MMA Financial, LLC A MuniMae Company Workouts Presented By Michael H. Gladstone, Esq. IPED – Boston, MA. November 21, 2008

2 (I)MMAs experience: We have not had much trouble as a matter of our total portfolio Approximately 2,000 LIHTC properties (+400 GPs) in our Asset Management portfolio Began with LIHTC in % of portfolio in some level of work-out at any point in time Approximately 10% of properties go through work-out at some point

3 (II)Causes of problems Primary causes –Issues with developer/GP91% –Property management61% Secondary causes –Deal structure39% –Market issues25% –Design/construction23% A very small number of developers have caused the bulk of our problems

4 (III)Red Flags Questions concerning integrity Fixing a bad deal with a new deal Liquidity issues Risky business plan Inexperienced developers and property managers Soft market

5 (IV)Primary focus Asset preservation and risk mitigation –Tax credits –Physical asset BUT THE WORLD HAS CHANGED IN What are investors need or desire for tax credits?

6 (V)What Do We Do? * Understand the new objectives of our investors Assess situation Stabilize Design and implement strategy

7 (VI) Assess situation by considering the following factors: Local General Partner financial strength, reputation and our other deal experience with them Condition and age of property Market Year in tax credit cycle Importance of property to fund yield, amount of Funds reserves vs. objective, overall health of Fund and, most importantly, what do our investors want? Financial analysis of property

8 (VI) Assess situation by considering the following factors (continued): Legal structure and our rights, withheld capital, General Partners funding and other obligations Valuation – possibly obtain appraisal or other 3 rd party report Review debt Review property management Is property a market conversion candidate? Consult with stakeholders, including Asset Management, Fund Management (and/or investors), General Partner, Lenders, Regulators, Property Manager

9 (VI) Assess situation by considering the following factors (continued): Consult with advisors, including legal, tax, market valuation, physical conditions Special fund considerations, including guaranteed funds and special needs Special debt considerations-is MMA debt involved?

10 (VII) Stabilize – Stop the Bleeding Replace Property Manager Replace General Partner More hands on role in day-to-day management Contact the lenderwith the problems in the markets there may be a new interest by lenders to deal

11 (VIII) Design and Implement Workout Plan Given the different types of issues that we confront, this could mean many things, including: Refinancing/Restructuring (lenders are now listening) Enforce Investor Rights Motivate GP to contribute/do more Replace Management Agent Raise/Contribute Capital Remove and Replace GP Resolve Compliance Issues Resolve Tax Issues Sell Property (easier without bonding requirements)

12 Sell Property Is property key to fund yield? (and do investors care about yield?) Reduce risk by selling New capital New management Indemnities Buyer is more important than price