1. 1 New Issue Bond Purchase Program: Going Forward For NALHFA Spring Meeting May 18, 2011 Gene Slater CSG Advisors

2. 2 1.NIBP: What’s Been Learned Great Value of Treasury and HFAs working together, with GSEs Very successful and efficient administrative system Treasury’s ability to make program work through different rate environments Value of rate-lock Adaptability of standardized program to many markets and strategies: -Warehousing -GNMA sales -Leveraging of limited NIBP allocation for both MF and SF -Success of shorter maturity market bonds Success in: -Eliminating or highly limiting negative arbitrage -Supporting fixed rate bond programs -Supporting highly secure, often MBS or risk-share, lending NIBP 2

3. 3 2.NIBP: Value of Experience Many HFAs, especially locals, who didn’t initially participate now see how valuable and successful it is Numerous state and local HFAs have fully utilized or committed their entire allocations or are limiting production to ration what is remaining Single-family volume has often heavily depended on available downpayment assistance Demand by issuer, by market, by SF and MF has often been very different than initially expected Experience now provides much better basis of gauging future demand NIBP 2

4. 4 3.Critical Need for NIBP Hasn’t Changed Long-term tax-exempt bond rates compared to mortgage rates Overwhelming negative arbitrage Weak housing markets 3.Key Questions Going Forward Can this extremely valuable experience, operating system and relationships continue to be used? Is there a way to do this under existing legislation? NIBP 2

5. 5 5.Options for NIBP 2 Given HERA Helped Develop Two Possible Options a)Federal Reserve in the role of Treasury Recycling or exchanges of existing MBS Potential reasons Concerns b)Potential way for Treasury to provide Without needing another party Already established system Potential legal approach -Exchange with Fannie/Freddie -Treasury exchanges existing Fannie/Freddie MBS for Fannie/Freddie NIBP 2 Securities NIBP 2

6. 6 December 20092011 HFA’s Market Treasury Issue Program Bonds $13.8 billion Issue NLBP2 Program Bonds Est. $15 billion Sell Fannie/ Freddie NIBP Securities $13.8 billion HFA’s Sell Fannie/ Freddie MBS $140 billion $15 billion Sell Exchanged MBS Exchange Fannie/ Freddie NIBP 2 Securities $125 billion Sell MBS Fannie/Freddie Treasury Fannie/Freddie NIBP 2 Est. $15 billion Fannie/ Freddie MBS Potential Approach: Exchanging for MBS Currently Held By Treasury

7. 7 6.Potential Benefits No new funds required No change needed to HERA Exchange MBSs that Treasury is planning to dispose of over next year anyway Same administrative system 7.Only Proposed Adjustments to Increase Success A.Program bonds with up to 3% premiums used solely for downpayment assistance Why critical Local HFAs and Many state HFAs have few or greatly reduced resources NIBP success has been directly linked to downpayment assistance FHA changes Importance of downpayment assistance B.Flexibility between single-family and multi-family allocations To improve performance and match market demand NIBP 2

8. 8 C.Increase Small Allocation Limit To $50 million or $100 million instead of $25 million Enables successful small programs to continue and not run out of funds quickly Overall leveraging of program remains substantial Allows smaller issues to leverage NIBP and GNMA sales NIBP 2