Mountain Plains Housing Summit 2016 Capital Markets logoRBCCM1 Mountain Plains Housing Summit 2016 Presented by: Mina Choo RBC Capital Markets May 4, 2016

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Volume of Housing Bonds Issued Capital Markets logoRBCCM1 Volume of Housing Bonds Issued $12.2B (Projected) 909 Series 988 Series 1,010 Series 567 Series 296 Series 331 Series 338 Series 324 Series 422 Series 401 Series 541 Series 114 Series Sources: Thompson Financial

Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD Capital Markets logoRBCCM1 Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD 2006 – 2007 Pre-Financial Crisis Sources: Bloomberg

Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD Capital Markets logoRBCCM1 Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD 2008 – 2010 During Financial Crisis Sources: Bloomberg

Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD Capital Markets logoRBCCM1 Historical FNMA Rates, 30-Yr Treasury, 30-Yr MMD Sources: Bloomberg

Sample Single Family Financing Options TBA (MBS) Traditional 30-Year Level Debt Pass-through Bonds (MBS) Variable Rate Bonds Overcollateralization Economic Refunding of prior bonds $102 ~ $108 Price (3.50% - 5.00% FHA Loan/3.00% - 4.50% GNMA) ~ 3.00% Bond Yield ~ 2.75% Bond Yield ~ 2.55% Bond Yield (30% swapped) ~ 2.50% Bond Yield (25% excess parity) Sources: RBC Capital Markets

State HFAs Historical Balance Sheets Overview: 2005 – 2015 Capital Markets logoRBCCM1 State HFAs Historical Balance Sheets Overview: 2005 – 2015 Debt Balances Loan Portfolio Balances Debt Balance Changes (Yr-Over-Yr) Loan Portfolio Balance Changes (Yr-Over-Yr) Sources: Fitch - STATE HOUSING FINANCE AGENCIES Peer Study, FIVE-YEAR HISTORY | September 2015

Housing Trends Real Home Prices (1989 – 2016) Robert Shiller’s Irrational Exuberance High – 1Q 2005 Low – 1Q 2012 1Q 2016 = 2Q 2008 = 2Q 2004 Peak = 69.2% 2004 1Q 2016 = 63.8% Sources: www.irrationalexuberance.com; US Census Bureau

Influence of Millennials (born 1981 – 1997) Millennials Are Now The Largest Generation in the US Labor Force Millennials Have Surpassed Baby Boomers as Largest Generation (75.4mm versus 74.9mm) Projected Population by Generation 2015 – 2050 U.S. Labor Force by Generation 1995-2015

Facts about Millennials 42% identify with race/ethnicity other than white, vs. 21% of Baby Boomers 15% are foreign born Most Diverse 61% have attended college, vs. 46% of Baby Boomers Most Educated Unemployment rate for 18–34 year olds peaked at over 13% in 2010 (down to 8.6% in 09/2014) Usually there is a lag for youngest employees (who compete with experience) Those entering workforce during a recession start with lower salaries (which persists for about 15 years) Will Contend with Starting their Careers during Historic Downturn for Years to Come Average age of first marriage in 2013: 29.0 men and 26.6 women vs. 22.9 men and 20.3 women in 1950 In 2013 30% of 20 – 34 year olds were married (vs. 77% in 1960) Tend to Get Married Later than Previous Generations 31% live with their parents (2014) vs. 28% in 2007 Corresponding decrease in the rate of household formation Tighter lending environment (younger population has lower credit scores, 67% under 680 FICO) Less likely to be Homeowners than Young Adults of Prior Generations Sources: 15 Economic Fact About Millennials – The Council of Economic Advisors, Office of the President, October 2014

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