NCSHA ConferenceMultifamily Financing Techniques

Jim Carey - FHA

October 20, 2014

FHA Risk Share Program Update

• 33 Housing Finance Agencies in the program • $5.5B financed over the life of program in 762

developments• Approximately 71% financed under Level I• MassHousing program leader with a risk share

portfolio of over $2.2 B• Risk Share Performance compares favorably

with FHA MAP Programs

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FHA Risk Share Performance Compares Favorably with Basic FHA Program -

Modestly Lower FY10-12 and match in FY 13

Fiscal Year

Active LoansBeginning of Year

ClaimsCounts Dollars

Count UPB (millions)

Count Rate Total (millions)

Rate Average (millions)

All Multifamily Programs2010 9,586 $38,506 51 0.53 % $493 1.28 % $102011 9,966 $45,489 23 0.23 % $159 0.35 % $72012 10,221 $51,498 19 0.19 % $189 0.37 % $102013 10,556 $60,113 11 0.10% $94 0.16% 9

Section 542(c) HFA Risk Share Program2010 920 $4,660 3 0.33% $71 1.53% $242011 962 $4,979 1 0.10% $1 0.02% $12012 1012 $5,249 0 0.00% $0.00 0.00% $02013 1038 $5,410 1 0.10% $0.55 0.01% $1

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Trends in the FHA/HFA Risk Share Program

• Due to the financing collapse in 2008 HFA tax exempt rates and Ginnie Mae rates inverted.

• Risk Share business volume dropped precipitously

• Risk Share business volume recovered briefly with the New Issue Bond Program

• Business volume continues its decline in 2014 • In the same period FHA MAP Lending LIHTC

volume has increased dramatically

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HFA Tax Exempt Rates vs. Ginnie Mae Security Rates

In late 2008 multifamily tax exempt rates and Ginnie Mae multifamily security rates inverted with HFA tax exempt rates higher than comparable Ginnies. The greatest disparity was in late 2012 when HFA rates were 130bps above Ginnies. In December 2013 a typical multifamily Ginnie Security was 76bps below a typical multifamily tax exempt bond offering.

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Tax Exempt vs. Ginnie Mae Security Rates

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HFA Risk Share Initial Endorsements FY 2007 to FY 2014

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FHA Apartment Loan Firm Commitments 2010-2014Overall mortgage volume, LIHTC volume and % of LIHTC

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Drivers in Growth In FHA LIHTC Volume

• Increased compatibility of MAP Underwriting with LIHTC syndication pay-ins and other LIHTC program elements

• Faster Hub turn times on LIHTC applications – turn times reduced from 101 days in FY 11 to 55 days in FY 14 while volume quadrupled.

• Growth of FHA LIHTC Pilot in the 223(f) Program - Closed 27 projects with 20 different lenders participating.

• Favorable pricing associated with Ginnie Mae Execution

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Future Initiatives• Federal Financing Bank Execution for Level I HFAs• Possible Legislative Change to allow a Ginnie Mae

Execution in the Risk Share Program• Revisions to Existing 20 year old HFA Risk Share

regulation– Provide increased flexibility for Level I Participants– Better align Level II underwriting with FHA programs

• Consideration of regulatory waivers such as the Cal HFA non-fully amortizing loan

• Small Buildings Risk Share Initiative

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