1. 1 Green Initiative & Green Refinance Plus Fannie Mae Multifamily October 12, 2011

2. 2 Fannie Mae Mission and Portfolio  Fannie Mae provides liquidity, stability and affordability to the secondary mortgage market  Multifamily Guaranty Book of $189B  3.8M rental units  Includes Market Rate, Affordable Subsidized and Affordable by Area Median Income (AMI) properties  20% of US Mortgage Debt Outstanding for Multifamily* Lender Fannie Mae Investor Tenant Property Owner *As reported by Federal Reserve as of Q2 2010

3. 3 Approach:  Enhance existing programs  Improve affordability  Drive best practices The goal of Multifamily’s Green Initiative is to: (i) improve the energy and water efficiency, (ii) enhance the sustainability; and, (iii) extend the useful life of multifamily housing stock financed by Fannie Mae – which will make a direct contribution to enhanced affordability, reduced risk and increased tenant satisfaction.  Provide tools to reduce national energy usage  Reduce risk  Leverage data

4. 4 Why Does Fannie Mae Care About Green Financing? … because “greening” multifamily housing is good for Tenants, Property Owners, Lenders, Fannie Mae, and Investors Fannie Mae  Improves property condition and operating performance  Advances our corporate mission by preserving affordable housing  Advances Federal policy on energy & water conservation Lenders  Manage expense risk  Enhances cash flow and property value  Provides impetus and support for allocation of capital for upgrades and improvements Property Owners  Improves affordability  Provides market differentiation, enhances occupancy and retention  Extends life of physical plant Tenants  Decreases living expenses  Improves quality of life and living conditions Investors  Indicates property’s focus on green improvements  May meet investor requirements for green investments

5. 5 Green Refinance Plus – Purpose and Background  Fannie Mae and HUD have had a Multifamily Risk Sharing Agreement since 1994.  On May 31, 2011, HUD Secretary Donovan and Ken Bacon announced “Green Refinance Plus” to promote energy efficient upgrades in affordable apartment buildings.  This joint product enhancement between Fannie Mae and FHA allows owners of existing affordable rental housing to refinance into new mortgages that include funding for energy- and water-saving upgrades along with other needed property renovations.  The purpose of the enhancement is to encourage the preservation of existing affordable properties via modest renovation and the “green” energy and water efficiency retrofitting of affordable properties.

6. 6 Green Refinance Plus - Benefits  Additional Proceeds:  4-5% more proceeds than our regular DUS Affordable preservation execution or a Standard FHA Risk Sharing loan.  10-year term or longer  Refinance AND Acquisition/Rehabilitation  Competitive Pricing  Ease and Certainty of Execution

7. 7 Green Refinance Plus - Product Terms  Eligible Loans:  Cash and MBS executions (no Bond Credit Enhancement); and  Fixed-Rate Loans, no interest-only period.  Not eligible for a construction loan  Eligible Properties:  Existing properties 10 years or older that have MAH affordability and income restrictions which run at least through the term of the Mortgage Loan.  Properties that involve an acquisition loan or a refinancing – spend at least 5% of new loan UPB on:  Energy and water efficiency retrofitting; and/or  General property renovations.

8. 8 Green Refinance Plus - Product Terms  Loan Amount - no minimum or maximum loan amount.  Loans above $50 million require HUD consent.  Loan Term - 10 years or more; the affordable restrictions must remain in effect for at least the term of the loan.  Term is based on a 30 year amortization; no 35-year amortization without waiver from HUD.

9. 9 Green Refinance Plus - Product Terms  Maximum LTV - 85%, 5% higher than standard MAH preservation deals.  Minimum DSCR - 1.15x, 5 bps lower than standard MAH preservation deals.  Proceeds - 4.35% higher than standard MAH.  Renovations Requirements:  Up to 3 months prior to loan closing and up to 12 months after closing;  Lender must discuss the scope and cost of renovations/retrofitting that will be done prior to closing in Transaction Approval Memo; and  Funds for renovations/retrofitting to be done post-closing must be placed in a standard repairs account.

10. 10 Green Physical Needs Assessment (PNA)  Standard third-party reports - PNA, Appraisal, Phase I Environmental Assessment - are required.  A “Green PNA” must be completed - Includes an assessment of a property’s physical needs, an energy audit and identification of cost effective opportunities for increasing energy and water efficiency, and reducing operating and capital costs.  The Green PNA scope of work is available via Lender Memo 11- 04 on efanniemae.com.  The scope of work is based on HUD’s Mark-to-Market Green Initiative Physical Condition Assessment and ARRA-funded Green Retrofit Program

11. 11 Green Physical Needs Assessment (PNA)  The Green PNA requirement can be waived for projects of 50 units or less, where the cost of other renovations can be demonstrated to be at least 5% of loan amount.  Borrowers will use ENERGY STAR Portfolio Manager to track and report annual energy performance.  Lenders will verify that the improvements have been installed within 12 months of loan disbursement.

12. 12 THANK YOU!!! Chrissa Pagitsas Fannie Mae Multifamily Green Initiative Program Manager chrissa_pagitsas@fanniemae.com (202) 752-6554