Competitive Landscape of Affordable Housing Finance SMAC 2016

Competitive Forces Affecting Affordable Housing Finance: 1. Commercial Banks Community Reinvestment Act 2. Fannie Mae & Freddie Mac Duty To Serve 3. FHA Programs

Commercial Banks - CRA: The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR parts 25, 228, 345, and 195.

Commercial Banks – Programs/Structures: Construction & Permanent Loans Letters of Credit Purchase of Tax-Exempt Bonds Investment in LIHTCs Participation in Lending Consortiums

Fannie Mae & Freddie Mac – Duty to Serve: On December 15, 2015, the Federal Housing Finance Agency (FHFA) issued a proposed rule affecting Fannie Mae and Freddie Mac – Duty to Serve Underserved Markets requiring the Enterprises to facilitate a secondary market for very low-, low-, and moderate income families for three underserved markets:

Fannie Mae & Freddie Mac – Duty to Serve: Three underserved markets: Manufactured Housing Affordable Housing Rural Housing

Fannie Mae & Freddie Mac – Programs/Structures: Tax-Exempt Loan (TEL) Program Tax-Exempt Bond Credit Enhancement Taxable Loans Short-Term Bond Structure Immediate Fundings & Forward Commitments Short Term Maturities & Fully Amortizing Interest Only Periods; 35 Year Amortization Pricing Initiatives; Green Initiatives

FHA Programs – Key Advantages: Construction Loan Component Term – 40 Years Plus Construction Period GNMA Interest Rates Reduced MIP for Affordable/Green Tax Credit PILOT – 223(f) and 221(d)(4)

Looking Ahead: Will Fannie Mae & Freddie Mac Re-Enter the LIHTC Investment Market?