1. The RADical Transformation of Public Housing 2016 Housing Credit Connect
Shaun K. Smith, Senior Director, Targeted Affordable Housing
June 15, 2016

2. RAD and Duty to Serve?
The Housing and Economic Recovery Act of 2008 established for Fannie Mae and Freddie Mac a duty to serve very low-, low-, and moderate-income families in three specified underserved markets: Each year, FHFA is required to evaluate and rate each Enterprise’s performance in each underserved market and report the results to Congress. RAD is noted as a specific HUD program to be considered under Duty to Serve.

3. Direct Purchase Tax-Exempt Loan
Significant cost savings compared to traditional publically offered bond credit enhancements with less documentation resulting in a more efficient execution
Garden, mid-rise or high-rise multifamily properties with 4% LIHTC with 90% occupancy for 90 days
Fixed Rate
Floating Rate
Minimum DCR
1.15x
1.20x; with interest rate hedge
Maximum LTV
90% of market value
85% of market value; with interest rate hedge
Loan Term
Up to 18 years
Up to 10 years
Construction Loan
Up to 36 months

4. Tax-Exempt Bond Placement Direct Purchase of Tax-Exempt Loan
Side-by-Side Comparison: Tax-Exempt Bond Placement and Direct Purchase of Tax-Exempt Loan
Bond Purchaser
Government Entity as Issuer
Borrower $
Tax-Exempt Bond Placement
Tax Exempt Bonds (payable solely from “Borrower Note”)
Purchase Price (pursuant to “Bond Purchase Agreement”)
Loan to Borrower (pursuant to “Loan Agreement”)
Direct Purchase of Tax-Exempt Loan
Borrower Note
Funding Lender
Governmental Lender
Government Lender Note (payable solely from “Borrower Note”) (Governed by “Funding Loan Agreement”)
Funding Loan to City as “Governmental Lender”

5. Bond Products Comparison Chart
Tax-Exempt Loan
More efficient, more cost effective alternative to publically offered tax-exempt bond credit enhancement
Private placement loan product with fewer documents and participants
Immediate and Forward Executions available
Fixed and Variable rate executions available
Min DCR
Max. 90% LTV
Terms up to 18 years
Max amortization of 35 years
Minimum 10 years prepayment protection
Credit Enhancement for Direct Placement Bonds
Private placement bond product with fewer documents and participants
Terms up to 15 years
Minimum 7 years prepayment protection
Cash Loan with Short Term Bonds
Cash loan, secured by the property, that provides collateral for tax-exempt bonds with 4% LIHTC
Bonds paid off when units placed in service. Cash loan remains in place.
Cash loan coupled with privately placement bonds.
Yield maintenance followed by defeasance
Bond Credit Enhancement with 4% LIHTC
Traditional, publicly offered bond credit enhancement
Public bond offering with multiple participants
Terms up to 35 years
Fee Maintenance is required
Bond Credit Enhancement with Other Affordability Components
New or replacement credit facility for tax-exempt housing bonds
Public offering or private placement bond executions available.
Min DCR*
Max. 85% LTV*
Terms up to 30 years
Max amortization of 30 years
*Higher leverage may be available in Tier 1 and Tier 2 Markets.

6. Bridge to Resyndication
Terms
Minimum DCR
1.15x
Maximum LTV
Maximum 85%
Cash Equity Required: 15% (if owned < 3 years)
Loan Term
24 months, one 6-month extension with approval
Benchmarks
Bond Inducement Resolution.
4% LIHTC allocation.
Final plans, budget and specifications for rehabilitation.
LIHTC investor commitment.
Commitments for all other sources necessary to close the LIHTC resyndication.