December 16, 2009

1. Multifamily New Issuance Bond Program (NIBP) HFA Underwriting Process for Private Placement Transactions December 16, 2009

2. Agenda • NIBP Program Overview • HFA Underwriting Execution Overview • Multifamily Underwriting Guides • GSE NIBP Term Sheet • Underwriting Process • Transaction Overview Form • General Underwriting Guidance • Conversion to Permanent Underwriting Guidance • Transaction Approval Memo (TAM) • Submission • Timing & Cost • Conclusion • Fannie Mae/ Freddie Mac Specific Underwriting Training

3. MF NIBP Program Overview • Multifamily bond mortgages issued under the NIBP must meet one of the following requirements: • FHA or Ginnie Mae guarantee or risk-sharing • Credit enhanced by the GSEs • Underwritten by GSEs pursuant to a new multifamily underwriting standard to be developed by the GSEs in concert with NCSHA, NALHFA, FHFA, and Treasury Note: Exceptions are to be rare under this execution path; more customized loans can go to other programs within the NIBP. For example, the GSE Lender Networks for a GSE Credit Enhancement.

4. HFA Underwriting Execution Overview • Underwrite to the relevant GSE’s Multifamily Underwriting Guidelines • As amended by the GSE Term Sheet • Access via AllRegs • Relevant Multifamily Underwriting Guides: • Freddie Mac Delegated Underwriting for Targeted Affordable Housing Guide • Fannie Mae Delegated Underwriting and Servicing Guide • Fannie Mae will provide more targeted Chapter references

5. GSE NIBP Term Sheet

6. GSE NIBP Term Sheet

7. GSE/Contract Underwriting Process Overview • Each HFA will underwrite its own transactions using the Multifamily Underwriting Guide of their GSE Point of Contact as modified by the GSE Term Sheet • The HFA must submit a Transaction Overview Form prior to full underwriting • The GSEs will have jointly selected one or more “Qualified Contract Underwriting Firms” (QCUF) • The HFA will submit its underwriting package to the QCUF designated to the transaction by the GSEs • The QCUF will perform the following on behalf of the GSEs: • Thorough review of the underwriting and third party reports • Site visit of the property and its comparables • Preparation a recommendation for the GSE Loan Committee • The GSE Loan Committee will unanimously approve or reject the transaction

8. Submission of the Transaction Overview • HFA must submit a Transaction Overview Form to the GSE POC for prescreening each deal • Do NOT wait until submitting the Underwriting Package to the QCUF • The GSE POC will coordinate approval with both GSEs • Transaction Overview Form includes: • Brief Transaction Overview • Waivers / Exceptions • Underwriting waivers (if requested) must be approved by both GSEs • Applicant Information • Borrowers, General Partners/Key Principals/Guarantors and Limited Partners with >25% ownership interest will need to pass an Applicant Experience Check by both GSEs

9. Transaction Overview Form

10. Transaction Overview Form

11. Points of Contact • Fannie Mae • Tabare Borbon • Tabare_Borbon@fanniemae.com • (201) 300-6733 • Freddie Mac • Clayton Davis • MF_NIBP@freddiemac.com • (703) 714-2837 • Contract Underwriting Firm - TBD • Contact for general underwriting questions

12. General GSE Underwriting Guidance • Funded Impounds • Taxes, Insurance and Replacement Reserves • Required Third Party Reports include (stabilized/forward): • Appraisal/Market Study • Physical Needs Assessment (“PNA”)/ Plan Cost Review • Environmental Report • Other Third Party Reports, per relevant Multifamily Underwriting Guide • Property valuation, per relevant Multifamily Underwriting Guide • DCR and LTV calculation • Income and Expense: Line-by-Line Analysis

13. Conversion to Permanent Underwriting Guidance • Conversion to Permanent/Release of Construction Period LOC must be approved by the GSE Loan Committee • Each GSE will provide guidance on calculating the maximum permanent loan amount • Fannie Mae: Construction Phase Financing Agreement (not in the DUS Guide) • Freddie Mac – Construction Phase Financing Agreement for the specific transaction and generally in the TAH Delegated Guide

14. Transaction Approval Memo (TAM) • Standardized Form for each GSE • Freddie Mac: Investment Brief (Loan Submission Template) • Fannie Mae: Underwriter’s Narrative • During underwriting, the HFA is expected to analyze all reasonably identifiable strengths and weaknesses of the proposed transaction • All factors that could impact the transaction during the term or at maturity of the Mortgage Loan must be reflected appropriately and mitigated in the ultimate underwriting conclusions and approved Mortgage Loan structure. • Among other things, the HFA must address: • Borrower’s, Key Principals’ and Principals’ financial capacity and experience • Property’s financial performance and trends • Property’s current physical condition and expected condition over the term of the Mortgage • Property market’s performance and trends

15. Transaction Approval Memo (TAM) • Required Information: • An analysis of all material strengths and weaknesses with mitigations • An affirmation that the proposed Mortgage Loan transaction complies with all relevant laws (including compliance with OFAC requirements) • The underwriting conclusions and the Chief Underwriter’s (or your HFA’s equivalent) approval of the proposed Mortgage Loan transaction • All other information required by the applicable Guide • GSE-specific underwriting spreadsheets must be attached

16. Submission to the Qualified Contract Underwriting Firms (QCUFs) • HFA Underwriting File Submission List (to be provided by each GSE) • Electronic Submission • QCUF will deliver the underwriting package to the appropriate GSE via the GSE’s document delivery system

17. Timing and Cost • Estimated approval time once submitted to QCUF • 15-20 business days • Cost • The QCUF fee to re-underwrite the transaction will be passed on to the Issuer/Developer.

18. Conclusion • Fannie Mae/ Freddie Mac Specific Underwriting Training • Questions?