Minnesota Housing 2006 Program Changes February 14, 2006 We are committed to meeting Minnesotans’ needs for decent, safe, affordable homes and stronger communities * * TTY

Minnesota Housing Finance Agency Mission We are committed to meeting Minnesotan’s needs for decent, safe, affordable homes and stronger communities.

Agency Strategic Goals End Long Term Homelessness Increase Minority Homeownership Strategically Preserve Existing Affordable Housing Stock Provide Housing Choices for Low and Moderate Income Workers Establish the MHFA as a Housing Partner of Choice

Industry Innovation Innovations in the Industry Interest Only Option Arms 40 Year Term Step Rate Mortgages

Dramatic Increase in CASA Production

Financial Imperatives Financial Constraints State budgetary constraints resulted in the suspension of state appropriations to support the HAF program. Minnesota Housing temporarily funded the HAF program using Agency resources. Reached a point in time where Minnesota Housing does not have the asset levels to sustain HAF at current volume levels.

Response Increasing House Prices Relative to Income Examination of Industry Tools Impact on success of first-time homebuyers Other HFA experiences Partner input Combine with resources constraints Lead to Program Redesign

Minnesota Housing Response PROGRAM REDESIGN Further focus programs to support goals Emerging Markets Workforce Housing Provide powerful tools that utilize available resources more efficiently and effectively Continue to provide the best package of HFA first-time homebuyer support in the country Continue to support partnership network

Proposed CASA Program Changes CASA Program Refine Program Concept alignment with goals Emerging Markets Single Headed Households Workforce Housing 40 Year Term Option Same interest rate as 30 year term option Transfer Initiatives from three pools to one

Proposed HAF Program Changes HAF Program Suspend Entry Cost Assistance Plus Monthly Payment Assistance for CASA borrowers only Increase HAF Calculation Ratio to 30% Increase HAF Monthly Payment Assistance Increments ($80,$55,$30) Decrease borrower HAF contribution to $500

Increased Purchasing Power & Cash to Close 5.625% $3,000 $233,300 $217,400 $233,300 CASA = An increase of $37,100 in buying power and $3,000 cash to close! Scenario A Market Interest Rate6.250% Max Loan$196,200 No HAF $0 Same Maximum Loan$196,200 Scenario B CASA Interest Rate Higher Loan Amount HAF Entry Cost Asst HAF Mo Payment Asst ($80) 40 Year Term Increased Maximum Loan $206,700

Proposed ECHO Program Changes ECHO Program Refine Program Concept alignment with goals Discontinue Home Repair component Maximum of $3,000 in Entry Cost Assistance available for all borrowers Decrease borrower ECHO contribution to $500 Applications accepted on a quarterly basis

Issues Implementation Support Closer partnerships with MI companies Automated Underwriting 40 year term Compatibility with HAF

Implementation Schedule Important Dates February 17 th – Suspend ECAP March 1 st – Final CASA and ECHO Program Concepts & Applications Available April 15 th _ Applications Under the New Program Concepts Due June 1 st New CASA/ECHO Initiatives Effective TBD - Release of CASA 40 year term option, increased HAF Monthly Payment Assistance, suspension of Monthly Payment Assistance under MMP/MCPP and ECHO loan changes

Lender and Partner Input Impact on lender production and ability to reach targeted populations What do lenders and partners need to successfully utilize program enhancements? Comments on program concepts

Technical Assistance Technical assistance sessions for support in reapplication under the new program concepts and understanding the changes scheduled for March. Register for E-News! to receive information on dates and locations.

Feedback Feedback sheet – in your folders For more information: Kimberly Stuart