Florida Housing Coalition Annual Conference Preservation of Affordable HousingSeptember 27, 2011

Fannie Mae and Freddie Mac

Preservation Programs - Expiring Section 8 HAP Contracts - Less than 10 Years of Restrictions

Bond Credit Enhancement – 4% LIHTC

9% LIHTC Mortgages

Green Refinance Plus – Fannie Mae

Preservation Programs – Immediate Funding

Debt Service Coverage Ratio – 1.20x – 1.25x - HUD Risk Share – 5 basis point reduction

Loan to Value – 80% - HUD Risk Share – increase LTV by 5%

Amortization – 30 to 35 years

Term – typically a minimum of 10 years

Minimum Occupancy – 85% Physical & 80% Economic

Recourse – Non-recourse except for standard carve-out provisions

Supplemental Loans - Available

Bond Credit Enhancement – 4% LIHTC

Immediate and Forward Commitment - Forward requires LOC from “A” – “AA” Rated Bank until construction/rehab and stabilization

General Underwriting - Debt Service Coverage Ratio – minimum of 1.15x (1.20x for VRB) - Loan to Value – maximum of 85% adjusted value or 90% of market value - Minimum Term – 15 years - Amortization – 30 to 35 years - Fixed or Variable Rate Bonds (Fannie Mae – only Fixed)

Processing Time – 90 days or less

Supplemental Loans – Available

HUD Risk Share – Normally available and may improve terms

9% LIHTC Mortgages

Immediate and Forward Commitment - Same LOC Requirement if Forward Commitment

General Underwriting - Debt Service Coverage Ratio –1.15x - Loan to Value – 90% - Minimum Term – 15 years - Amortization – 30 to 35 years - Fixed or Variable Interest Rate

Processing Time – 75 days or less

Supplemental Loans – Available

HUD Risk Share – Normally available and may improve terms

Fannie Mae Green Refinance Plus

Benefits - 4%-5% more proceeds for energy retro-fitting - One Stop Customer Service – Fannie Mae Lender interacts with HUD/FHA

General Underwriting - Loan to Value – 85% - Minimum Debt Service Coverage Ratio – 1.15x - Term – 10 years or more - Amortization – 30 years - Fixed Interest Rate with no I/O period

Other Terms - Affordability Restrictions must remain for Term of Loan - Subsidy Layering Review may be required - Green PNA is required - Standard Appraisal and Phase I ESA required

Case Study #1 – Bonds with 4% LIHTC

$6,400,000

Florida Housing Finance Corporation

New Issue Bond Program

CWCapital wasSeller/Servicer

Forward CommitmentAcquisition/Rehab

CWCapital LLC served as the Freddie Mac TAH Seller/Servicer on $6,400,000 of NIBP bonds purchased by Treasury.

Bond proceeds were used to rehabilitate a 14-story, 200 unit elderly housing development.

Principal and interest on the mortgage loan was secured by a direct pay Credit Enhancement Agreement issued by Freddie Mac.

Initial Bond Issuance was split between Gap Bond amount of $2,850,000 and Permanent Bond amount of $6,400,000 and both were credit enhanced by Freddie Mac.

The all-in cost of capital for the financing was 4.638%.

Freddie Mac HUD Risk Share program utilized to improve terms.

Case Study #1 – Bonds with 4% LIHTC (continued)

Originally constructed in 1971 and consists of an existing 200-unit elderly housing development.

The Project includes 81 efficiency units and 119 1B/1B units and was affiliated with the Methodist Church.

The cost of the rehab was $6,418,000 or $32,090 per unit. The Project will receive a new 20-year, Section 8 HAP contract for 84% of the units upon expiration of the existing contract in 2012.

Rehabilitation will be floor-by-floor, and is expected to be completed within 15 months.

SOURCES OF FUNDS - Permanent

NIBP Bond Proceeds $ 6,400,000

Tax Credit Equity $ 5,488,000

Home Loan $ 3,923,000

Seller Subordinate Loan $ 2,500,000

Borrower Contribution $ 350,000

Total Sources $18,661,000

USES OF FUNDS - Permanent

Purchase Price – Land and Building $ 4,600,000

Hard Construction Costs - Rehab $ 6,418,000

Soft Construction Costs / Financing $ 7,267,000

Transition Reserve/Contingency $ 376,000

Total Uses $18,661,000

Case Study #1 – Bonds with 4% LIHTC (continued)

Interest Rate Stack

0.960%

0.208%

3.070%

0.400%

FRE Guaranty

Servcing Fee

Estimated Bond Rate

Issuer / Trustee

All-In Cost4.638%

Case Study #1 – Bonds with 4% LIHTC (continued)

Flow of Funds

Issuer

Borrower

Project

Trustee

CWCapital LLC

Bond Proceeds Bond Mortgage

Loan

Proceeds used to rehabilitate

Revenue

Bonds

Bond Proceeds

Treasury

Principal and Interest

Loan Payment

Credit EnhancementAgreement

Case Study – Rehab with Tenants in Place – 9% LIHTC

$7,800,000

Fannie Mae Immediate Delivery

Fixed Rate in Place Rehab with 9% LIHTC

CWCapital wasFannie Mae DUS Lender

Immediate DeliveryAcquisition/Rehab

CWCapital LLC served as the Fannie Mae DUS Lender on an immediate delivery loan of $7,800,000.

Loan proceeds plus tax credit equity were used to rehabilitate a 180-unit garden apartment property with residents in place.

Tax Credit Equity Installments plus loan proceeds to fund the renovations.

Completion and Operating Deficits Guaranty required.

Fannie Mae HUD Risk Share program utilized to improve terms.

Case Study – Rehab with Tenants in Place – 9% LIHTC (continued)

Originally constructed in 1981 and consists of an existing 180-unit family and seniors development.

The Project includes 148 family units and 32 age-restricted units.

The cost of the rehab was $7,920,000 or $44,000per unit. The Project received a new 20-year, Section 8 HAP contract for 100% of the units in 2011.

Rehabilitation is expected to be completed within 15 months and the borrower provided an interim bridge loan to fund the timing gap from tax credit equity installments.

SOURCES OF FUNDS - Permanent

Loan Proceeds $ 7,800,000

Tax Credit Equity $10,786,000

Existing Reserves $ 303,000

Total Sources $18,889,000

USES OF FUNDS - Permanent

Purchase Price – Land and Building $ 7,000,000

Hard Construction Costs - Rehab $ 7,920,000

Soft Costs / Financing $ 2,981,000

Reserve/Contingency $ 988,000

Total Uses $18,889,000