1. How HFAs Are Financing Homeownership in a Complex Time October 20, 2014 Joe Tait joseph.tait@raymondjames.com

2. 2 PLANNING AHEAD IN A COMPLEX TIME – PROJECTIONS VS. ACTUAL US Treasury’s NIBP effectively served as QE for HFAs Post NIBP – consensus forecast was for higher rates – in 2011 waiting seemed to be a viable alternative Additional Fed actions created a different reality Data Source: 1) 10-Yr UST (Forecast 1-Yr Prior) – Bloomberg consensus projection of the 10-Year UST rate, 4 quarters ahead, based on economic forecasts from approximately 70 firms (see function “ECFC”), 2) 10-Yr UST (Actual) is from the US Federal Reserve’s H-15 Historical Data for the 10-Year Constant Maturity UST.

3. 3 PLANNING AHEAD IN A COMPLEX TIME – QE3 – NO SUBSIDY FOR HFAS! Bonds from 3 rd Quarter 2012 to 2 nd Quarter 2013: Blended Refunding & New Money; Pass-Through; Taxable Mid 2013 “Taper talk” – bonds became less effective in higher rate environment as Fed continues MBS buying Number of TBA based programs grows Data Source: 1) 10-Yr UST (FORECAST 1-Yr Prior) – Bloomberg consensus projection of the 10-Year UST rate, 4 quarters ahead, based on economic forecasts from approximately 70 firms (see function “ECFC”); 2) 10-Yr UST (Actual) is from the US Federal Reserve’s H-15 Historical Data for the 10-Year Constant Maturity UST; 3) Net Fed TBA Commitment based on publically released NY Federal Reserve data for MBS purchases and sales.

4. 4 HOW ARE HFAS FINANCING HOMEOWNERSHIP TODAY? Most HFAs now have the ability to use MBS, and some have both whole loan and MBS programs Large # of GNMA S.F. Issuers Few HFAs remain that do not have the ability to use MBS, either as a servicer/issuer or through a master servicer “Turnkey” – guaranteed price; eliminates market and pipeline risks; government and conventional Bond only programs include larger HFAs with ample refunding's/0%s and smaller HFAs funding low volume Certain HFAs continue to use Fannie Mae cash window for conventionals Financing alternatives not mutually exclusive

5. 5 FINANCING HOMEOWNERSHIP IN A COMPLEX TIME - EVALUATE ALTERNATIVES AND EXECUTE USING LOWEST COST OF FINANCE Recent Comparison of 3 rd Party TBA-Based “Turnkey” vs. Bond Funded Single Family Financing

6. 6 PLANNING AHEAD IN A COMPLEX TIME – WHAT DOES THE FUTURE HOLD? QE3 ends in two weeks 2015Q2 10-Year UST forecast is now 3% … maybe 2.5% by end of week? Interest rates in US now appear to be driven more by external factors rather than domestic fundamentals Data Source: 1) 10-Yr UST (FORECAST 1-Yr Prior) – Bloomberg consensus projection of the 10-Year UST rate, 4 quarters ahead, based on economic forecasts from approximately 70 firms (see function “ECFC”); 2) 10-Yr UST (Actual) is from the US Federal Reserve’s H-15 Historical Data for the 10-Year Constant Maturity UST; 3) Net Fed TBA Commitment based on publically released NY Federal Reserve data for MBS purchases and sales.

7. 7 SUCCESSFUL TBA BASED PROGRAMS - RAYMOND JAMES EXPERIENCE Raymond James Early Innovator – recognized need and led industry with early 2009 proposals 2009-2010 - assisted several HFAs on program implementation and expedited MSFTA process for state HFAs for TBA broker dealer services; 2011 – Expertise led to creation of Raymond James “Turnkey” program; implementation delayed due to servicer concerns over the use of MBS sale premiums February 2012 – Raymond James kicked off two pilot “Turnkey” Programs. They have been in operation since that time Raymond James now has 11 State HFA and additional local TBA “Turnkey” Program clients. Characteristics of Successful Programs Customized. RJ programs are tailored to each client Focus on Lenders. Lender outreach and education is key. The fewer changes made when transitioning a bond program into a TBA based program, the easier the transition. External subsidy is not a requirement for success. Many of RJ’s high volume programs have no external subsidy. Many programs also offer MCCs Flexibility. Willingness to take advantage of bond financing when it is advantageous to do so