Midwest Lenders’ Conference July 6, 2016 Dan Sullivan, Acting Director Multifamily Production, HUD HQ

Affordable Housing Incentives Higher leverage – loan ratios, more aggressive NOI assumptions Priority processing Relaxed technical requirements (e.g. timing of escrow funding) Waivers

Why is it so complicated? Multiple sources and types of financing Long term FHA debt versus 15-18 year Tax Credit structure Statutory requirements – e.g. FHA first loan terms –vs- secondary loan requirements Timing

What does HUD/FHA want? To be recognized as a reliable and attractive capital source for the debt Affordability – rents Preservation – real estate Consistency / standardization of national program Application of the Golden Rule Administrative efficiency (enforcement, low maintenance servicing)

Tax Credit Pilot Program & the 2016 MAP Guide A huge success! Pilot still “on the books” Only exception to 3 year rule waivers (if had permit in place prior to Sept 30, 2014.) New Construction/Sub Rehab version pending

2016 MAP Guide LIHTC Changes Incorporates changes from Ted Toon and Ben Metcalf memos from 2014/2015 Allow Equity Bridge Loans to be obligations by FHA Mortgagor Entity (with limits on recourse against project) Relaxed “Pari Passu” funding requirements Relaxed secondary financing restrictions (e.g., recordation, compounding)

2016 MAP Guide LIHTC Changes/Clarifications 55+ exemption. Only available for existing projects (> 3 years) which do NOT have Project-based Section 8 (or other legacy deep-subsidy) age-restricted definitions. Initial LIHTC Equity Pay-In requirement: 20% of Total Equity. This amount may not be funded by a Bridge Loan. Subsequent Pay-Ins may be funded by an EBL and are based on Net Equity.