998 (the "Prior Registration Statement"). Pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Act"), the prospectus
included in this Registration Statement is a combined prospectus that also
relates to the Prior Registration Statement. In accordance with Section 8(c)
of the Act, Post-Effective Amendment No. 1 to the Prior Registration Statement
shall hereafter become effective concurrently with the effectiveness of this
Registration Statement.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the     +
+Securities and Exchange Commission is effective. This prospectus is not an    +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                 SUBJECT TO COMPLETION, DATED JANUARY 28, 1999
 
                                   PROSPECTUS
 
                        INDYMAC MORTGAGE HOLDINGS, INC.
                 DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
 
  IndyMac Mortgage Holdings, Inc., a real estate investment trust ("we" or
"IndyMac REIT"), is offering its shares of common stock, $.01 par value
("Common Stock"), to you for purchase from time to time through its Dividend
Reinvestment and Stock Purchase Plan (the "Plan").
 
  The Plan is a simple and convenient method of investing cash dividends from
shares of our Common Stock that you own or purchase under the Plan in
additional shares of Common Stock at a 1% discount (subject to change) from the
market price (as determined in accordance with the Plan). The 1% discount will
apply to the extent the administrator of the Plan acquires the shares directly
from us. If the administrator acquires the shares in open market transactions,
such discount will not be available.
 
  You may also purchase additional shares of our Common Stock at the market
price (as determined in accordance with the Plan) on a monthly basis under the
Plan. We may decide to offer these shares at a discount from the market price.
Any discount that we may offer under the Plan may be changed from time to time
in our discretion after a review of current market conditions, the level of
participation in the Plan and our current and projected capital needs. In the
event that we change the discount, we will notify you in the manner described
in this prospectus. The discounts will not vary from a range of 0% to 5%.
 
  To enroll in the Plan, simply complete the enclosed Authorization Form and
return it in the envelope provided. Enrollment in the Plan is entirely
voluntary and you may terminate your participation at any time. Your broker,
bank or other nominee may reinvest dividends and make optional cash payments on
your behalf. If you hold shares of our Common Stock and do not participate in
the Plan, you will receive cash dividends, as declared, in the usual manner.
 
  If you enroll in the Plan, you may obtain additional shares of Common Stock
by:
 
  . reinvesting your dividends on all or part of the shares of Common Stock
    that you hold.
 
  . making optional cash payments of not less than $50 up to $10,000 per month
    whether or not the dividends on shares that you hold are being reinvested.
 
  . with our permission, making optional cash payments in excess of $10,000
    per month, whether or not dividends on shares that you hold are being
    reinvested.
 
  This prospectus relates to 7,000,000 shares of Common Stock offered hereby
and registered for sale under the Plan. Participants should retain this
prospectus for future reference.
 
                                 ------------
 
  Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
 
  The Attorney General of the State of New York has not passed on or endorsed
the merits of this offering. Any representation to the contrary is unlawful.
 
                The date of this prospectus is            , 1999
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Available Information......................................................   3
Incorporation of Certain Documents by Reference............................   3
IndyMac Mortgage Holdings, Inc.............................................   3
Summary of Plan............................................................   3
The Plan...................................................................   5
Purpose....................................................................   5
Options Available to Participants..........................................   6
Advantages and Disadvantages...............................................   6
Administration.............................................................   7
Participation..............................................................   8
Purchases and Prices of Shares.............................................  11
Reports to Participants....................................................  17
Dividends on Fractions.....................................................  17
Certificates for Common Shares.............................................  17
Withdrawals and Termination................................................  18
Other Information..........................................................  19
Dividends..................................................................  22
Use of Proceeds............................................................  22
Plan of Distribution.......................................................  23
Legal Opinion..............................................................  23
Experts....................................................................  23
Indemnification............................................................  23
Glossary...................................................................  24
Schedule A.................................................................  26
</TABLE>
 
  You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to
provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted.
 
  You should assume that the information appearing in this prospectus, as well
as information we previously filed with the Securities and Exchange Commission
and incorporated by reference, is accurate as of the date on the front cover
of this prospectus only. Our business, financial condition, results of
operations and prospects may have changed since that date.
 
                                       2
<PAGE>
 
                             AVAILABLE INFORMATION
 
  IndyMac REIT is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information concerning IndyMac REIT can be inspected at the public reference
facilities maintained by the Commission at its Public Reference Room, 450
Fifth Street, N.W., Washington, D.C. 20549 (telephone number 1-800-SEC-0330),
and copies of such material can be obtained from the Public Reference Room of
the Commission at prescribed rates. In addition, such materials are available
through the Commission's internet website at (http://www.sec.gov). Reports,
proxy statements and other information concerning IndyMac REIT also may be
inspected at the offices of the New York Stock Exchange ("NYSE") where IndyMac
REIT's Common Stock is listed. This Prospectus does not contain all
information set forth in the Registration Statement and Exhibits thereto which
IndyMac REIT has filed with the Commission under the Securities Act and to
which reference is hereby made.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents filed with the Securities and Exchange Commission by
IndyMac REIT are incorporated by reference in this Prospectus: (1) IndyMac
REIT's Annual Report on Form 10-K for the year ended December 31, 1997; (2)
IndyMac REIT's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998; (3) IndyMac REIT's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998; (4) IndyMac REIT's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998; and (5) the description of the Common Stock
contained in IndyMac REIT's registration statement under Section 12 of the
Exchange Act and all amendments and reports filed for the purpose of updating
that description.
 
  All documents filed by IndyMac REIT pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities offered hereby shall be
deemed incorporated by reference into this Prospectus and to be a part hereof
from the date of filing such documents.
 
  Any person receiving a copy of this Prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Written requests should be
addressed to Investor Relations, IndyMac Mortgage Holdings, Inc., 155 North
Lake Avenue, Pasadena, California 91101. Telephone requests may be directed to
Investor Relations at (800) 669-2300.
 
                        INDYMAC MORTGAGE HOLDINGS, INC.
 
  IndyMac REIT is a real estate investment trust which currently operates six
businesses: its principal business, a non-conforming mortgage loan conduit, a
manufactured housing lending division, a warehouse lending division, a
construction lending division, a home improvement lending division, and a
residential mortgage direct lending division. IndyMac REIT's principal
executive office is located at 155 North Lake Avenue, Pasadena, California
91101.
 
                                SUMMARY OF PLAN
 
  The Plan provides owners of Common Stock with a convenient and attractive
method of investing cash dividends and optional cash payments in additional
shares of Common Stock at a discount from the Market Price (as defined in
Question 12), except for optional cash payments of up to $10,000, and without
payment of any
 
                                       3
<PAGE>
 
brokerage commission or service charge. The price to be paid for shares of
Common Stock purchased under the Plan will be a price reflecting a discount of
1% (subject to change) from the Market Price for the reinvestment of cash
dividends, to the extent shares are purchased directly from IndyMac REIT, and
a discount of 0% to 5% (the "Waiver Discount") from the Market Price for the
investment of optional cash payments that exceed $10,000. No discount from the
Market Price will apply to shares of Common Stock purchased under the Plan
pursuant to optional cash payments of up to $10,000. Each of the discounts
offered under the Plan is subject to change (but will not vary from the range
of 0% to 5%) from time to time or discontinuance at IndyMac REIT's discretion
after a review of current market conditions, the level of participation in the
Plan and IndyMac REIT's current and projected capital needs. Except with
respect to the Waiver Discount (see Question 17), IndyMac REIT will provide
Participants (as defined in Question 2) with written notice of a change in the
applicable discount rate at least thirty days prior to the relevant record
date.
 
  Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no minimum or maximum limitation on the
amount of dividends a Participant may reinvest under the Plan. See Question 2.
 
  Participants electing to invest optional cash payments in additional shares
of Common Stock are subject to a minimum per month purchase limit of $50 and a
maximum per month purchase limit of $10,000 (subject to waiver). See Question
17. Optional cash payments in excess of $10,000 may be made only upon
acceptance by IndyMac REIT of a completed Request for Waiver form from a
Participant. See Question 17. Each month, at least three business days prior
to each record date (as defined in Question 18), IndyMac REIT will establish
the Waiver Discount and Threshold Price, if any (each as defined in Question
17), applicable to optional cash payments that exceed $10,000. The Waiver
Discount, which may vary each month, will be established in IndyMac REIT's
sole discretion after a review of current market conditions, the level of
participation in the Plan and IndyMac REIT's current and projected capital
needs. With respect to optional cash payments that exceed $10,000 only, for
each Trading Day of the related Pricing Period (each as defined in Question
12) on which the Threshold Price is not satisfied, one-twelfth of a
Participant's optional cash payment will be returned without interest.
Optional cash payments that do not exceed $10,000 and the reinvestment of
dividends in additional shares of Common Stock will not be subject to the
Waiver Discount or Threshold Price, if any. Optional cash payments of less
than $50 and that portion of any optional cash payment which exceeds the
maximum monthly purchase limit of $10,000, unless such limit has been waived,
are subject to return to the Participant without interest. Participants may
request that any or all shares held in the Plan be sold by the Plan
Administrator on behalf of such Participants. See Question 27.
 
  Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can
be issued pursuant to the reinvestment of dividends and no pre-established
maximum limit applies to optional cash payments that may be made pursuant to
Requests for Waiver. As of the date hereof, 7,000,000 shares of Common Stock
have been registered and are available for sale under the Plan. To the extent
that shares of Common Stock issued pursuant to the Plan are authorized but
previously unissued shares or treasury shares rather than shares acquired in
the open market, the Plan will raise additional capital for IndyMac REIT.
IndyMac REIT currently intends to issue such shares and, therefore, the Plan
is expected to raise capital for IndyMac REIT.
 
  IndyMac REIT expects to grant Requests for Waiver to financial
intermediaries, including brokers and dealers, and other Participants in the
future. Grants of Requests for Waiver will be made in the sole discretion of
IndyMac REIT based on a variety of factors, which may include: IndyMac REIT's
current and projected capital needs, the alternatives available to IndyMac
REIT to meet those needs, prevailing market prices for Common Stock, general
economic and market conditions, expected aberrations in the price or trading
volume of the Common Stock, the potential disruption of the price of the
Common Stock by a financial intermediary, the
 
                                       4
<PAGE>
 
number of shares of Common Stock held by the Participant submitting the waiver
request, the past actions of a Participant under the Plan, the aggregate
amount of optional cash payments for which such waivers have been submitted
and the administrative constraints associated with granting such waivers. If
such Requests for Waiver are granted, a portion of the shares available for
issuance under the Plan will be purchased by Participants (including brokers
or dealers) who, in connection with any resales of such shares, may be deemed
to be underwriters within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). To the extent that Requests for Waiver are
granted, it is expected that a greater number of shares will be issued under
the optional cash payment feature of the Plan as opposed to the dividend
reinvestment feature of the Plan.
 
  Financial intermediaries may purchase a significant portion of the shares of
Common Stock issued pursuant to the optional cash payment feature of the Plan.
IndyMac REIT does not have any formal or informal understanding with any such
organizations and, therefore, the extent of such financial intermediaries'
participation under the Plan cannot be estimated at this time. Participants
that are financial intermediaries that acquire shares of Common Stock under
the Plan with a view to distribution of such shares or that offer or sell
Shares for IndyMac REIT in connection with the Plan may be deemed to be
underwriters within the meaning of the Securities Act.
 
  From time to time, financial intermediaries, including brokers and dealers,
may engage in positioning transactions in order to benefit from the discount
from the Market Price of the shares of Common Stock acquired through the
reinvestment of dividends or optional cash payments under the Plan. Such
transactions may cause fluctuations in the trading volume of the Common Stock.
Financial intermediaries which engage in positioning transactions may be
deemed to be underwriters within the meaning of the Securities Act. The Plan
is intended for the benefit of investors in IndyMac REIT and not for
individuals or investors who engage in transactions which may cause
aberrations in the price or trading volume of the Common Stock.
 
                                   THE PLAN
 
  The Plan was adopted by the Board of Directors of IndyMac REIT on October
31, 1985 and was significantly amended by the Board of Directors on March 23,
1992 and May 17, 1995. Additional resolutions relating to the reservation of
additional shares of Common Stock to be issued pursuant to the Plan were
adopted by the Board of Directors on January 16, 1996, July 25, 1996, January
17, 1997, September 15, 1997, January 27, 1998, August 7, 1998 and October 14,
1998. The following questions and answers explain and constitute the Plan.
Shareholders who do not participate in the Plan will receive cash dividends,
as declared, and paid in the usual manner.
 
                                    PURPOSE
 
1. What is the purpose of the Plan?
 
  The primary purpose of the Plan is to provide eligible holders of shares of
Common Stock of IndyMac REIT with a convenient and simple method of increasing
their investment in IndyMac REIT by investing cash dividends in additional
shares of Common Stock without payment of any brokerage commission or service
charge and at a discount from the Market Price (as defined in Question 12), to
the extent shares are purchased directly from IndyMac REIT, and by investing
optional cash payments in additional shares of Common Stock at the Market
Price, without payment of any brokerage commission or service charge. See
Question 5 for a description of the holders who are eligible to participate in
the Plan. The Plan may also be used by IndyMac REIT to raise additional
capital through the sale each month of a portion of the shares available for
issuance under the Plan to owners of shares (including brokers or dealers)
who, in connection with any resales of such shares, may be deemed to be
underwriters. These sales will be effected through IndyMac REIT's ability to
waive limitations applicable to the amounts which Participants (as defined in
Question 2) may invest pursuant to the Plan's optional cash payment feature.
 
                                       5
<PAGE>
 
  See Question 17 for information concerning limitations applicable to
optional cash payments and certain of the factors considered by IndyMac REIT
in granting waivers. To the extent shares are purchased from IndyMac REIT
under the Plan, it will receive additional funds for general corporate
purposes. The Plan is intended for the benefit of investors in IndyMac REIT
and not for individuals or investors who engage in transactions which may
cause aberrations in the price or trading volume of Common Stock. From time to
time, financial intermediaries may engage in positioning transactions in order
to benefit from the discount from the Market Price of the shares of Common
Stock acquired through the reinvestment of dividends under the Plan. Such
transactions may cause fluctuations in the trading volume of the Common Stock.
IndyMac REIT reserves the right to modify, suspend or terminate participation
in the Plan by otherwise eligible holders of Common Stock in order to
eliminate practices which are not consistent with the purposes of the Plan.
 
                       OPTIONS AVAILABLE TO PARTICIPANTS
 
2. What options are available to enrolled Participants?
 
  Eligible holders of Common Stock who wish to participate in the Plan (each a
"Participant") may elect to have cash dividends paid on all or a portion of
their shares of Common Stock automatically reinvested in additional shares of
Common Stock. Cash dividends are paid on the Common Stock when and as declared
by IndyMac REIT's Board of Directors. Subject to the availability of shares of
Common Stock registered for issuance under the Plan, there is no minimum
limitation on the amount of dividends a Participant may reinvest under the
dividend reinvestment feature of the Plan.
 
  Each month, Participants may also elect to invest optional cash payments in
additional shares of Common Stock, subject to a minimum per month purchase
limit of $50 and a maximum per month purchase limit of $10,000, subject to
waiver. See Question 17 for information concerning limitations applicable to
optional cash payments and the availability of waivers with respect to such
limitations. Participants may make optional cash payments each month even if
dividends on their shares of Common Stock are not being reinvested and whether
or not a dividend has been declared.
 
                         ADVANTAGES AND DISADVANTAGES
 
3. What are the advantages and disadvantages of the Plan?
 
  Advantages:
 
    (a) The Plan provides Participants with the opportunity to reinvest cash
  dividends paid on all or a portion of their shares of Common Stock in
  additional shares of Common Stock without payment of any brokerage
  commission or service charge and at a 1% discount from the Market Price
  (subject to change), to the extent shares are purchased directly from
  IndyMac REIT.
 
    (b) The Plan provides Participants with the opportunity to make monthly
  investments of optional cash payments, subject to minimum and maximum
  amounts, for the purchase of additional shares of Common Stock at the
  Market Price, without payment of any brokerage commission or service
  charge.
 
    (c) Subject to the availability of shares of Common Stock registered for
  issuance under the Plan, all cash dividends paid on Participants' shares
  can be fully invested in additional shares of Common Stock because the Plan
  permits fractional shares to be credited to Plan accounts. Dividends on
  such fractional shares, as well as on whole shares, will also be reinvested
  in additional shares which will be credited to Plan accounts.
 
                                       6
<PAGE>
 
    (d) The Plan Administrator, at no charge to Participants, provides for
  the safekeeping of stock certificates for shares credited to each Plan
  account.
 
    (e) Periodic statements reflecting all current activity, including share
  purchases and latest Plan account balance, simplify Participants' record
  keeping. See Question 22 for information concerning reports to
  Participants.
 
  Disadvantages:
 
    (a) No interest will be paid by IndyMac REIT or the Plan Administrator on
  dividends or optional cash payments held pending reinvestment or
  investment. See Question 11. In addition, optional cash payments in excess
  of $10,000 may be subject to return to the Participant without interest in
  the event that the Threshold Price, if any, is not met for any Trading Day
  during the related Pricing Period. See Question 17.
 
    (b) With respect to optional cash payments, the actual number of shares
  to be issued to a Participant's Plan account will not be determined until
  after the end of the relevant Pricing Period. Therefore, during the Pricing
  Period Participants will not know the actual number of shares they have
  purchased.
 
    (c) With respect to optional cash payments, the Market Price may exceed
  the price at which shares of the Common Stock are trading on the Investment
  Date when the shares are issued or thereafter.
 
    (d) Because optional cash payments must be received by the Plan
  Administrator prior to the related Pricing Period, such payments may be
  exposed to changes in market conditions for a longer period of time than in
  the case of typical secondary market transactions. In addition, optional
  cash payments once received by the Plan Administrator will not be returned
  to Participants unless a written request is directed to the Plan
  Administrator at least five business days prior to the record date for the
  Investment Date with respect to which optional cash payments have been
  delivered by such Participant. See Questions 18 and 20.
 
    (e) Resales of shares of Common Stock credited to a Participant's account
  under the Plan will involve a nominal fee per transaction paid to the Plan
  Administrator (if such resale is made by the Plan Administrator at the
  request of a Participant), a brokerage commission and any applicable stock
  transfer taxes on the resales. See Questions 21 and 27.
 
                                ADMINISTRATION
 
4. Who administers the Plan?
 
  IndyMac REIT has retained The Bank of New York as plan administrator (the
"Plan Administrator"), to administer the Plan, keep records, send statements
of account activity to each Participant and perform other duties relating to
the Plan. See Question 22 for information concerning reports to Participants.
Shares purchased under the Plan and held by the Plan Administrator will be
registered in the Plan Administrator's name or the name of its nominee for the
benefit of the Participants. In the event that the Plan Administrator resigns
or otherwise ceases to act as plan administrator, IndyMac REIT will appoint a
new plan administrator to administer the Plan.
 
  The Plan Administrator also acts as dividend disbursing agent, transfer
agent and registrar for IndyMac REIT's Common Stock and the trustee for
securities issued by CWMBS, Inc. in which an affiliate of IndyMac REIT has an
interest and IndyMac ABS, Inc., which is a wholly-owned subsidiary of an
affiliate of IndyMac REIT.
 
                                       7
<PAGE>
 
                                 PARTICIPATION
 
  For purposes of this section, responses will generally be based upon the
method by which the shareholder holds his or her shares of Common Stock.
Generally, shareholders are either Record Owners or Beneficial Owners. A
Record Owner is a shareholder who owns shares of Common Stock in his or her
own name. A Beneficial Owner is a shareholder who beneficially owns shares of
Common Stock that are registered in a name other than his or her own name (for
example, the shares are held in the name of a broker, bank or other nominee).
A Record Owner may participate directly in the Plan, whereas a Beneficial
Owner will have to either become a Record Owner by having one or more shares
transferred into his or her own name or coordinate his or her participation in
the Plan through the broker, bank or other nominee in whose name the
Beneficial Owner's shares are held. If a Beneficial Owner who desires to
become a Participant encounters any difficulties in coordinating his or her
participation in the Plan with his or her broker, bank or other nominee, he or
she should call IndyMac REIT's Investor Relations department at (800) 669-
2300.
 
5. Who is eligible to participate?
 
  All Record Owners or Beneficial Owners of at least one share of Common Stock
are eligible to participate in the Plan. A Record Owner may participate
directly in the Plan. A Beneficial Owner must either become a Record Owner by
having one or more shares transferred into his or her own name or arrange with
the broker, bank or other nominee who is the record holder to participate on
his or her behalf. See Question 6.
 
  To facilitate participation by Beneficial Owners, IndyMac REIT has made
arrangements with the Plan Administrator to reinvest dividends, on a per
dividend basis, and accept optional cash payments under the Plan by record
holders such as brokers, banks and other nominees, on behalf of Beneficial
Owners. See Question 6.
 
  IndyMac REIT may terminate, by written notice, at any time any Participant's
individual participation in the Plan if such participation would be in
violation of the restrictions contained in the Certificate of Incorporation or
Bylaws of IndyMac REIT. Such restrictions prohibit any person or group of
persons from acquiring or holding, directly or indirectly, ownership of a
number of shares of capital stock of IndyMac REIT in excess of 9.8% of the
outstanding shares. The meanings ascribed to the terms "group" and "ownership"
may cause a person who individually owns less than 9.8% of the shares
outstanding to be deemed to be holding shares in excess of the foregoing
limitation. The Certificate of Incorporation provides that in the event a
person acquires shares of capital stock in excess of the foregoing limitation,
the excess shares are deemed tendered for purchase to IndyMac REIT at a price
calculated pursuant to a formula set forth in the Certificate of
Incorporation. Under the Certificate of Incorporation, any acquisition of
shares of IndyMac REIT that would result in the disqualification of IndyMac
REIT as a real estate investment trust for tax purposes is void to the fullest
extent permitted by law. Additionally, IndyMac REIT's Certificate of
Incorporation and Bylaws provide that certain "disqualified organizations,"
which generally include governmental entities and other tax-exempt persons not
subject to tax on unrelated business taxable income, are ineligible to hold
IndyMac REIT's shares.
 
6. How does an eligible shareholder participate?
 
  Record Owners may join the Plan by completing and signing the Authorization
Form included with the Plan and returning it to the Plan Administrator. A
postage-paid envelope is provided for this purpose. Authorization Forms may be
obtained at any time by written request to The Bank of New York, Investor
Relations Department, P.O. Box 11258, Church Street Station, New York, New
York 10286-1258, or by telephoning the Plan Administrator at (800) 524-4458.
 
  Beneficial Owners who wish to join the Plan must instruct their broker, bank
or other nominee to complete and sign the Authorization Form. The broker, bank
or other nominee will forward the completed Authorization
 
                                       8
<PAGE>
 
Form to its securities depository and the securities depository will provide
the Plan Administrator with the information necessary to allow the Beneficial
Owner to participate in the Plan. See Question 8 for a discussion of the
Broker and Nominee form (the "B&N Form"), which is required to be used for
optional cash payments of a Beneficial Owner whose broker, bank or other
nominee holds the Beneficial Owner's shares in the name of a major securities
depository. See also Question 16.
 
  If a Record Owner or the broker, bank or other nominee on behalf of a
Beneficial Owner submits a properly executed Authorization Form without
electing an investment option, such Authorization Form will be deemed to
indicate the intention of such Record Owner or Beneficial Owner, as the case
may be, to apply all cash dividends and optional cash payments, if applicable,
toward the purchase of additional shares of Common Stock. See Question 7 for
investment options.
 
7. What does the Authorization Form provide?
 
  The Authorization Form appoints the Plan Administrator as agent for the
Participant and directs IndyMac REIT to pay to the Plan Administrator each
Participant's cash dividends on all or a specified number of shares of Common
Stock owned by the Participant on the applicable record date ("Participating
Shares"), as well as on all whole and fractional shares of Common Stock
credited to a Participant's Plan account ("Plan Shares"). The Authorization
Form directs the Plan Administrator to purchase on the Investment Date (as
defined in Question 11) additional shares of Common Stock with such dividends
and optional cash payments, if any, made by the Participant. See Question 8
for a discussion of the B&N Form which is required to be used for optional
cash payments of a Beneficial Owner whose broker, bank or other nominee holds
the Beneficial Owner's shares in the name of a major securities depository.
The Authorization Form also directs the Plan Administrator to reinvest
automatically all subsequent dividends on Plan Shares. Dividends will continue
to be reinvested on the number of Participating Shares and on all Plan Shares
until the Participant specifies otherwise by contacting the Plan
Administrator, withdraws from the Plan (see Questions 26 and 27), or the Plan
is terminated. See Question 6 for additional information about the
Authorization Form.
 
  The Authorization Form provides for the purchase of additional shares of
Common Stock through the following investment options:
 
  (1)  If "Full Dividend Reinvestment" is elected, the Plan Administrator will
       apply all cash dividends on all shares of Common Stock then or
       subsequently registered in the Participant's name, and all cash
       dividends on all Plan Shares, together with any optional cash payments,
       toward the purchase of additional shares of Common Stock.
 
  (2)  If "Partial Dividend Reinvestment" is elected, the Plan Administrator
       will apply all cash dividends on only the number of Participating
       Shares registered in the Participant's name and specified on the
       Authorization Form and all cash dividends on all Plan Shares, together
       with any optional cash payments, toward the purchase of additional
       shares of Common Stock.
 
  (3)  If "Optional Cash Payments Only" is elected, the Participant will
       continue to receive cash dividends on shares of Common Stock registered
       in that Participant's name in the usual manner. However, the Plan
       Administrator will apply all cash dividends on all Plan Shares,
       together with any optional cash payments received from the Participant,
       toward the purchase of additional shares of Common Stock. See Question
       8 for a discussion of the B&N Form which is required to be used for
       optional cash payments of a Beneficial Owner whose broker, bank or
       other nominee holds the Beneficial Owner's shares in the name of a
       major securities depository.
 
  Each Participant may select any one of these three options. In each case,
dividends will be reinvested on all Participating Shares and on all Plan
Shares held in the Plan account, including dividends on shares of Common
 
                                       9
<PAGE>
 
Stock purchased with any optional cash payments, until a Participant specifies
otherwise by contacting the Plan Administrator, or withdraws from the Plan
altogether (see Questions 26 and 27), or until the Plan is terminated. If a
Participant would prefer to receive cash payments of dividends paid on Plan
Shares rather than reinvest such dividends, those shares must be withdrawn
from the Plan by written notification to the Plan Administrator. See Questions
26 and 27 regarding withdrawal of Plan Shares.
 
  Participants may change their investment options at any time by requesting a
new Authorization Form and returning it to the Plan Administrator at the
address set forth in Question 37. See Question 11 for the effective date for
any change in investment options.
 
 8. What does the B&N Form provide?
 
  The B&N Form provides the only means by which a broker, bank or other
nominee holding shares of a Beneficial Owner in the name of a major securities
depository may invest optional cash payments on behalf of such Beneficial
Owner. A B&N Form must be delivered to the Plan Administrator each time such
broker, bank or other nominee transmits optional cash payments on behalf of a
Beneficial Owner. B&N Forms will be furnished at any time upon request to the
Plan Administrator at the address or telephone number specified in Question
37.
 
  Prior to submitting the B&N Form, the broker, bank or other nominee for a
Beneficial Owner must submit a completed Authorization Form on behalf of the
Beneficial Owner. See Questions 6 and 7.
 
  The B & N Form and appropriate instructions must be received by the Plan
Administrator not later than the applicable Record Date or the optional cash
payment will not be invested until the following Investment Date.
 
 9. Is partial participation possible under the Plan?
 
  Yes. Record Owners or the broker, bank or other nominee for Beneficial
Owners may designate on the Authorization Form a number of shares for which
dividends are to be reinvested. Dividends will thereafter be reinvested only
on the number of shares specified, and the Record Owner or Beneficial Owner,
as the case may be, will continue to receive cash dividends on the remainder
of the shares.
 
10. When may an eligible shareholder join the Plan?
 
  A Record Owner or a Beneficial Owner may join the Plan at any time. Once in
the Plan, a Participant remains in the Plan until he or she withdraws from the
Plan, IndyMac REIT terminates his or her participation in the Plan or IndyMac
REIT terminates the Plan. See Question 27 regarding withdrawal from the Plan.
 
11. When will dividends be reinvested and/or optional cash payments be
    invested?
 
  When shares are purchased from IndyMac REIT, such purchases will be made on
the "Investment Date" in each month. The Investment Date with respect to
Common Stock acquired directly from IndyMac REIT and relating to a dividend
reinvestment will be the dividend payment date declared by the Board of
Directors (unless such date is not a business day in which case it is the
first business day immediately thereafter) or, in the case of open market
purchases, no later than ten business days following the dividend payment
date. The Investment Date with respect to Common Stock acquired directly from
IndyMac REIT and relating to an optional cash payment will generally be on or
about the twenty-second day of each month or, in the case of open market
purchases, no later than the last business day of each month. In no event,
however, will the Investment Date relating to dividend reinvestments be less
than ten days from the Investment Date relating to optional cash payments.
 
                                      10
<PAGE>
 
  When open market purchases are made by the Plan Administrator, such
purchases may be made on any securities exchange where the shares are traded,
in the over-the-counter market or by negotiated transactions, and may be
subject to such terms with respect to price, delivery and other matters as
agreed to by the Plan Administrator. Neither IndyMac REIT nor any Participant
shall have any authorization or power to direct the time or price at which
shares will be purchased or the selection of the broker or dealer through or
from whom purchases are to be made by the Plan Administrator. However, when
open market purchases are made by the Plan Administrator, the Plan
Administrator shall use its best efforts to purchase the shares at the lowest
possible price.
 
  If the Authorization Form is received prior to the record date for a
dividend payment, the election to reinvest dividends will begin with that
dividend payment. If the Authorization Form is received on or after any such
record date, reinvestment of dividends will begin on the dividend payment date
following the next record date if the Participant is still a holder of record.
Record dates for payment of dividends normally precede payment dates by
approximately five weeks.
 
  See Question 17 for information concerning limitations on the minimum and
maximum amounts of optional cash payments that may be made each month and
Question 18 for information as to when optional cash payments must be received
to be invested on each Investment Date.
 
  Shares will be allocated and credited to Participants' accounts as follows:
(1) shares purchased from IndyMac REIT will be allocated and credited on the
appropriate Investment Date; and (2) shares purchased in market transactions
will be allocated and credited as of the date on which the Plan Administrator
completes the purchases of the aggregate number of shares to be purchased on
behalf of all Participants with dividends to be reinvested or optional cash
payments, as the case may be, during the month.
 
  NO INTEREST WILL BE PAID ON CASH DIVIDENDS OR OPTIONAL CASH PAYMENTS PENDING
INVESTMENT OR REINVESTMENT UNDER THE TERMS OF THE PLAN. SINCE NO INTEREST IS
PAID ON CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST
INTEREST OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
 
                        PURCHASES AND PRICES OF SHARES
 
12. What will be the price to Participants of shares purchased under the Plan?
 
  With respect to reinvested dividends, the price per share of Common Stock
acquired directly from IndyMac REIT will be 99% (subject to change) of the
average of the high and low sales prices, computed to four decimal places, of
the Common Stock, as reported on the NYSE, on the Investment Date (as defined
in Question 11), or if no trading occurs in the Common Stock on the Investment
Date, the average of the high and low sales prices for the first trading day
immediately preceding the Investment Date for which trades are reported.
 
  No discount will be available for dividends reinvested in Common Stock
acquired in open market purchases. See Question 15. The price per share of
Common Stock acquired through open market purchases with reinvested dividends
will be the weighted average of the actual prices paid, computed to four
decimal places, for all of the Common Stock purchased by the Plan
Administrator with all Participants' reinvested dividends for the related
quarter. Additionally, each Participant will be charged a pro rata portion of
any brokerage commissions or other fees or charges paid by the Plan
Administrator in connection with such open market purchases. (If a Participant
desires to opt out of the dividend reinvestment feature of the Plan when the
Common Stock relating to dividend reinvestments will be purchased in the open
market, a Participant must notify the Plan Administrator no later
 
                                      11
<PAGE>
 
than the record date for the related dividend payment date. For information as
to the source of the Common Stock to be purchased under the Plan see Question
15.)
 
  With respect to optional cash payments that do not exceed $10,000 (see
Question 17 for a discussion of the discount applicable to optional cash
payments in excess of $10,000), the price per share of Common Stock acquired
directly from IndyMac REIT will be 100% of the average of the daily high and
low sale prices, computed to four decimal places, of the Common Stock, as
reported on the NYSE, for the twelve Trading Days immediately preceding the
relevant Investment Date (as defined in Question 11 above) or, if no trading
occurs in the Common Stock on one or more of such Trading Days, for the twelve
Trading Days immediately preceding the Investment Date for which trades are
reported. A "Trading Day" means a day on which trades in the Common Stock are
reported on the NYSE. With respect to all optional cash payments, regardless
of the amount being invested, the period encompassing the twelve Trading Days
which relate to an Investment Date constitutes the relevant "Pricing Period".
 
  The price per share of Common Stock acquired through open market purchases
with optional cash payments will be 100% of the weighted average of the actual
prices paid, computed to four decimal places, for all of the Common Stock
purchased by the Plan Administrator with all Participants' optional cash
payments for the related month. Additionally, each Participant will be charged
a pro rata portion of any brokerage commissions or other fees or charges paid
by the Plan Administrator in connection with such open market purchases. For
information as to the source of the Common Stock to be purchased under the
Plan, see Question 15.
 
  The price per share of Common Stock purchased with dividends reinvested in
Common Stock acquired directly from IndyMac REIT currently reflects a discount
which is subject to change (but will not vary from the range of 0% to 5%) from
time to time or discontinuance at IndyMac REIT's discretion after a review of
current market conditions, the level of participation in the Plan and IndyMac
REIT's current and projected capital needs. Except with respect to the Waiver
Discount (see Question 17), IndyMac REIT will provide Participants with
written notice of a change in the applicable discount rate at least thirty
days prior to the relevant record date.
 
  Neither IndyMac REIT nor any Participant shall have any authorization or
power to direct the time or price at which shares will be purchased or the
selection of the broker or dealer through or from whom purchases are to be
made by the Plan Administrator. However, when open market purchases are made
by the Plan Administrator, the Plan Administrator shall use its best efforts
to purchase the shares at the lowest possible price.
 
  All references in the Plan to the "Market Price" when it relates to dividend
reinvestments which will be reinvested in Common Stock acquired directly from
IndyMac REIT shall mean the average of the high and low sales prices, computed
to four decimal places, of the Common Stock, as reported on the NYSE, on the
Investment Date, or if no trading occurs in the Common Stock on the Investment
Date, the average of the high and low sales prices for the first trading day
immediately preceding the Investment Date for which trades are reported. With
respect to dividend reinvestments which will be reinvested in Common Stock
purchased in the open market, "Market Price" shall mean the weighted average
of the actual prices paid, computed to four decimal places, for all of the
Common Stock purchased by the Plan Administrator with all Participants'
reinvested dividends for the related quarter. All references in the Plan to
the "Market Price" for optional cash payments which will be invested in Common
Stock acquired directly from IndyMac REIT shall mean the average of the daily
high and low sales prices, computed to four decimal places, of the Common
Stock, as reported on the NYSE, during the Pricing Period (as defined above).
With respect to optional cash payments which will be reinvested in Common
Stock purchased in the open market, "Market Price" shall mean the weighted
average of the actual prices paid, computed to four decimal places, for all of
the Common Stock purchased by the Plan Administrator with all Participants'
optional cash payments for the related month.
 
                                      12
<PAGE>
 
13. What are the Record Dates and Investment Dates for dividend reinvestment?
 
  For the reinvestment of dividends, the "Record Date" is the record date
declared by the Board of Directors for such dividend. Likewise, the dividend
payment date declared by the Board of Directors constitutes the Investment
Date applicable to the reinvestment of such dividend with respect to Common
Stock acquired directly from IndyMac REIT, except that if any such date is not
a business day, the first business day immediately following such date shall
be the Investment Date. The Investment Date with respect to Common Stock
purchased in open market transactions will be no later than ten business days
following the dividend payment date. Dividends will be reinvested on the
Investment Date using the applicable Market Price (as defined in Question 12).
Generally, record dates for quarterly dividends on the Common Stock will
precede the dividend payment dates by approximately five weeks. See Schedule A
for a list of the future dividend record dates and payment dates. Please refer
to Question 18 for a discussion of the Record Dates and Investment Dates
applicable to optional cash payments.
 
14. How will the number of shares purchased for a Participant be determined?
 
  A Participant's account in the Plan will be credited with the number of
shares, including fractions computed to four decimal places, equal to the
total amount to be invested on behalf of such Participant divided by the
purchase price per share as calculated pursuant to the methods described in
Question 12, as applicable. The total amount to be invested will depend on the
amount of any dividends paid on the number of Participating Shares and Plan
Shares in such Participant's Plan account and available for investment on the
related Investment Date, or the amount of any optional cash payments made by
such Participant and available for investment on the related Investment Date.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no total maximum number of shares available for
issuance pursuant to the reinvestment of dividends.
 
15. What is the source of Common Stock purchased under the Plan?
 
  Plan Shares will be purchased either directly from IndyMac REIT, in which
event such shares will be either authorized but unissued shares or shares held
in the treasury, or on the open market, or by a combination of the foregoing,
at the option of IndyMac REIT, after a review of current market conditions and
IndyMac REIT's current and projected capital needs. IndyMac REIT will
determine the source of the Common Stock to be purchased under the Plan at
least three business days prior to the relevant Record Date, and will notify
the Plan Administrator of the same. Neither IndyMac REIT nor the Plan
Administrator shall be required to provide any written notice to Participants
as to the source of the Common Stock to be purchased under the Plan, but
current information regarding the source of the Common Stock may be obtained
by contacting IndyMac REIT's Treasurer at (800) 669-2300.
 
16. How does the optional cash payment feature of the Plan work?
 
  All Record Holders who have timely submitted signed Authorization Forms
indicating their intention to participate in this feature of the Plan, and all
Beneficial Owners whose brokers, banks or other nominees have timely submitted
signed Authorization Forms indicating their intention to participate in this
feature of the Plan (except for Beneficial Owners whose brokers, banks or
other nominees hold the shares of the Beneficial Owners in the name of a major
securities depository), are eligible to make optional cash payments during any
month, whether or not a dividend is declared. If a broker, bank or other
nominee holds shares of a Beneficial Owner in the name of a major securities
depository, optional cash payments must be made through the use of the B&N
Form. See Question 8. Optional cash payments must be accompanied by an
Authorization Form or a B&N Form, as applicable. Each month the Plan
Administrator will apply any optional cash payment received from a Participant
no later than one business day prior to the commencement of that month's
Pricing Period (as defined
 
                                      13
<PAGE>
 
in Question 12) to the purchase of additional shares of Common Stock for the
account of the Participant on the following Investment Date (as defined in
Question 11).
 
  No discount from the Market Price (as defined in Question 12) will apply to
optional cash payments of up to $10,000. Refer to Question 17 for a discussion
of the possible limitations on the purchase price applicable to the purchase
of shares made with optional cash payments.
 
17. What limitations apply to optional cash payments?
 
  Each optional cash payment is subject to a minimum per month purchase limit
of $50 and a maximum per month purchase limit of $10,000. For purposes of
these limitations, all Plan accounts under the common control or management of
a Participant will be aggregated. Generally, optional cash payments of less
than $50 and that portion of any optional cash payment which exceeds the
maximum monthly purchase limit of $10,000, unless such limit has been waived
by IndyMac REIT, will be returned to Participants without interest at the end
of the relevant Pricing Period.
 
  Participants may make optional cash payments of up to $10,000 each month
without the prior approval of IndyMac REIT. Optional cash payments in excess
of $10,000 may be made by a Participant only upon acceptance by IndyMac REIT
of a completed Request for Waiver form from such Participant. There is no pre-
established maximum limit applicable to optional cash payments that may be
made pursuant to accepted Requests for Waiver. A Request for Waiver form must
be received and accepted by IndyMac REIT each month no later than the Record
Date (as defined in Question 18) for the applicable Investment Date. Request
for Waiver forms will be furnished at any time upon request to the Plan
Administrator at the address or telephone number specified in Question 37.
Participants interested in obtaining further information about a Request for
Waiver should contact IndyMac REIT's Treasurer at (800) 669-2300.
 
  Waivers will be considered on the basis of a variety of factors, which may
include IndyMac REIT's current and projected capital needs, the alternatives
available to IndyMac REIT to meet those needs, prevailing market prices for
Common Stock and other Company securities, general economic and market
conditions, expected aberrations in the price or trading volume of the Common
Stock, the potential disruption of the price of the Common Stock by a
financial intermediary, the number of shares of Common Stock held by the
Participant submitting the waiver request, the past actions of a Participant
under the Plan, the aggregate amount of optional cash payments for which such
waivers have been submitted and the administrative constraints associated with
granting such waivers. Grants of waivers will be made in the absolute
discretion of IndyMac REIT.
 
  Participants in the Plan are not obligated to participate in the optional
cash payment feature of the Plan at any time. Optional cash payments need not
be in the same amount each month.
 
  Unless it waives its right to do so, IndyMac REIT may establish for any
Pricing Period a minimum price (the "Threshold Price") applicable only to the
investment of optional cash payments that exceed $10,000 and that are made
pursuant to Requests for Waiver, in order to provide IndyMac REIT with the
ability to set a minimum price at which Common Stock will be sold under the
Plan each month pursuant to such requests. A Threshold Price will only be
established when shares of Common Stock will be purchased directly from
IndyMac REIT on the applicable Investment Date. IndyMac REIT will, at least
three business days prior to each Record Date (as defined in Question 18),
determine whether to establish a Threshold Price and, if a Threshold Price is
established, its amount and so notify the Plan Administrator. The
determination whether to establish a Threshold Price and, if a Threshold Price
is established, its amount will be made by IndyMac REIT at its discretion
after a review of current market conditions, the level of participation in the
Plan and IndyMac REIT's current and projected capital needs. Neither IndyMac
REIT nor the Plan Administrator shall be required to provide any written
notice to Participants as to whether a Threshold Price has been established
for any Pricing Period, but
 
                                      14
<PAGE>
 
current information regarding the Threshold Price may be obtained by
contacting IndyMac REIT's Treasurer at (800) 669-2300.
 
  The Threshold Price for optional cash payments made pursuant to Requests for
Waiver, if established for any Pricing Period, will be a stated dollar amount
that the average of the high and low sale prices of the Common Stock, as
reported on the NYSE, for each Trading Day of the relevant Pricing Period,
must equal or exceed. In the event that the Threshold Price is not satisfied
for a Trading Day in the Pricing Period, then that Trading Day and the trading
prices for that day will be excluded from that Pricing Period. Thus, for
example, if the Threshold Price is not satisfied for three of the twelve
Trading Days in a Pricing Period, then the average sales price for purchases
and the amount of optional cash payments which may be invested will be based
upon the remaining nine Trading Days when the Threshold Price is satisfied.
For each Trading Day on which the Threshold Price is not satisfied, 1/12 of
each optional cash payment made by a Participant pursuant to a Request for
Waiver will be returned to such Participant, without interest, as soon as
practicable after the applicable Investment Date. In the example above,
therefore, 3/12 of each Participant's optional cash payment made pursuant to a
Request for Waiver will be returned to such Participant by check, without
interest, as soon as practicable after the applicable Investment Date. This
return procedure will only apply when shares are purchased directly from
IndyMac REIT for optional cash payments made pursuant to Requests for Waiver
and IndyMac REIT has set a Threshold Price with respect to the relevant
Pricing Period. See Question 15.
 
  Setting a Threshold Price for a Pricing Period shall not affect the setting
of a Threshold Price for any subsequent Pricing Period. The Threshold Price
concept and return procedure discussed above apply only to optional cash
payments made pursuant to Requests for Waiver.
 
  For any Investment Date, IndyMac REIT may waive its right to set a Threshold
Price for optional cash payments made pursuant to Requests for Waiver.
Participants may ascertain whether the Threshold Price applicable to a given
Pricing Period has been set or waived, as applicable, by contacting IndyMac
REIT's Treasurer at (800) 669-2300.
 
  For a list of expected dates by which the Threshold Price will be set in
1999, see Schedule A.
 
  Each month, at least three business days prior to the applicable Record Date
(as defined in Question 18), IndyMac REIT will establish the discount from the
Market Price applicable to optional cash payments made pursuant to Requests
for Waiver and will notify the Plan Administrator of the same. Such discount
(the "Waiver Discount") will be between 0% and 5% of the Market Price and may
vary each month, but once established will apply uniformly to all optional
cash payments made pursuant to Requests for Waiver during that month. The
Waiver Discount will be established in IndyMac REIT's sole discretion after a
review of current market conditions, the level of participation in the Plan,
and IndyMac REIT's current and projected capital needs. The Waiver Discount
applies only to optional cash payments made pursuant to Requests for Waiver.
Neither IndyMac REIT nor the Plan Administrator shall be required to provide
any written notice to Participants as to the Waiver Discount, but current
information regarding the Waiver Discount applicable to the next Pricing
Period may be obtained by contacting IndyMac REIT's Treasurer at (800) 669-
2300. Setting a Waiver Discount for an Investment Date shall not affect the
setting of a Waiver Discount for any subsequent Investment Date. The Waiver
Discount feature discussed above applies only to optional cash payments made
pursuant to Requests for Waiver and does not apply to the reinvestment of
dividends.
 
  The Threshold Price concept and return procedure discussed above apply only
to optional cash payments made pursuant to Requests for Waiver when shares of
Common Stock are to be purchased from IndyMac REIT on the applicable
Investment Date. Only such optional cash payments will be affected by the
Waiver Discount. All other optional cash payments will be made at the Market
Price, without regard to any Threshold Price or Waiver Discount.
 
                                      15
<PAGE>
 
18. What are the Record Dates and Investment Dates for optional cash payments?
 
  Optional cash payments will be invested every month on the related
Investment Date. The "Record Date" for optional cash payments is two business
days prior to the commencement of the related Pricing Period and the
"Investment Date" is generally on or about the twenty-second day of each month
or, in the case of open market purchases, no later than the last business day
of each month. In no event, however, will the Investment Date relating to
optional cash payments be less than ten days from the Investment Date relating
to dividend reinvestments.
 
  Optional cash payments received by the Plan Administrator at least one
business day prior to the commencement of a Pricing Period will be applied to
the purchase of shares of Common Stock on the Investment Date which relates to
that Pricing Period. No interest will be paid by IndyMac REIT or the Plan
Administrator on optional cash payments held pending investment. Generally,
optional cash payments received on or after the commencement of a Pricing
Period will be returned to Participants without interest at the end of the
Pricing Period; such optional cash payments may be resubmitted by a
Participant prior to the commencement of the next or a later Pricing Period.
 
  For a schedule of expected Record Dates and Investment Dates in 1999, see
Schedule A.
 
19. When must optional cash payments be received by the Plan Administrator?
 
  Each month the Plan Administrator will apply any optional cash payment for
which good funds are timely received to the purchase of shares of Common Stock
for the account of the Participant on the next Investment Date. See Question
18. In order for funds to be invested on the next Investment Date, the Plan
Administrator must have received a check, money order or wire transfer by the
end of the business day immediately preceding the first Trading Day of the
ensuing Pricing Period and such check, money order or wire transfer must have
cleared on or before the related Investment Date. Wire transfers may be used
only if approved verbally in advance by the Plan Administrator. Checks and
money orders are accepted subject to timely collection as good funds and
verification of compliance with the terms of the Plan. Checks or money orders
should be made payable to The Bank of New York--IndyMac Mortgage Holdings,
Inc. DRIP. Checks returned for any reason will not be resubmitted for
collection.
 
  NO INTEREST WILL BE PAID BY INDYMAC REIT OR THE PLAN ADMINISTRATOR ON
OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO INTEREST IS PAID ON
CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST INTEREST
OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
 
  In order for payments to be invested on the Investment Date, in addition to
the receipt of good funds by the end of the business day immediately preceding
the commencement of a Pricing Period, the Plan Administrator must be in
receipt of an Authorization Form or a B&N Form, as appropriate, as of the same
date. See Questions 6 and 8.
 
20. May optional cash payments be returned?
 
  Upon telephone or written request to the Plan Administrator received at
least five business days prior to the Record Date for the Investment Date with
respect to which optional cash payments have been delivered to the Plan
Administrator, such optional cash payments will be returned to the Participant
as soon as practicable. Requests received less than five business days prior
to such date will not be returned but instead will be invested on the next
related Investment Date. Additionally, a portion of each optional cash payment
will be returned by check, without interest, as soon as practicable after the
Investment Date for each Trading Day of the Pricing
 
                                      16
<PAGE>
 
Period that does not meet the Threshold Price, if any, applicable to optional
cash payments made pursuant to Requests for Waiver. See Question 17. Also,
each optional cash payment, to the extent that it does not either conform to
the limitations described in Question 18 or clear within the time limit
described in Question 19, will be subject to return to the Participant as soon
as practicable.
 
21. Are there any expenses to Participants in connection with their
    participation under the Plan?
 
  Participants will have to pay brokerage fees or commissions on shares of
Common Stock purchased with reinvested dividends and optional cash payments on
the open market, which sums are not expected to exceed $.15 per share (subject
to change) and which will be first deducted before determining the number of
shares to be purchased. The Plan Administrator may effect open market
purchases and sales of shares for the Plan through BNY Brokerage Inc., an
affiliated broker-dealer, in which case BNY Brokerage Inc. will receive a
commission for effecting such transactions. Participants will incur no
brokerage commissions or service charges in connection with the reinvestment
of dividends or optional cash payments when shares of Common Stock are
acquired directly from IndyMac REIT. IndyMac REIT will pay all other costs of
administration of the Plan. However, Participants that request that the Plan
Administrator sell all or any portion of their shares (see Question 27) must
pay a nominal fee per transaction to the Plan Administrator, any related
brokerage commissions and applicable stock transfer taxes.
 
                            REPORTS TO PARTICIPANTS
 
22. What kind of reports will be sent to Participants in the Plan?
 
  Each Participant in the Plan will receive a statement of his or her account
following each purchase of additional shares. These statements are
Participants' continuing record of the cost of their purchases and should be
retained for income tax purposes. In addition, Participants will receive
copies of other communications sent to holders of the Common Stock, including
IndyMac REIT's annual report to its shareholders, the notice of annual meeting
and proxy statement in connection with its annual meeting of shareholders and
Internal Revenue Service information for reporting dividends paid.
 
                            DIVIDENDS ON FRACTIONS
 
23. Will Participants be credited with dividends on fractions of shares?
 
  Yes.
 
                        CERTIFICATES FOR COMMON SHARES
 
24. Will certificates be issued for shares purchased?
 
  No. Common Stock purchased for Participants will be held in the name of the
Plan Administrator or its nominee. No certificates will be issued to
Participants for shares in the Plan unless a Participant submits a written
request to the Plan Administrator or until participation in the Plan is
terminated. At any time, a Participant may request the Plan Administrator to
send a certificate for some or all of the whole shares credited to a
Participant's account. This request should be mailed to the Plan Administrator
at the address set forth in the answer to Question 37. Any remaining whole
shares and any fractions of shares will remain credited to the Plan account.
Certificates for fractional shares will not be issued under any circumstances.
 
                                      17
<PAGE>
 
25. In whose name will certificates be registered when issued?
 
  Each Plan account is maintained in the name in which the related
Participant's certificates were registered at the time of enrollment in the
Plan. Stock certificates for whole shares purchased under the Plan will be
similarly registered when issued upon a Participant's request. If a
Participant is a Beneficial Owner, such request should be placed through such
Participant's banker, broker or other nominee. See Question 6. A Participant
who wishes to pledge shares credited to such Participant's Plan account must
first withdraw such shares from the account.
 
                          WITHDRAWALS AND TERMINATION
 
26. When may Participants withdraw from the Plan?
 
  Participants may withdraw from the Plan with respect to all or a portion of
the shares held in his or her account in the Plan at any time. If the request
to withdraw is received prior to a dividend record date set by the Board of
Directors for determining Shareholders of record entitled to receive a
dividend, the request will be processed on the day following receipt of the
request by the Plan Administrator.
 
  If the request to withdraw is received by the Plan Administrator on or after
a dividend record date, but before payment date, the Plan Administrator, in
its sole discretion, may either pay such dividend in cash or reinvest it in
shares for the Participant's account. The request for withdrawal will then be
processed as promptly as possible following such dividend payment date. All
dividends subsequent to such dividend payment date or Investment Date will be
paid in cash unless a Shareholder re-enrolls in the Plan, which may be done at
any time.
 
  Any optional cash payments which have been sent to the Plan Administrator
prior to a request for withdrawal will also be invested on the next Investment
Date unless a Participant expressly requests return of that payment in the
request for withdrawal, and the request for withdrawal is received by the Plan
Administrator at least two business days prior to the first day of the Pricing
Period.
 
27. How does a Participant withdraw from the Plan?
 
  A Participant who wishes to withdraw from the Plan with respect to all or a
portion of the shares held in his or her account in the Plan must notify the
Plan Administrator in writing at its address set forth in the answer to
Question 37. Upon a Participant's withdrawal from the Plan or termination of
the Plan by IndyMac REIT, certificates for the appropriate number of whole
shares credited to his or her account under the Plan will be issued. A cash
payment will be made for any fraction of a share.
 
  Upon withdrawal from the Plan, a Participant may also request in writing
that the Plan Administrator sell all or part of the shares credited to his or
her account in the Plan. The Plan Administrator will sell the shares as
requested within ten business days after processing the request for
withdrawal. The Participant will receive the proceeds of the sale, less a
nominal fee per transaction paid to the Plan Administrator, any brokerage fees
or commissions and any applicable stock transfer taxes, generally within five
business days of the sale.
 
28. Are there any automatic termination provisions?
 
  Participation in the Plan will be terminated if the Plan Administrator
receives written notice of the death or adjudicated incompetency of a
Participant, together with satisfactory supporting documentation of the
appointment of a legal representative, at least five business days before the
next Record Date for purchases made through the reinvestment of dividends or
optional cash payments, as applicable. In the event written notice of death or
adjudicated incompetency and such supporting documentation is received by the
Plan Administrator less
 
                                      18
<PAGE>
 
than five business days before the next Record Date for purchases made through
the reinvestment of dividends or optional cash payments, as applicable, shares
will be purchased for the Participant with the related cash dividend or
optional cash payment and participation in the Plan will not terminate until
after such dividend or payment has been reinvested. Thereafter, no additional
purchase of shares will be made for the Participant's account and the
Participant's shares and any cash dividends paid thereon will be forwarded to
such Participant's legal representative.
 
                               OTHER INFORMATION
 
29. What happens if a Participant sells or transfers all of the shares
    registered in the Participant's name?
 
  If a Participant disposes of all shares registered in his or her name, and
is not shown as a Record Owner on a dividend record date, the Participant may
be terminated from the Plan as of such date and such termination treated as
though a withdrawal notice had been received prior to the record date.
 
30. What happens if IndyMac REIT declares a dividend payable in shares or
    declares a stock split?
 
  Any dividend payable in shares and any additional shares distributed by
IndyMac REIT in connection with a stock split in respect of shares credited to
a Participant's Plan account will be added to that account. Stock dividends or
split shares which are attributable to shares registered in a Participant's
own name and not in his or her Plan account will be mailed directly to the
Participant as in the case of Shareholders not participating in the Plan.
 
31. How will shares held by the Plan Administrator be voted at meetings of
    shareholders?
 
  If the Participant is a Record Owner, the Participant will receive a proxy
card covering both directly held shares and shares held in the Plan. If the
Participant is a Beneficial Owner, the Participant will receive a proxy
covering shares held in the Plan through his or her broker, bank or other
nominee.
 
  If a proxy is returned properly signed and marked for voting, all the shares
covered by the proxy will be voted as marked. If a proxy is returned properly
signed but no voting instructions are given, all of the Participant's shares
will be voted in accordance with recommendations of the Board of Directors of
IndyMac REIT, unless applicable laws require otherwise. If the proxy is not
returned, or if it is returned unexecuted or improperly executed, shares
registered in a Participant's name may be voted only by the Participant in
person.
 
32. What are the responsibilities of IndyMac REIT and the Plan Administrator
    under the Plan?
 
  IndyMac REIT and the Plan Administrator will not be liable in administering
the Plan for any act done in good faith or required by applicable law or for
any good faith omission to act including, without limitation, any claim of
liability arising out of failure to terminate a Participant's account upon his
or her death, with respect to the prices at which shares are purchased and/or
the times when such purchases are made or with respect to any fluctuation in
the market value before or after purchase or sale of shares. Notwithstanding
the foregoing, nothing contained in the Plan limits IndyMac REIT's liability
with respect to alleged violations of federal securities laws.
 
  IndyMac REIT and the Plan Administrator shall be entitled to rely on
completed forms and the proof of due authority to participate in the Plan,
without further responsibility of investigation or inquiry.
 
33. May the Plan be changed or discontinued?
 
  Yes. IndyMac REIT may suspend, terminate, or amend the Plan at any time.
Notice will be sent to Participants of any suspension or termination, or of
any amendment that alters the Plan terms and conditions, as soon as
practicable after such action by IndyMac REIT.
 
                                      19
<PAGE>
 
  IndyMac REIT may substitute another administrator or agent in place of the
Plan Administrator at any time; Participants will be promptly informed of any
such substitution.
 
  Any questions of interpretation arising under the Plan will be determined by
IndyMac REIT and any such determination will be final.
 
34. What are the federal income tax consequences of participation in the Plan?
 
  The following summary is based upon an interpretation of current federal tax
law. Participants should consult their own tax advisers to determine
particular tax consequences, including state income tax (and non-income tax,
such as stock transfer tax) consequences, which vary from state to state and
which may result from participation in the Plan and subsequent disposition of
shares acquired pursuant to the Plan. Income tax consequences to Participants
residing outside the United States will vary from jurisdiction to
jurisdiction.
 
  Participants in the Plan will be treated for federal income tax purposes as
having received, on the dividend payment date, a distribution in an amount
equal to the fair market value on that date of the shares acquired with
reinvested dividends. Such shares will have a tax basis equal to the same
amount. For federal income tax purposes, the fair market value of shares
acquired with reinvested dividends under the Plan will be equal to 100% of the
average of the high and low sale prices of shares on the related Investment
Date.
 
  Such distribution will be taxable as a dividend to the extent of IndyMac
REIT's current or accumulated earnings and profits. To the extent the
distribution is in excess of IndyMac REIT's current or accumulated earnings
and profits, the distribution will be treated first as a tax-free return of
capital, reducing the tax basis in a Participant's shares, and the
distribution in excess of a Participant's tax basis will be taxable as gain
realized from the sale of its shares.
 
Example 1:
 
  The following example may be helpful to illustrate the federal income tax
consequences of the reinvestment of dividends at a 1% discount from Market
Price when shares of Common Stock are purchased directly from IndyMac REIT.
 
<TABLE>
      <S>                                                       <C>      <C>
      Cash dividends reinvested................................          $100.00
      Assumed fair market value and Market Price*.............. $15.00
      Less 1% discount per share............................... $(0.15)
                                                                -------
      Net purchase price per share............................. $14.85
      Number of shares purchased ($100.00/$14.85)..............   6.7340
      Total taxable dividend resulting from transaction
       ($15.00 x 6.7340).......................................          $101.01
</TABLE>
- --------
*These prices are assumed for illustrative purposes only, and will vary with
   the market price of Common Stock.
 
  Participants could be treated as having received a distribution upon the
purchase of shares with an optional cash payment in an amount equal to the
excess, if any, of the fair market value of the shares on the Investment Date
over the amount of the optional cash payment. The taxation of any such excess
as a distribution is not entirely clear. Participants should be aware that
IndyMac REIT will treat the entire amount of any such excess as a distribution
for tax reporting purposes. It is possible, however, that all or a portion of
such distribution should not be treated as a taxable distribution.
Participants are encouraged to consult their own tax advisors in this regard.
 
                                      20
<PAGE>
 
  Shares acquired under the optional cash payment feature of the Plan will
have a tax basis equal to the amount of the payment plus the excess, if any,
of the fair market value of the shares purchased over the amount of the
payment, to the extent such excess is treated as a distribution. The fair
market value on an acquisition date is likely to differ from the Market Price
for the Pricing Period immediately preceding the related Investment Date
(which is used to determine the number of shares acquired).
 
Example 2:
 
  The following example may be helpful to illustrate the federal income tax
consequences of the optional cash payment feature at the Market Price.
 
<TABLE>
      <S>                                                       <C>     <C>
      Optional cash payment....................................         $100.00
      Assumed fair market value*............................... $15.00
      Assumed Market Price*.................................... $14.75
                                                                ------
      Net purchase price per share............................. $14.75
      Number of shares purchased ($100.00/$14.75)..............  6.7797
      Total taxable dividend resulting from transaction
       (6.7797 x $15.00-$100.00)...............................         $  1.69
</TABLE>
- --------
*These prices are assumed for illustrative purposes only, and will vary with
   the market price of Common Stock.
 
  A Participant's holding period for shares acquired pursuant to the Plan will
begin on the day following the Investment Date.
 
  A Participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the Participant's account, either
upon the Participant's request for certain of those shares or upon termination
of participation in the Plan. A Participant will realize gain or loss upon the
sale or exchange of shares acquired under the Plan. A Participant will also
realize gain or loss upon receipt, following termination of participation in
the Plan, of a cash payment for any fractional share equivalent credited to
the Participant's account. The amount of any such gain or loss will be the
difference between the amount that the Participant received for the shares or
fractional share equivalent and the tax basis thereof.
 
  The foregoing discussion is based on the assumption that newly issued or
treasury shares will be purchased directly from IndyMac REIT. No discount will
be available for shares purchased on the open market with reinvested
dividends. Accordingly, the tax consequences will be different from those set
forth in Example 1. With respect to open market purchases relating to optional
cash payments, the consequences will be generally the same as set forth in
Example 2.
 
35. How are income tax withholding provisions applied to shareholders who
    participate in the Plan?
 
  If a Participant fails to provide certain federal income tax certifications
in the manner required by law, dividends on shares of Common Stock, proceeds
from the sale of fractional shares and proceeds from the sale of shares held
for a Participant's account will be subject to federal income tax withholding
at the rate of 31%. If withholding is required for any reason, the appropriate
amount of tax will be withheld. Certain shareholders (including most
corporations) are, however, exempt from the above withholding requirements.
 
  If a Participant is a foreign shareholder whose dividends are subject to
federal income tax withholding at the 30% rate (or a lower treaty rate), the
appropriate amount will be withheld and the balance in shares will be credited
to such Participant's account.
 
                                      21
<PAGE>
 
36. Who bears the risk of market fluctuations in IndyMac REIT's Common Stock?
 
  A Participant's investment in shares held in the Plan account is no
different from his or her investment in directly held shares. The Participant
bears the risk of any loss and enjoys the benefits of any gain from market
price changes with respect to such shares.
 
37. Who should be contacted with questions about the Plan?
 
  All correspondence regarding the Plan should be directed to:
 
  The Bank of New York
  Investor Relations Department
  P.O. Box 11258
  Church Street Station
  New York, New York 10286-1258
  Telephone (800) 524-4458
 
Please mention IndyMac Mortgage Holdings, Inc. and this Plan in all
correspondence.
 
38. How is the Plan interpreted?
 
  Any question of interpretation arising under the Plan will be determined by
IndyMac REIT and any such determination will be final. IndyMac REIT may adopt
rules and regulations to facilitate the administration of the Plan. The terms
and conditions of the Plan and its operation will be governed by the laws of
the State of California.
 
39. What are some of the Participant responsibilities under the Plan?
 
  Plan Shares are subject to escheat to the state in which the Participant
resides in the event that such shares are deemed, under such state's laws, to
have been abandoned by the Participant. Participants, therefore, should notify
the Plan Administrator promptly in writing of any change of address. Account
statements and other communications to Participants will be addressed to them
at the last address of record provided by Participants to the Plan
Administrator.
 
  Participants will have no right to draw checks or drafts against their Plan
accounts or to instruct the Plan Administrator with respect to any shares of
Common Stock or cash held by the Plan Administrator except as expressly
provided herein.
 
                                   DIVIDENDS
 
  IndyMac REIT has paid dividends since its incorporation. In order to
accommodate the provisions of this Plan, IndyMac REIT anticipates that
dividends will be payable within the first ten business days of March, June,
September and December.
 
                                USE OF PROCEEDS
 
  IndyMac REIT does not know either the number of shares of Common Stock that
will be ultimately sold pursuant to the Plan or the prices at which such
shares will be sold. However, IndyMac REIT proposes to use the net proceeds
from the sale of newly issued or treasury shares of Common Stock for general
corporate purposes.
 
 
                                      22
<PAGE>
 
                             PLAN OF DISTRIBUTION
 
  Except to the extent the Plan Administrator purchases Common Stock in open
market transactions, the Common Stock acquired under the Plan will be sold
directly by IndyMac REIT through the Plan. IndyMac REIT may sell Common Stock
to owners of shares (including brokers or dealers) who, in connection with any
resales of such shares, may be deemed to be underwriters. Such shares,
including shares acquired pursuant to waivers granted with respect to the
optional cash payment feature of the Plan, may be resold in market
transactions (including coverage of short positions) on any national
securities exchange on which shares of Common Stock trade or in privately
negotiated transactions. The Common Stock is currently listed on the NYSE.
Under certain circumstances, it is expected that a portion of the shares of
Common Stock available for issuance under the Plan will be issued pursuant to
such waivers. The difference between the price such owners pay to IndyMac REIT
for shares of Common Stock acquired under the Plan, after deduction of the
applicable discount from the Market Price, and the price at which such shares
are resold, may be deemed to constitute underwriting commissions received by
such owners in connection with such transactions.
 
  Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can
be issued pursuant to the reinvestment of dividends. From time to time,
financial intermediaries may engage in positioning transactions in order to
benefit from the discount from the Market Price of Common Stock acquired
through the reinvestment of dividends or optional cash payments under the
Plan.
 
  Except with respect to open market purchases of Common Stock relating to
reinvested dividends and optional cash payments, IndyMac REIT will pay any and
all brokerage commissions and related expenses incurred in connection with
purchases of Common Stock under the Plan. Upon withdrawal by a Participant
from the Plan by the sale of Common Stock held under the Plan, the Participant
will receive the proceeds of such sale less a nominal fee per transaction paid
to the Plan Administrator (if such resale is made by the Plan Administrator at
the request of a Participant), any related brokerage commissions and any
applicable transfer taxes.
 
  Common Stock may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any Common Stock or other securities in any state or any other
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
 
                                 LEGAL OPINION
 
  The validity of the securities offered hereby has been passed upon by
Richard H. Wohl, General Counsel of IndyMac REIT.
 
                                    EXPERTS
 
  The consolidated financial statements of IndyMac REIT and its subsidiaries
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1997 have been so incorporated in reliance on
the report of Grant Thornton LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
 
                                INDEMNIFICATION
 
  IndyMac REIT's Certificate of Incorporation eliminates, to the fullest
extent permitted by Delaware law, director liability for monetary damage for
breaches of the directors' fiduciary duty of care. IndyMac REIT's Certificate
of Incorporation and Bylaws also provide that IndyMac REIT shall indemnify
directors and officers under certain circumstances for liabilities and
expenses incurred by reason of their actions as agents of IndyMac REIT. In
addition, IndyMac REIT maintains an insurance policy that indemnifies
directors and officers against certain liabilities.
 
                                      23
<PAGE>
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling IndyMac REIT
pursuant to the foregoing provisions, IndyMac REIT has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in said Act and is therefore unenforceable.
 
                                   GLOSSARY
 
  "Beneficial Owners" means shareholders who beneficially own shares of Common
Stock that are registered in a name other than their own (for example, in the
name of a broker, bank or other nominee).
 
  "B&N Form" means a Broker and Nominee form.
 
  "business day" means any day other than Saturday, Sunday or legal holiday on
which the NYSE is closed or a day on which the Plan Administrator is
authorized or obligated by law to close.
 
  "Commission" means the Securities and Exchange Commission.
 
  "Common Stock" means the common stock, $.01 par value, of IndyMac REIT.
 
  "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
  "IndyMac REIT" means IndyMac Mortgage Holdings, Inc.
 
  "Investment Date" means, with respect to Common Stock acquired directly from
IndyMac REIT and relating to a dividend reinvestment, the dividend payment
date declared by the Board of Directors (unless such date is not a business
day in which case it is the first business day immediately thereafter) or, in
the case of open market purchases, no later than ten business days following
the dividend payment date; and with respect to Common Stock acquired directly
from IndyMac REIT and relating to an optional cash payment, generally on or
about the twenty-second day of each month; or, in the case of open market
purchases, no later than the last business day of each month. In no event,
however, will the Investment Date relating to dividend reinvestments be less
than ten days from the Investment Date relating to optional cash payments.
 
  "Market Price" means, with respect to Common Stock acquired directly from
IndyMac REIT and relating to a dividend reinvestment, the average of the high
and low sales prices, computed to four decimal places, of the Common Stock, as
reported on the NYSE, on the Investment Date or if no trading occurs in the
Common Stock on the Investment Date, the average of the high and low sales
prices for the first trading day immediately preceding the Investment Date for
which trades are reported. With respect to dividend reinvestments which will
be reinvested in Common Stock purchased in the open market, "Market Price"
shall mean the weighted average of the actual prices paid, computed to four
decimal places, for all of the Common Stock purchased by the Plan
Administrator with all Participants' reinvested dividends for the related
quarter. With respect to Common Stock acquired directly from IndyMac REIT and
relating to optional cash payments, "Market Price" shall mean the average of
the daily high and low sales prices, computed to four decimal places, of the
Common Stock, as reported on the NYSE, during the Pricing Period. With respect
to optional cash payments which will be reinvested in Common Stock purchased
in the open market, "Market Price" shall mean the weighted average of the
actual prices paid, computed to four decimal places, for all of the Common
Stock purchased by the Plan Administrator with all Participants' optional cash
payments for the related month.
 
  "NYSE" means the New York Stock Exchange.
 
  "Participant" means an eligible holder of Common Stock who wishes to
participate in the Plan.
 
                                      24
<PAGE>
 
  "Participating Shares" means shares of Common Stock owned by a Participant
on the applicable record date as to which such Participant has directed
IndyMac REIT to pay the related cash dividends to the Plan Administrator.
 
  "Plan" means the IndyMac Mortgage Holdings, Inc. Dividend Reinvestment and
Stock Purchase Plan.
 
  "Plan Administrator" means a plan administrator that administers the Plan,
keeps records, sends statements of account to each Participant and performs
other duties related to the Plan. The Bank of New York currently serves as
Plan Administrator of the Plan.
 
  "Plan Shares" means all whole and fractional shares of Common Stock credited
to a Participant's Plan account.
 
  "Pricing Period" means the period encompassing the twelve Trading Days
preceding the relevant optional cash payment Investment Date.
 
  "Record Date" means, with respect to reinvestments of dividends, the record
date declared by the Board of Directors for such dividend; and with respect to
optional cash payments, two business days prior to the commencement of the
related Pricing Period.
 
  "Record Owners" means shareholders who own shares of Common Stock in their
own names.
 
  "Requests for Waiver" means a written request from a Participant to make
optional cash payments in excess of $10,000.
 
  "Securities Act" means the Securities Act of 1933, as amended.
 
  "Threshold Price" means the minimum price, if any, established by IndyMac
REIT that the average high and low prices of the Common Stock must equal or
exceed during each Trading Day of the Pricing Period for optional cash
payments made pursuant to Requests for Waiver.
 
  "Trading Day" means a day on which trades in the Common Stock are reported
on the NYSE.
 
  "Waiver Discount" means the discount from the Market Price applicable to
optional cash payments made pursuant to Requests for Waiver. Such discount
will vary between 0% and 5% of the Market Price and may vary each month.
 
                                      25
<PAGE>
 
                                  SCHEDULE A
 
Optional Cash Payments
 
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
  Threshold Price and                                        Pricing Period
    Waiver Discount                         Optional Cash     Commencement
       Set Date            Record Date    Payment Due Date        Date         Investment Date
- ------------------------------------------------------------------------------------------------
  <S>                   <C>               <C>               <C>               <C>
  December 28, 1998     December 31, 1998 January 4, 1999   January 5, 1999   January 22, 1999
  January 27, 1999      February 1, 1999  February 2, 1999  February 3, 1999  February 22, 1999
  February 26, 1999     March 2, 1999     March 3, 1999     March 4, 1999     March 22, 1999
  March 29, 1999        April 1, 1999     April 5, 1999     April 6, 1999     April 22, 1999
  April 28, 1999        May 3, 1999       May 4, 1999       May 5, 1999       May 21, 1999
  May 27, 1999          June 2, 1999      June 3, 1999      June 4, 1999      June 22, 1999
  June 28, 1999         July 1, 1999      July 2, 1999      July 6, 1999      July 22, 1999
  July 29, 1999         August 3, 1999    August 4, 1999    August 5, 1999    August 23, 1999
  August 27, 1999       September 1, 1999 September 2, 1999 September 3, 1999 September 22, 1999
  September 29, 1999    October 4, 1999   October 5, 1999   October 6, 1999   October 22, 1999
  October 28, 1999      November 2, 1999  November 3, 1999  November 4, 1999  November 22, 1999
  November 29, 1999     December 2, 1999  December 3, 1999  December 6, 1999  December 22, 1999
- ------------------------------------------------------------------------------------------------
</TABLE>
 
 
Dividend Reinvestments/1/
 
<TABLE>
<CAPTION>
                   -------------------------------------
                       Record          Investment/2/
                        Date               Date
                   -------------------------------------
                   <S>                 <C>
                   February 1, 1999    March 8, 1999
                   May 3, 1999         June 7, 1999
                   August 2, 1999      September 7, 1999
                   November 1, 1999    December 6, 1999
                   -------------------------------------
</TABLE>
 
- --------
/1/  The dates indicated are those expected to be applicable under the Plan with
     respect to future dividends, if and when declared by the Board of
     Directors.  The actual record and payment dates will be determined by the
     Board of Directors.

/2/  The Investment Date relating to dividends is also the pricing date with
     respect to Common Stock acquired directly from IndyMac REIT. See Question
     12.
 
                                      26
<PAGE>
 
Summary Date Information
 
 .  The Investment Date is, with respect to Common Stock acquired directly from
   IndyMac REIT and relating to a dividend reinvestment, the dividend payment
   date declared by the Board of Directors (unless such date is not a business
   day in which case it is the first business day immediately thereafter) or,
   in the case of open market purchases, no later than ten business days
   following the dividend payment date; and with respect to Common Stock
   acquired directly from IndyMac REIT and relating to an optional cash
   payment, generally on or about the twenty-second day of each month; or, in
   the case of open market purchases, no later than the last business day of
   each month. In no event, however, will the Investment Date relating to
   dividend reinvestments be less than ten days from the Investment Date
   relating to optional cash payments.
 .  The Pricing Period for optional cash payments which are invested in Common
   Stock acquired directly from IndyMac REIT is the twelve Trading Days
   preceding the relevant Investment Date.
 .  Optional cash payments must be received by the Plan Administrator by the
   end of the business day immediately preceding the commencement of the
   relevant Pricing Period.
 .  The Record Date for dividends is set by the Board of Directors. The Record
   Date for optional cash payments is two business days prior to the
   commencement of the related Pricing Period.
 .  The Waiver Discount and the Threshold Price, if any, are set three business
   days prior to the applicable Record Date.
 
                                      27
<PAGE>
 
                                    PART II
 
                  INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
Item 14. Other Expenses of Issuance and Distribution (estimated):
 
<TABLE>
      <S>                                                               <C>
      Registration fee................................................. $21,650
      Listing fees..................................................... $ 1,500
      Printing expenses................................................ $ 6,500
      Accounting fees and expenses..................................... $10,000
      Legal fees and expenses.......................................... $ 1,500
      Blue sky fees and expenses....................................... $ 1,000
                                                                        -------
      TOTAL............................................................ $42,150
                                                                        =======
</TABLE>
 
Item 15. Indemnification of Directors and Officers.
 
  Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation shall have the power, and in some cases is required, to
indemnify an agent, including an officer or director, who was or is a party or
is threatened to be made a party to any proceedings, against expenses,
judgments, fines, settlements and other amounts under certain circumstances.
 
  The Certificate of Incorporation and Bylaws of IndyMac REIT provide, in
effect, that, to the extent and under the circumstances permitted by Section
145 of the General Corporation Law of Delaware, IndyMac REIT shall indemnify
any person who was or is a party or is threatened to be made a party to any
action, suit or proceeding by reason of the fact that he or she is or was a
director, officer, employee or agent of IndyMac REIT. IndyMac REIT maintains
insurance covering certain liabilities of the directors and officers of
IndyMac REIT. IndyMac REIT has also entered into contractual arrangements with
its directors and officers pursuant to which such persons may be entitled to
indemnity from IndyMac REIT against certain liabilities arising from the
discharge of their duties in such capacities.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling IndyMac
REIT pursuant to the foregoing provisions, IndyMac REIT has been informed that
in the opinion of the Commission such indemnification is against public policy
as expressed in said Act and is therefore unenforceable.
 
Item 16. Exhibits.
 
<TABLE>
     <C>  <S>
      4.  Dividend Reinvestment and Stock Purchase Plan (included in the
          Prospectus)
      5.  Opinion of Counsel (Richard H. Wohl, General Counsel of IndyMac REIT)
     23.1 Consent of Grant Thornton LLP
     23.2 Consent of Counsel (included in Exhibit 5)
     24.1 Power of Attorney of Certain Officers and Directors (included on page
          II-3)
</TABLE>
 
                                     II-1
<PAGE>
 
Item 17. Undertakings.
 
  The undersigned Registrant hereby undertakes:
 
(1) To file, during any period in which offers or sales are being made, a
    post-effective amendment to this Registration Statement:
 
  (i)   To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;
 
  (ii)  To reflect in the prospectus any facts or events arising after the
        effective date of the Registration Statement (or the most recent post-
        effective amendment thereof) which, individually or in the aggregate,
        represent a fundamental change in the information set forth in the
        Registration Statement. Notwithstanding the foregoing, any increase or
        decrease in volume of securities offered (if the total dollar value of
        securities offered would not exceed that which was registered) and any
        deviation from the low or high end of the estimated maximum offering
        range may be reflected in the form of prospectus filed with the
        Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
        volume and price represent no more than 20 percent change in the maximum
        aggregate offering price set forth in the "Calculation of Registration
        Fee" table in the effective Registration Statement;
 
  (iii) To include any material information with respect to the plan of
        distribution not previously disclosed in the Registration Statement or
        any material change to such information in the Registration Statement;
 
  provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
  information required to be included in a post-effective amendment by those
  paragraphs is contained in periodic reports filed with or furnished to the
  Commission by the Registrant pursuant to Section 13 or 15(d) of the
  Securities Exchange Act of 1934 that are incorporated by reference in this
  Registration Statement;
 
(2) That, for the purpose of determining any liability under the Securities
    Act of 1933, each such post-effective amendment shall be deemed to be a
    new Registration Statement relating to the securities offered therein, and
    the offering of such securities at that time shall be deemed to be the
    initial bona fide offering thereof; and
 
(3) To remove from registration by means of a post-effective amendment any of
    the securities being registered which remain unsold at the termination of
    the offering.
 
  The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
 
                                     II-2
<PAGE>
 
                                  SIGNATURES
 
  Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pasadena, State of California, on January 28, 1999.
 
                                          INDYMAC MORTGAGE HOLDINGS, INC.
 
                                                  /s/ Michael W. Perry
                                          By __________________________________
                                                    Michael W. Perry
                                                        President
 
                               POWER OF ATTORNEY
 
  Each person whose signature appears below constitutes and appoints Michael
W. Perry and Richard H. Wohl his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
 
  Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
             Signature                           Title                    Date
             ---------                           -----                    ----
<S>                                  <C>                           <C>
       /s/ David S. Loeb             Director and Chairman of the   January 28, 1999
____________________________________ Board of Directors
           David S. Loeb


      /s/ Angelo R. Mozilo           Director, Chief Executive      January 28, 1999
____________________________________ Officer and Vice Chairman of
          Angelo R. Mozilo           the Board of Directors
                                     (Principal Executive
                                     Officer)

      /s/ Michael W. Perry           Director and President         January 28, 1999
____________________________________
          Michael W. Perry


     /s/ Carmella L. Grahn           Executive Vice President and   January 28, 1999
____________________________________ Chief Financial Officer
         Carmella L. Grahn           (Principal Accounting and
                                     Financial Officer)
</TABLE>
 
                                     II-3
<PAGE>
 
<TABLE>
<CAPTION>
             Signature                           Title                    Date
             ---------                           -----                    ----
<S>                                  <C>                           <C>

      /s/ Lyle E. Gramley            Director                       January 28, 1999
- ------------------------------------
          Lyle E. Gramley


      /s/ Thomas J. Kearns           Director                       January 28, 1999
- ------------------------------------
          Thomas J. Kearns


  /s/ Frederick J. Napolitano        Director                       January 28, 1999
- ------------------------------------
      Frederick J. Napolitano
</TABLE>
 
 
                                      II-4
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                   Sequential
 Exhibit                                                              Page
 Number  Exhibit                                                     Number
 ------- -------                                                   ----------
 <C>     <S>                                                       <C>
  4.     Dividend Reinvestment and Stock Purchase Plan (included
         in the Prospectus)
  5.     Opinion of Counsel (Richard H. Wohl, General Counsel of
         IndyMac REIT)
 23.1    Consent of Grant Thornton LLP
 23.2    Consent of Counsel (included in Exhibit 5)
 24.1    Power of Attorney of Certain Officers and Directors
         (included on page II-3)
</TABLE>
 
                                      II-5

<PAGE>
 
                                                                      EXHIBIT 5
 
                [LETTERHEAD OF INDYMAC MORTGAGE HOLDINGS, INC.]
 
January 28, 1999
 
IndyMac Mortgage Holdings, Inc.
155 North Lake Avenue
Pasadena, California 91101
 
Ladies and Gentlemen:
 
  I have acted as counsel to IndyMac Mortgage Holdings, Inc., a Delaware
Corporation ("IndyMac REIT") in connection with the preparation of a
Registration Statement on Form S-3 (as such Registration Statement may be
subsequently amended and together with all exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the offer of up to 7,000,000 shares (the "Shares") of
common stock of IndyMac REIT, par value $.01 ("Common Stock"), to be issued
pursuant to the IndyMac Mortgage Holdings, Inc. Dividend Reinvestment and
Stock Purchase Plan (the "Plan").
 
  This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act.
 
  In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
(i) the Registration Statement, filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act on January 28, 1999
(ii) the Plan, (iii) the Certificate of Incorporation of IndyMac REIT as
currently in effect, (iv) the By-laws of IndyMac REIT as currently in effect,
(v) a specimen of the certificate to be used to represent the Common Stock,
and (vi) resolutions of the Board of Directors of IndyMac REIT relating to the
issuance of the Shares and the filing of the Registration Statement. I have
also examined originals or copies, certified or otherwise identified to my
satisfaction, of such records of IndyMac REIT and such agreements,
certificates of public officials, certificates of officers or representatives
of IndyMac REIT and others, and such other documents, certificates and
records, as I have deemed necessary or appropriate as a basis for the opinion
set forth herein.
 
  In my examination, I have assumed the legal capacity of all natural persons,
the genuineness of all signatures, the authenticity of all documents submitted
to me as originals, the conformity to original documents of all documents
submitted to me as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to any facts material to the opinion
expressed herein, I have relied upon oral or written statements and
representations of officers and other representatives of IndyMac REIT and
others. I have also assumed that the Shares will be issued for proper and
sufficient consideration, in accordance with the terms of the Plan, and that
the certificates representing such Shares will be properly issued.
 
  Based upon and subject to the foregoing, I am of the opinion that the
Shares, when issued and paid for in accordance with the Plan, will be validly
issued, fully paid and nonassessable.
 
  I hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. This opinion is furnished to you
solely in connection with the Registration Statement.
 
                                          Very truly yours,
 
                                                  /s/ Richard H. Wohl
                                          -------------------------------------
                                                     Richard H. Wohl
                                           Senior Executive Vice President and
                                                     General Counsel

<PAGE>
 
                                                                   EXHIBIT 23.1
 
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
We have issued our reports dated February 27, 1998, accompanying the
consolidated financial statements and schedules included in the Annual Report
of INMC Mortgage Holdings, Inc. (now known as IndyMac Mortgage Holdings, Inc.)
on Form 10-K for the year ended December 31, 1997. We consent to the
incorporation by reference of said report in this Registration Statement of
IndyMac Mortgage Holdings, Inc. on Form S-3 and to the use of our name as it
appears under the caption "Experts."
 
GRANT THORNTON LLP
 
Los Angeles, California
January 28, 1999


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