Topics

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2. Topics Multifamily Insured Programs Endorsements FY2000 to 2010 Endorsements FY11 to date Recent National Initiatives/changes Targeted National Initiatives/changes San Fran MF Hub Initiatives/activities Going forward with FHA Multifamily 2

3. HUD Production Overview Production includes: 1. Insured Production Insuring mortgages for construction, purchase, refinance, and rehabilitation of multifamily properties Financing affordable housing in conjunction with the low-income housing tax credit program 2. 202/811 Capital Advances Providing Capital Advances (conditional grants) for the construction or rehabilitation of housing for low-income seniors and people with disabilities along with project rental assistance subsidies to keep the housing affordable. This presentation will focus on insured production, although many 202/811s are now using LIHTCs and mixed financing. 3

4. FHA Multifamily Mortgage Insurance

5. Primary FHA Programs Section 223f- refi and purchase of existing �minor� repairs Section 223a7- refi of existing FHA insured Section 221d4- new and sub rehab Section 231- NC/SR of elderly (= >62 yrs) Section 232- Health Care (B&C, ALF, SNF) Section 242c- Risk sharing w/ HFAs 5

6. FHA (Basic and Risk Sharing) Endorsements 2000-2010 6

7. FHA (Basic and RS) endorsements FY2011 compared to FY2010 FY2010 = 10/1/09 - 9/30/10 FY2011 = 10/1/10 � 4/30/11 (year to date) 58% of yr FY # loans #units/beds $ (billion) �10 1,343 208,429 $13.877 �11YRTD 961 140,828 $9.062 FYYTD as % of prior FYTD 132.7% 125.9% 124.3% FYTD as a % of all prior FY 71.6% 67.6% 65.3% 7

8. Some Recent Underwriting Changes Establish Hub and National Loan Committee (Notice H 2010-13, 7/19/10) Streamline LIHTC processing (*ML 2009-18, ML 2010-26 re: AE docs) 3 year waiver rule on 223f (ML 2010-30, ML 2011-13) Risk Mitigation (Notice H 2010-11, ML 2010-21) *ML= Mortgagee Letter 8

9. Mortgagee Letter 2010-21Risk Mitigation Changes in underwriting requirements Changes in DSCR/LTV/LTC Examples: 221d4 past: 1.11 DSCR, 90%LTC now: 1.11 to 1.20 DSCR, 90% to 83% LTC 223f past: 1.11 to 1.176 DSCR, 90% to 85% LTV now: 1.11 to 1.20 DSCR, 90% to 83.3% LTV Still allows equity take out at 80% LTV 9

10. ML 2010-21, some underwriting changes Expand mortgage credit reviews Evaluate total REO Reduce max. occupancy (ex: 93% vs. 95%) exceptions for affordable properties Market study independent of appraisal Underwriter site inspection required 2-stage processing, split application fee Absorption period reduced to 18 months (vs. 24) Change in construction contract retention (reduce and earlier release) Change in working capital escrow (4%) Change in sub rehab contingency (15% vs. 10%) 10

11. San Francisco MF Hub

12. San Fran Multifamily Portfolio Overview* Asset Management: Count of property_id and sum of total_unit_count from MPRD active_property table, where is_under_management_ind = �Y� or has_use_restriction_ind = �Y� or property_category_name like �Flexible Subsidy� or �Subsidized;� grouped by is_subsidized_ind. Sum of original_loan_amount from active financing table for �$ insured.� -Production Pipeline: Count of property_id and sum of units and sum of amount from DAP datamart Pipeline view, grouped by is_202_811_ind. Asset Management: Count of property_id and sum of total_unit_count from MPRD active_property table, where is_under_management_ind = �Y� or has_use_restriction_ind = �Y� or property_category_name like �Flexible Subsidy� or �Subsidized;� grouped by is_subsidized_ind. Sum of original_loan_amount from active financing table for �$ insured.� -Production Pipeline: Count of property_id and sum of units and sum of amount from DAP datamart Pipeline view, grouped by is_202_811_ind.

13. San Fran Hub Initiative: Preservation Since Jan. 1, 2008, the Hub has increased the total number of 20-year HAP contracts in our Project-Based Section 8 portfolio from 151 to 295, a 95% increase. 13

14. FHA Multifamily Mortgage Insurance: Creating Jobs and Affordable Housing in Arizona 14 Need to get photos and stats from production teamNeed to get photos and stats from production team

15. Financing the Rehabilitation of Affordable Housing with Low-Income Housing Tax Credits 15

16. Building Energy-Efficient, Green Multifamily Properties in Arizona Tanque Verde Valley Casitas Tucson, AZ 221(d)(4)-Insured new development built in 2010 with many green and energy-saving amenities 16

17. Some Recent San Fran Activity Arc-Light, 221d4, in construction 94 units, $33MM, new construction inside historical shell, SOMA 333 Harrison, 221d4, firm issued 326 units, $70MM, market with affordable, adjacent to Bay Bridge and One Rincon Unity Homes, 221d4 Sub rehab, firm issued 94 units, $14.4MM, existing S8, limited equity co-op, Bayview/Hunters� Pt. 227 Golden Gate, 221d4, prelim 88 units, $13.4MM 10th & Market, 221d4, prelim 754 units, $213MM, market with affordable, near City Hall 17

18. Using HUD/FHA mortgage insurance To review program requirements Google: �HUD MAP Guide� �HUD Multifamily Programs� Anticipate new Guide to be issued 6/11 To find a lender Google: �HUD MAP lenders� �HUD multifamily data� (includes lender activity) HUD�s website: www.hud.gov 18

19. 18 MF Hubs nationwideGoogle �HUD Multifamily Hubs� to find contact info 19

20. For More Information Questions? Please Contact: Tom Azumbrado Director, San Francisco Multifamily Hub (415) 489-6604 thomas.w.azumbrado@hud.gov 20