Green Initiative & Green Refinance Plus

1. Green Initiative & Green Refinance Plus Fannie Mae Multifamily October 12, 2011

2. Lender Fannie Mae Investor Tenant Property Owner Fannie Mae Mission and Portfolio • Fannie Mae provides liquidity, stability and affordability to the secondary mortgage market • Multifamily Guaranty Book of $189B • 3.8M rental units • Includes Market Rate, Affordable Subsidized and Affordable by Area Median Income (AMI) properties • 20% of US Mortgage Debt Outstanding for Multifamily* *As reported by Federal Reserve as of Q2 2010

3. The goal of Multifamily’s Green Initiative is to: (i) improve the energy and water efficiency, (ii) enhance the sustainability; and, (iii) extend the useful life of multifamily housing stock financed by Fannie Mae – which will make a direct contribution to enhanced affordability, reduced risk and increased tenant satisfaction. Approach: • Enhance existing programs • Improve affordability • Drive best practices • Provide tools to reduce national energy usage • Reduce risk • Leverage data

4. Why Does Fannie Mae Care About Green Financing? … because “greening” multifamily housing is good for Tenants, Property Owners, Lenders, Fannie Mae, and Investors • Tenants • Decreases living expenses • Improves quality of life and living conditions • Property Owners • Improves affordability • Provides market differentiation, enhances occupancy and retention • Extends life of physical plant • Lenders • Manage expense risk • Enhances cash flow and property value • Provides impetus and support for allocation of capital for upgrades and improvements • Fannie Mae • Improves property condition and operating performance • Advances our corporate mission by preserving affordable housing • Advances Federal policy on energy & water conservation • Investors • Indicates property’s focus on green improvements • May meet investor requirements for green investments

5. Green Refinance Plus – Purpose and Background • Fannie Mae and HUD have had a Multifamily Risk Sharing Agreement since 1994. • On May 31, 2011, HUD Secretary Donovan and Ken Bacon announced “Green Refinance Plus” to promote energy efficient upgrades in affordable apartment buildings. • This joint product enhancement between Fannie Mae and FHA allows owners of existing affordable rental housing to refinance into new mortgages that include funding for energy- and water-saving upgrades along with other needed property renovations. • The purpose of the enhancement is to encourage the preservation of existing affordable properties via modest renovation and the “green” energy and water efficiency retrofitting of affordable properties.

6. Green Refinance Plus - Benefits • Additional Proceeds: • 4-5% more proceeds than our regular DUS Affordable preservation execution or a Standard FHA Risk Sharing loan. • 10-year term or longer • Refinance AND Acquisition/Rehabilitation • Competitive Pricing • Ease and Certainty of Execution

7. Green Refinance Plus - Product Terms • Eligible Loans: • Cash and MBS executions (no Bond Credit Enhancement); and • Fixed-Rate Loans, no interest-only period. • Not eligible for a construction loan • Eligible Properties: • Existing properties 10 years or older that have MAH affordability and income restrictions which run at least through the term of the Mortgage Loan. • Properties that involve an acquisition loan or a refinancing – spend at least 5% of new loan UPB on: • Energy and water efficiency retrofitting; and/or • General property renovations.

8. Green Refinance Plus - Product Terms • Loan Amount - no minimum or maximum loan amount. • Loans above $50 million require HUD consent. • Loan Term - 10 years or more; the affordable restrictions must remain in effect for at least the term of the loan. • Term is based on a 30 year amortization; no 35-year amortization without waiver from HUD.

9. Green Refinance Plus - Product Terms • Maximum LTV - 85%, 5% higher than standard MAH preservation deals. • Minimum DSCR - 1.15x, 5 bps lower than standard MAH preservation deals. • Proceeds - 4.35% higher than standard MAH. • Renovations Requirements: • Up to 3 months prior to loan closing and up to 12 months after closing; • Lender must discuss the scope and cost of renovations/retrofitting that will be done prior to closing in Transaction Approval Memo; and • Funds for renovations/retrofitting to be done post-closing must be placed in a standard repairs account.

10. Green Physical Needs Assessment (PNA) • Standard third-party reports - PNA, Appraisal, Phase I Environmental Assessment - are required. • A “Green PNA” must be completed - Includes an assessment of a property’s physical needs, an energy audit and identification of cost effective opportunities for increasing energy and water efficiency, and reducing operating and capital costs. • The Green PNA scope of work is available via Lender Memo 11-04 on efanniemae.com. • The scope of work is based on HUD’s Mark-to-Market Green Initiative Physical Condition Assessment and ARRA-funded Green Retrofit Program

11. Green Physical Needs Assessment (PNA) • The Green PNA requirement can be waived for projects of 50 units or less, where the cost of other renovations can be demonstrated to be at least 5% of loan amount. • Borrowers will use ENERGY STAR Portfolio Manager to track and report annual energy performance. • Lenders will verify that the improvements have been installed within 12 months of loan disbursement.

12. THANK YOU!!! • Chrissa Pagitsas Fannie Mae Multifamily Green Initiative Program Manager chrissa_pagitsas@fanniemae.com (202) 752-6554