1. Office of Multifamily Housing Update Western Lenders Priya Jayachandran Acting Director, Program Administration Office April 15, 2015

2. Agenda HUD Leadership Changes Multifamily for Tomorrow Draft MAP Guide Overview 2014 FHA Production Results New FHA Affordable Initiatives Update on Interest Rate Reductions Energy Efficiency Initiatives Rental Assistance Demonstration 2

3. HUD Leadership Secretary-- Julian Castro Deputy Secretary-- Nani Coloretti Principal DAS, Housing– Ed Golding Deputy Assistance Secretary, Multifamily– Ben Metcalf 3

4. To effectively address the next generation of challenges in the housing market, HUD’s Multifamily Housing Programs is pursuing four initiatives as part of the Multifamily for Tomorrow transformation. UNDERWRITER MODEL 1 1 ACCOUNT EXECUTIVE MODEL 2 2 WORKLOAD SHARING 3 3 STREAMLINED ORGANIZATIONAL STRUCTURES 4 4 4

5. New 5 Region Field Structure 5

6. Multifamily for Tomorrow Milestones HQ and Southwest Region up and running Midwest Region nearly complete All staff assignments completed Frontline training almost done Southeast Region on deck Hiring kicked off this month Frontline training scheduled to start Northeast and West on track for Winter/Spring 6

7. “…the overall energy in the Dallas/Fort Worth office seems to now have a totally different quality to it – a sense of freshness, excitement and growth that I have, frankly, never really seen before at HUD.…I see HUD’s transformation efforts as a model worth emulating.” 7 Multifamily For Tomorrow Feedback “It was not a simple transaction; complications included affordability restrictions, a Section 8 HAP contract, and more. Despite the challenges the HUD underwriter was responsive and easily approachable throughout the review…This experience and positive outcome is proof of the success that can be achieved through the MFT initiative.” “It was a record setting process…the loans were engaged, screened, underwritten by our team, submitted to HUD for review and approval, and then [we] engaged all of the legal teams to close the loans [and] closed the loans…that entire process took 93 days. That would not have been possible had it not been for the Single Underwriter Model…”

8. Draft MAP Guide Publication Makes technical corrections and edits, Integrates previously published policy changes, and clarifies policy that has been unclear, Incorporates the organizational and operational changes of Multifamily for Tomorrow, and Introduces proposed new policy improvements for public feedback and discussion. 8

9. 9 Proposed MAP Guide Changes Loan Ratios Large Loan Threshold Substantial Rehab Cap Adjustment Updated Three Year Rule

10. Total Basic FHA MF Production Volume 2015 YTD versus 2014 Fiscal Year# of Firm Commitments issued Total $ Volume (Billions) FY14 YTD616$6.2 FY14 Actual1,092$11.0 FY15 YTD416$4.3 ’15 annualized832$8.6

11. FHA MF Production Volume – Tax Credit Deals 2015 YTD versus 2014 Fiscal Year# of Firm Commitments issued Total $ Volume (Billions) FY14 YTD176$1.4 FY14 Actual335$2.5 FY15 YTD145$1.1 ’15 annualized290$2.3

12. FHA TAX CREDIT PILOT PROGRAM Current Production Data (As of March 30, 2015) Projects in Pipeline 146 Units Affected 16,038 Pilot Hubs with Projects 9 Lenders with Projects 28 (of 52 total) Average Days to Close 104 (Excludes Applicant Delays) Tenant Types 28% Elderly, 72% Family Project Types 25% 3 Year Rule, 22% Resyndication, 53% Assisted

13. MF Production Volume New Constr/Sub Rehab Firms Issued Fiscal Year# of Firm Commitments issued Average Loan Size (millions) Total Loan Volume ($Billions) ‘0888$11.6 $1.0 ‘12162$15.7 $2.5 ’13185$14.0 $2.6 ’14185$12.7 $2.3 FY15 YTD104$13.8 $1.4 ’15 annualized208 Expect Total $2.9 Billion

14. MF Production Volume 223(f) Firms Issued Fiscal Year# of Firm Commitments issued Average Loan Size (millions) Total Loan Volume ($Billions) ‘08237$3.7 $0.88 ‘12597$8.9 $5.31 ’13728$7.5 $5.46 ’14*694 $9.6 $6.66 * * FY14 Included $750 million of FY2013 holdover. FY15 YTD234$8.8 ’15 annualized468 Expect total of $4.2 Billion

15. FY 2012 MF Production Volume 223(a)(7) Firms Issued Fiscal Year# of Firm Commitments issued Average Loan Size (millions) Total Loan Volume ($Billions) ‘0884$2.8 $0.88 ‘12585$8.3 $5.31 ‘13843$6.9 $5.46 ‘14143$9 $1.3 FY15 YTD88$11.6$1.0 ’15 annualized 176 Expected Total $2.0 Billion

16. MF Pipeline Snapshot last year compared to now ProgramOctober 2012 # of apps in pipeline ( received, not rejected, withdrawn, or closed ) April 2014 # of apps in pipeline ( received, not rejected, withdrawn, or closed ) April 2015 # of apps in pipeline ( received, not rejected, withdrawn, or closed ) NewConstr/Sub Rehab 185220 245 223(f)364414 271 223(a)(7)42963 57 TOTAL # of DEALS 978697573

17. MF Pipeline Snapshot last year compared to now Program Average Loan Size (millions) October 2012 Average Loan Size (millions) Nov 2014 Average Loan Size ( millions ) Now NewConstr/Sub Rehab$16.7$16.1$17.5 223(f) $10.9$9.5$8.7 223(a)(7) $8.4 $11.2

18. Timing– how long? Program / Stage # of Firms issued Dec-Mar 2014 Average (and median) Calendar days App rec’d to Firm issuance (April 2014) # of Firms issued Dec-Mar 2015 Average (and median) Calendar days App rec’d to Firm issuance (April 2015) 223(a)(7) - FIRM 5095 average (50 median) 5244 average (38 median) 223(f) – FIRM – total elapsed days 163120 average (93 median) 14996 average (74 median) NewC/Sub Rehab 2-stage Processing 33295 (Preapp rec’d to Firm Issued) 27366 (Preapp rec’d to Firm Issued) NewC/Sub Rehab Direct to FIRM 16125 4097

19. “FHA MF/HC Endorsements FY ’14”

20. Interest Rate Reductions (IRRs) 20 # of Loans

21. Interest Rate Reductions 21

22. Status of IRR Program for 202s Expect to issue guidance to field offices this month, including: – Flexibility on debt service savings – Hold harmless for IRRs on 202s that have previously refinanced – Permit borrowing of operating or reserve funds to allow non-profits to pay certain costs 22

23. FHA LIHTC Volume 2010-2014 23

24. New Affordable Initiatives FHA/MAP Dedicated LIHTC Teams Dedicated FHA/RAD teams. Expanding Pilot to 221d4 in California FHA/Risk Share Nationwide rollout of Federal Financing Bank (FFB). Small Buildings Risk Sharing (SBRS) Initiative this spring. 24

25. Other New Initiatives Pay.gov CNAe tool ASAP system Section 8 Renewal Guide 2530 Updates 4350.1 Handbook Update 25

26. Promoting Energy Efficiency Improving Access to Capital and Resources Commercial PACE Better Buildings Challenge incentives Enhanced underwriting through Fannie Mae Risk Share and FHA Promoting Best Practices in Asset Management Utility Allowance guidance Data Collection and Benchmarking Energy Star Certification Facilitating Standardization and Alignment New Capital Needs Assessment (CNA) E-Tool 26

27. Rental Assistance Demonstration Cap Lifted to 185,000 Second component extended Expect 30-40% new RAD units will seek FHA financing Closed/converted 129 projects = 13,205 units so far, with average $40,000/unit investment Expect RAD will leverage $6 Billion of new investment in public housing. www.hud.gov/rad 27

28. RAD Case Study: Lexington, NC 28 Before RAD: Capital needs backlog between all three properties averaged $41,000/unit Without financing solution, LHA was at risk of losing a property After RAD: Converting and preserving all 268 units Most LHA residents will only have to move once – into the updated units LHA retains majority ownership of the land and the buildings with 51% interest in a newly formed partnership This transaction leverages LHA’s $1,000,000 in capital fund contribution to raise over $20 million in other sources

29. 29 RAD Case Study: Southern Nevada “The RAD program has provided to the SNRHA the flexibility needed to respond to the capital needs of an aging and tired property, and more importantly, protecting and offering choices to the Landsman Gardens families.” - John Hill, Executive Director Before RAD Built in 1971, Al Landsman Gardens had dangerous levels of mold, as well as asbestos and lead paint present No workable financing solution to remediate Units at risk of demolition After RAD All 100 units preserved and rehabilitated This was the first RAD transaction to use FHA financing (221(d)(4) Mortgage) Deal completed with fast turn around to protect “Difficult to Develop Area” tax credit boost of 130%

30. RAD Case Study: Elgin, IL 30 Before RAD: 149 a mix of efficiency, one, and two bedroom units in a senior building built in 1969 High demand for affordable senior housing but limited market for the efficiencies “This will help transform affordable housing in the city of Elgin…They said it couldn't be done but it can be done. You can see great things happening.“ Damon Duncan, President/CEO After RAD: Gut rehab paired with new construction on adjacent lot One for one replacement of EHA units and the addition of 14 market rate units Combines LIHTC, Illinois State Housing Tax Credits, FHA 221(d)4 mortgage, soft secondary financing

31. Looking Forward 31

32. Thank you 32