19th Annual Western HUD Lenders’ Conference Highlights from the West Region September 19th, 2018 Tom Azumbrado, Regional Director Multifamily West Region Angela Corcoran, Production Division Director

Multifamily West Region Management

Multifamily West Production Division

Multifamily West Region Staffing Multifamily Division Current Staff Level Authorized Staff Level San Francisco Production 22 28 Denver Production 19 Production Total 41 51 San Francisco AM 50 57 Denver AM 33 44 Asset Management Total 83 101 San Francisco Operations 4 6 Denver Operations 1 2 Operations Total 5 8 Regional Office 3 Total 132 163 Note: Original Transformation staffing plan allotted 180 FTEs

Multifamily West Region Vacancies PRODUCTION:  3 Underwriters 2 Appraisers 1 Construction Analysts 2 Program Assistants 2 Closing Coordinators     ASSET MANAGEMENT: 2 Branch Chiefs 11 Account Executives 2 Resolution Specialists 3 Program Assistants  OPERATIONS: 3 Program Analysts   On Board Staff = 132 Vacant Positions = 31 Total FTE = 163 Original FTE for Transformation = 180 (due to budget adjustments, current staffing level has been adjusted to 163, 17 less than originally planned) Recent hiring approvals to be onboarded = 10 1 Appraiser, 1 Production Program Assistant, 2 Closing Coordinators, 3 AM Program Assistants, 3 Account Executives

Presidentially Declared Disasters - PDD Major disaster or emergency declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act Declaration is published by FEMA (FEMA.gov) Disaster Declaration Major Disaster Declaration Emergency Declaration Fire Management Assistance Declaration Fire Suppression Authorization Individual Assistance HUD Multifamily Disaster Guidance HUD Handbook 4350.1 – Chapter 38

Multifamily Asset Management and Project Servicing (4350.1) Chapter 38 – Multifamily Emergency Disaster Guidance Applicable Insured Assisted Use Agreement Layout Pre-disaster Planning The Presidentially Declared Disaster (PDD) Program and Disaster Relief Options During a PDD Responsibilities – Appendix A-8

Phases Assessment Recovery Restoration Plan Preliminary Sources/Uses of Funds Detailed Repair Listing Estimated Completion Dates Contractor Information Displaced Resident Tracking Tracking Return to Normal Operations/Close Out (Appendix A-7) Preliminary Preliminary Disaster Assessment (Appendix A-3) Vacancy Utilization/Displaced Resident Report (Appendix A-4) Damage Code Onsite Final Disaster Assessment (Appendix A-5)

Current Disasters as of 9/10/18 State /PDD Identifier # of Properties Total Number of Units # of Assisted Units Texas - Hurricane Harvey 4332 454 51,072 20,971 Georgia - Hurricane Irma 4338 62 5,249 2,874 Florida - Hurricane Irma 4337 910 106,513 45,902 Puerto Rico - Hurricane Maria 4339 203 21,013 19,859 U S Virgin Islands - Hurricane Maria 4340 17 1,474 1,468 California - Wildfire 4344 176 14,024 8,454 California - Mudslides 4353 960 75,831 51,913 Alabama - Tornado 4362 29 1,904 1,352 North Carolina - 4364 77 6,537 2,431 Indiana - 4363 149 16,232 8,717 Hawaii - 4365 & 4366 92 5,390 3,271 Texas - 4377 79 6,443 2,728 TOTAL 3,208 311,682 169,940

Active disturbances/storms: Event State Total Number of Properties Total Number of Insured Properties Exposure UPB Total Units Total Assisted Units Hurricane Olivia HI 117 17 $       125,320,831 6,302 3,964 Typhoon Guam & Marianas 5 $ 0 182 167 Hurricane Isaac PR 203 55 $       113,990,613 21,013 19,859 VI 6 $         23,543,232 1,474 1,468 Hurricane Florence SC 510 229 $   1,352,957,202 36,223 21,400 NC 1,174 573 $   3,614,505,428 75,705 32,066 VA 781 368 $   4,464,403,592 77,569 33,527 WV 235 123 $       257,388,034 13,303 11,541 DC 170 103 $   1,198,071,949 20,827 10,518 MD 809 469 $   5,089,329,284 79,240 31,235 DE 131 22 $       212,803,474 8,612 5,487 PA 1,099 380 $   1,501,061,897 83,617 68,145 GA 780 400 $   2,325,502,838 71,914 36,073 TOTALS   6,031 2,745 $ 20,278,878,374 495,981 275,450 Florence only 5,689 2,667 $20,016,023,698 467,010 249,992

Multifamily West Region Asset Management Assisted and Uninsured Properties Properties Units Annual Assistance 3,973 212,677 $2,027,773,044 Unassisted and Insured Properties Properties Units Unpaid Balance 1,549 185,539 $13,266,910,978 Assisted and Insured Properties Properties Units Annual Assistance Unpaid Balance 602 52,267 $476,746,704 $2,607,192,450.26 Total Properties Total Units 6,124 450,483

Closings this Fiscal Year Properties: 76 Amount: $1,034,226,100 New Construction Properties: 39 Amount: $781,415,700 223(a)(7) Properties: 14 Amount: $209,628,400 FY 2018 YTD Total Properties: 129 Mortgage Amount: $2,123,345,200 Mortgage Amount: $2,410,082,300 Mortgage Amount: $1,480,123,000 FY 2017 FY 2016

LIHTC’s FY 2018 Closings LIHTC Closings State Closings Units Mortgage Amount AZ 2 169 $6,852,600 CA 18 1,776 $161,846,500 CO 5 425 $38,553,400 HI 1 128 $13,900,000 MT 149 $5,042,000 ND 68 $3,500,000 NV 311 $22,022,500 OR 6 652 $59,458,400 UT 146 $12,600,000 WA 624 $41,500,300 Totals 40 projects 4,448 units $365,275,700 FY 2017 : 34 projects 3,805 units $419,640,400

FY18 Closings by State 22 2 19 37 1 10 14 8 12 7 1 State Closings Units Mortgage Alaska 1 24 $1,388,000 Arizona 22 3,461 $339,018,400 California 37 3,514 $443,179,300 Colorado 19 2,822 $440,982,100 Hawaii 128 $13,900,000 Idaho $882,700 Montana 2 149 $5,042,000 North Dakota 68 $3,500,000 Nevada 10 1,821 $152,433,700 Oregon 14 1,401 $171,046,000 South Dakota 160 $24,165,300 Utah 8 1,457 $227,159,900 Washington 12 1,967 $300,647,800 3 1 5 11 7 4 1 New Construction Deals Shown in Red (39) Totals in Black Include New Construction (129) 1 1

FY18 Closings by Lender 18 Closings – 2 Lenders 9 Closings – 2 Lenders

142 Firms Issued FY18 221(d)(4) 223(f) 223(a)(7) Firms Issued 26 Average Staff Processing 45 Days / 95 Days Rejected Applications 1 223(f) Firms Issued 101 Average Staff Processing 48 Days / 89 Days Rejected Applications 11 223(a)(7) Firms Issued 15 Average Staff Processing 43 Days / 59 Days Rejected Applications 1

FY18 Application Submissions 184 Total Applications Submitted FY 18 YTD

Current Portfolio In Processing Applications in Active Processing 221(d)(4) 41 223(f) 10 Risk Share 7 Total 58 87 Projects Under Construction Section of Act Properties Units Mortgage Amount 202 Capital Advance for Elderly 4 159 $22,806,200.00 213 NC/SR Management Coop 2 113 $26,399,300.00 220 NC/SR in Urban Renewal Area 293 $70,213,200.00 221d4 NC/SR 61 10,397 $1,677,752,700.00 542(c) HFA Risk Sharing -- NC/SR 8 896 $86,630,000.00

Challenges FY 18 Hiring/Staffing CNA e-Tool HERO System/Environmental Submissions Third Parties Access to HEROS Complete Environmental Information at PreApp Technology, Systems and Data Integrity Electronic Submissions of Application Systems Update is a DAS Priority Data Integrity Problem Large Number of Concept Meetings 160 Concept Meetings this year Complex Deals

Priorities Meeting Timeframes Streamlined, Risk Based Processing Strategic Travel Planning Workload Sharing Getting peripheral work away from UW’s New Intake Procedures Upfront Detailed Review by Director or Branch Chiefs Delay in accepting applications with major deficiencies Avoid Last Minute Surprises

Priorities Consistency Between Offices Weekly Branch Chief Meetings Sharing Staff Waiver Discussions Regional Loan Committee Participation in National Loan Committee Both offices host trainings for the entire region

Priorities Hire New Staff Continue to Improve Timeframes 223(f) Repair Escrow Releases Production will likely start processing 223f repair escrow releases Periodic Checks by Lenders during Repair Period Streamline Construction Administration Monitoring Soft Markets

Soft Markets in West Region Northern Colorado and Boise due to pipeline concerns Energy Markets, Area of Dakota’s and Wyoming City of Denver, unless affordable Phoenix and Las Vegas markets are balanced but we’re monitoring conditions especially in areas of significant development of high-end luxury, apartment projects Market conditions are softening in Chandler/Gilbert, North Scottsdale, South Tempe and Central Phoenix North. Market conditions are soft and vacancy rates are high in Northeast Phoenix, Central Phoenix South, and North Tempe. Downtown submarkets in Portland and Seattle are experiencing a slight uptick in vacancy rates and decline in rent growth. May move from balanced to slightly soft by the end of the year.

Underwriting Issues that Delay Acceptance/Processing Undisclosed/Unaddressed Environmental Issues Noise concerns, Phase I/ Phase II issues, SHPO, THPO, or Fish and Wildlife Issues Incomplete 3rd Party Reports Intrusive Testing and/or WDO Report as a repair item Missing Completed Intrusive Testing reports Not extrapolating Life Safety Repairs Developer’s Like-Kind Experience for d4’s For mortgages over $25,000,000, Lenders must demonstrate that Large Loan borrowers have substantial prior experience developing, constructing and owning multifamily projects that are similar in size and scope to what is proposed

Issues that Delay Processing/Closings: Secondary Financing No monetary liens ahead of HUD’s Loan Affordability Restrictions can be in 1st position, if: Resident and Affordability Restrictions do not conflict with HUD’s requirements, and Government entity made or will make a financial contribution to the property. No post foreclosure requirements of notifications or monitoring HOA Fees and Restrictions Cannot conflict with HUD’s regulations or provide a risk because of unpredictable increases in fees Attorneys and/or Title Companies unfamiliar with HUD’s Requirements Undisclosed Title Concerns Previously existing restrictive covenants, development agreements, water rights, unusual easements, etc.

Asset Management Updates RAD for PRACs.  We are expecting a Notice out in late fall that will detail how 202 PRACs can utilize the RAD platform. 202 PRACs receive rental subsidies that are similar to Section 8,but the regulations don’t allow 202 PRACS to take on debt. Prepayment Approvals We are expecting a Mortgagee letter to be issued about updates to the HUD Form 9807 prepayment process.  Not significant changes but areas where we are trying to make the process more streamlined (faster). Rent Comp Studies HQ is also looking at ways to streamline the Rent Comp Study (RCS) process.  However, HUD allows the use of a lender ordered MAP appraisal to serve as a substitute for the HUD required RCS if certain conditions are met as outlined in Chapter 9 of the Section 8 renewal guide. Assigned Account Executives As always, servicing questions can be answered by Account Executives, (AE).  These can change so we encourage folks to check our property listings : https://www.hud.gov/states/shared/working/west/mf   If you are working on refinancing an existing HUD property, we strongly encourage you to have a conversation with your AE.  Asset Management Processing Servicing items can be sent to our centralized mailboxes:  SF.Incoming@hud.gov and Den.Incoming@hud.gov  

New Closing Checklists Published May 2018 https://www.hud.gov/OGC_Multifamily_Closing_Documents_Checklist

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