1. Rapid Rental Refinancing and Retention Program Virginia Housing Development Authority Art Bowen Managing Director of Rental Housing

2. Rental Loan Program Overview VHDA’s $3.4 billion rental loan portfolio is almost entirely uninsured Most profitable line of business 10-15 year prepayment lock-out period – Lockout period ensures development will remain affordable and subject to VHDA’s mission-driven regulatory requirements – Gives bond owners assurance that their bonds will unlikely be redeemed prior to the first optional redemption date

3. Prepayment Risk Upon expiration of the prepayment lockout period: – Borrowers have the option to pay off their loan and seek financing elsewhere – Once loan is paid off, developments are under no obligation to remain affordable – VHDA risks a diminishing footprint of affordable rental housing stock in the Commonwealth

4. Refinance Program VHDA has developed a proactive, streamlined, rental loan refinancing and retention program To attract existing borrowers, the program is designed to offer three compelling benefits: 1.Eliminate interest rate risk for borrower 2.Minimize required fees 3.Increase cash flow to development

5. Program Implementation Development Officers contact mortgagors with proposals – Rate reset at VHDA’s current rate – Extension of the term and reset of the amortization period for the next 25 years – Waiver of any prepayment, origination or refinancing fees – New prepayment lockout period of at least 10 years

6. Program Benefits Reduce risk of losing affordable housing Preserve existing footprint for at least an additional 10 years Mortgagor usually applies for loan increase which provides additional funding for maintaining or improving the condition of the development Refinance offer generation, negotiation, and execution can be accomplished with only four hours of staff time (it takes 75-100 hours of staff time to underwrite new rental loans)

7. Program Benefits, cont. Mortgagor acceptance can be accomplished swiftly without any material out-of-pocket expenses and minimal interest rate risk The program is profitable over time, in that it generates approximately $59.4 million ($46.9 million from refinances + $12.5 million from related loan increases) of additional gross spread which can be re-deployed to support grant and other subsidy programs

8. Rapid Restructure Example Abbington @ Northhampton II Units: 146 Loan Type: Taxable Immediate Delivery Income Limits: 20% @ 80% AMI, 80% @ 150% Fee: Yield Maintenance Fee Term: 222 mos. Old Rate: 7.26% New Rate: 5.35% Loan Amount: $2,360,449.81

9. Conclusion Upon expiration of the prepayment lockout period, borrowers have the option to pay off their loan thus developments are no longer required to maintain affordability VHDA developed a Rapid Refinance Program that eliminates the borrowers interest rate risk while minimizing any out-of-pocket fees Since 2012, more than 4,100 affordable housing units have been preserved in 36 communities totaling $183,886,572 of debt

10. Questions?