2. GREYSTONE SERVICING CORPORATION Presented by MATTHEW JAMES Vice President

3. REGULATORY AGREEMENT

4. HUD must approve the sale of the property and approve the new borrowers. SALE OF THE PROPERTY Failure to do so will send your loan to Enforcement

5. CHANGE IN THE PROPERTY MANAGEMENT H UD must approve any changes in the firm which manages the property. Failure to do so will send your loan to Enforcement

6. PROJECT FINANCIAL AUDITS All insured projects are required to file electronically with HUD audited financial statements. Failure to do so will send your loan to Enforcement

7. HUD only allows a borrower to remove Surplus Cash as defined by HUD, at most, twice annually. USE OF SURPLUS CASH

8. UNAPPROVED SUBORDINATE DEBT HUD does not allow any subordinate debt without prior approval. This includes notes payable or notes receivable to any affiliates or entities. Incurring additional debt without HUD consent will send your loan to Enforcement

9. INSURANCE PROCEEDS The rules require that the mortgagee/lender must be a payee on all insurance checks from casualty or losses which are paid by the property insurer.

10. CHANGES OR CONVERSIONS TO THE UNIT MIX HUD must approve changes to the projects unit configuration such as combining two 1 bedroom units to one 2 bedroom unit, as the market may dictate.

11. USE AGREEMENTS Land Use Restriction Agreements (generally projects financed with tax- exempt bonds). HUD may prohibit loan payoffs where purchasers refuse to sign Use Agreements.

12. INSPECTIONS HUD requires property inspections. Properties with scores of 60 or below may be referred to Enforcement. Properties with scores of 40 or below will Automatically be sent to Enforcement.

13. 2530 MAINTENANCE HUD is currently making changes to the 2530 process. 2530 is the procedure whereby HUD currently approves the borrower and manager. Changes to this process are a hot topic of debate between HUD and the industry. Please see a representative of good folks at Nixon Peabody who populate this room for an attempt at clarification of what is going on.

14. MISCELLANEOUS Bank Accounts: HUD requires that the project maintain its operating account in the name of the Project, not the Borrower. Residual Receipts/Limited Distribution Entities: On Limited Distribution Entities, HUD restricts the owner to a set percentage of the original equity investment. Non-profit entities must place Surplus Cash as defined by HUD in the Residual Receipts Account. Changes to HUD handbooks/rules/procedures The borrower is required to keep abreast of any and all changes to HUD rules and procedures. This is where a mortgagee such as Greystone (company plug) can be helpful as we assist our borrowers with changes which may affect their properties.

15. CONTACT MATTHEW JAMES GREYSTONE SERVICING CORP., INC. Carnegie Hall Tower 152 West 57 th Street, 60 th Floor New York, NY 10019 Tel: 212.649.9700 Direct: 212.649.9740 Fax: 212.649.9701 mjames@greyco.com www.greyco.com