1. 1 New Issue Bond Purchase Program: Implications NALHFA Annual Meeting, Austin TX April 27, 2012

2. 2 What’s Been Achieved: Roles Treasury and White House recognition of: -Key role of HFAs -Ongoing value of HFAs Basis for Federal Reserve recognition of HFAs Differentiation of housing bonds through use of GSEs Value of NIBP

3. 3 What’s Been Achieved: Created Model for National Partnership That Works Four fundamental elements: 1.Very efficient administrative system 2.Approach to interest rates Bond rate slightly below e.g. 85% - 90% current GNMA rates (extension increase only due to length of escrow) Rate lock, to: -Adjust to market changes -Avoid negative arbitrage Ability to leverage shorter-term market bonds Value of NIBP

4. 4 What’s Been Achieved: Created Model for National Partnership That Works 3.Adaptability of nationally standardized program to many markets and strategies Warehousing MBS sales Range of multifamily enhancements and separate bridge bonds 4.Above all, ability to use for single-family or multifamily based on local needs, HFA capacity and resources Assure national support and results Make program invulnerable to ‘lack of need’ arguments Focus on principle that program has to be able to work for everyone Value of NIBP

5. 5 More than 100,000 first time homebuyers Median income of local HFA homebuyers: 78% of area median Median purchase price for local HFA programs: $133,000 Number of local HFAs converting single-family NIBP bonds: 33 Local HFAs doubled their production by using MBS sales in conjunction with NIBP More than 25,000 affordable rental units Local HFAs financed 71 new construction or preservation projects 91% of units for tenants below 60% of median Re-stabilized affordable multifamily production after devastation of tax credit pricing Direct Accomplishments

6. 6 Key concern of HUD, Treasury, White House Importance of interest rate benefit -Over 1% lower than all-market tax-exempt issues -Long-term tax-exempt rates are still at their widest spread above taxable GNMA But for NIBP

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8. 8 Single-Family If There Had Not Been NIBP -State and local HFAs would have issued virtually no single- family bonds -Without the lower rates, HFA downpayment assistance and limits on lender fees, less than 10% of the 100,000 first- time homebuyers would have been able to afford the home they now live in -NIBP thus increased sales to first-time buyers by more than $10 billion at a time, still continuing, when these sales are: at weakest in decades, and critical to stabilizing soft housing markets, move-up sales and home prices But for NIBP

9. 9 Multifamily If There Had Not Been NIBP -Tax credit projects would have required approximately 15% more public subsidies while sources of local subsidies have had their greatest ever cuts -Benefit of NIBP was same magnitude as increasing credit pricing by 20 cents on the dollar (e.g. equivalent impact to TCAP) -At least one quarter of the 25,000 units would not have proceeded -Limited public subsidies would not have been available for many more new units But for NIBP

10. 10 NIBP: the most effective Treasury initiative for affordable housing -At no net cost to the Federal government -Targeted to critical needs -Nationally successful Multifamily is needed now especially to offset reductions in subsidies, at a time when rental pressures are increasing To be successful for future single-family, only very modest amount of NIBP is needed -example: using $30 million of NIBP authority to hedge $300 million of MBS production with downpayment assistance NIBP provides model of role for HFAs in a world to be less dependent on Fannie Mae and Freddie Mac Implications Going Forward