1. Federal Financing Bank Participation
Risk Sharing with
Federal Financing Bank Participation
Beth M. Elliott NCSHA Annual Conference & Showplace Miami, September 27, 2016

2. Changing HFA Multi-Family Lending Environment
Risk Sharing History
Traditional Risk Sharing has been a powerful tool for HFAs since the program’s inception
MassHousing originated $2.3 billion using Risk Sharing from 1994 through 2015.
30,868 units
91% affordable
Current Market Conditions
Tax Exemption = Competitive Pricing Disadvantage
Low Interest Rates = Nominal Investment Income
Many Competitive Multifamily Products
Soft Money Shrinking, Volume Cap Becoming Scarce

3. FHA Programs Comparison Chart MAP Programs
FHA MAP Insurance Programs (Typically Private, For-Profit Lenders)
Deal Type
Light or No Rehab
Moderate Rehab with Tax Credit Equity
New Construction or Substantial Rehab
Lending Program
223(f)
223(f) Tax Credit Pilot
221(d)(4)
FHA Risk %
99%
Rehab Per Unit
Up to $17,500/Unit
Up to $40,000/unit
Over $40,000/unit
Davis Bacon Applies? No
Yes
Affordability Required?
None
None (but LIHTC does)
Equity Takeout Permitted?
 Yes
Closing Process
HUD MAP Underwriting/ Closing Process
HUD Pilot Underwriting/ Closing Process
HUD MAP Underwriting/ Closing process
Best Execution
Taxable (GNMA)
Tax-Exempt (GNMA)
Either
Current Est. Rate
3.10%
3.10% + COI
3.85%

4. FHA Programs Comparison Chart Traditional HFA Risk-Sharing
HFA Traditional Risk Sharing Program 
Deal Type
Light or No Rehab
Moderate Rehab with Tax Credit Equity
New Construction or Substantial Rehab
Lending Program
HFA Risk Share
FHA Risk %
50-90%
Rehab Per Unit
<15% of value
≥15% of value
Davis-Bacon Applies? No
Yes
Affordability Required?
of AMI or of AMI
Equity Takeout Permitted?
Waiver Required
Closing Process
HFA Underwriting,
Limited HUD Review
HFA Underwriting, Limited HUD Review
Best Execution
Taxable
Tax-Exempt
Current Est. Rate
4.62%
4.02% + COI

5. FHA Programs Comparison Chart HFA FFB Risk Sharing Program
Deal Type
Light or No Rehab
Moderate Rehab with Tax Credit Equity
New Construction or Substantial Rehab
Lending Program
HUD/FFB Risk Share
FHA Risk %
50%
Rehab Per Unit
$30,000-$40,000
>$30,000-$40,000
Davis-Bacon Applies? No
Yes
Affordability Required?
of AMI or of AMI
Equity Takeout Permitted
Waiver Required
Closing Process
HFA Underwriting,
Limited HUD Review
HFA Underwriting, Limited HUD Review
Best Execution
Participation
Participation +
Short-Term Tax-Exempt
N/A
Current Estimated Rate
3.71%
3.71% + COI

6. FFB Risk Share Differences from Traditional Risk-Sharing
HUD Insurance Only
90/10, 75/25 or 50/50
Refinance Portfolio Transactions Only
Equity Take Out through PPP Waiver (HUD sign-off on CNA)
Requires 20 year use restriction
Substantial Rehabilitation limit of 15% of Appraised Value
No Prepayment Restrictions
No Custodial Accounts
Insured Construction Advances Available
FFB / Risk Sharing
HUD Insurance with FFB Funding
50/50 Only
Refinance Any Transaction
Equity Take-Out under New Waiver
Substantial Rehabilitation limit up to $40,500+/unit, but cannot do 2+ building systems
10-Year Prepayment Lockout
No Partial Claims Allowed on Default
Custodial Accounts
Construction Period Execution not yet available

7. FFB Risk Share Parties Involved
HFA
Local HUD
HUD HQ
FFB
Custodian Bank

8. FFB Risk Share Processing
Application to HUD
Firm Approval Issued
Interest Rate Locked with FFB
Close Into Escrow
Record & Fund
(Loan & Participation)

9. FFB Risk Share Rate Lock Process
Local HUD Issues FAL
HFA Submits Rate Lock Submission to HUD HQ
HUD HQ Approves (3 business days)
FFB Issues Rate Commitment Offer (3 business days)
HFA Agrees to RCO & Rate is Locked ( 2 business days)

10. FFB Risk Share Rate Lock Process
Significant Rate Lock Considerations
8 Business Days to Process
Rate Lock Max =
60 Days
Must Commit to Closing Month
Cannot Re-Lock for 90 Days if Miss Deadline

11. FFB Risk Share Simultaneous Closing & Funding
11 Days Before Funding
HFA Notifies Custodian
9 Days…
HFA Submits Draft Participation Documents to Custodian
8 Days…
Close in escrow with Borrower; send certificates to HUD HQ
7 Days…
Send Endorsement Package to HUD Local, w/ Notice to FFB
3 Days…
FFB Confirms Various Business Terms
2 Days…
HUD Local Issues Endorsement
1 Day…
FFB Circulates Executed Participation Docs
HFA Records
Day 0
FFB Funds to HFA
HFA Funds to Borrower

12. FFB Risk Share Comparison with Proposed Regulations
HUD’s Proposed Risk Sharing Regulations Incorporate Many Key Changes Instituted under the FFB Waiver
Equity Take-Out
Requires 20-year use restriction
Substantial Rehabilitation limit up to $40,500+/unit, but cannot do 2+ building systems

13. FFB Risk Share Comparison with Proposed Regulations
Questions?