1. NIBP Successes and Challenges in the Municipal Housing Market May 19, 2011 NALHFA 2011 Educational Conference Chris Spelbring, First Vice President 951 East Byrd Street, Suite 930 Richmond, Virginia 23059 Phone: 804.225.1161 chris.spelbring@morgankeegan.com

2. Morgan Keegan 2  The Urban Residential Finance Authority of the City of Atlanta (“URFA”) issued $25 million of Escrow Bonds in January of 2010.  A mortgage-backed security warehousing facility was secured to facilitate the program.  URFA intended to undertake a single conversion in late 2010 and had originated $19.4 million of loans based on the original program parameters.  Upon program extension to the end of 2011, URFA (1) submitted a ceiling rate request that significantly lowered the conversion bond and program mortgage rate from 5.00% to 4.375% (2) secured a new warehousing facility that terminates at the end of 2011 and (3) undertook actions to sell the existing mortgage production.  Selling the mortgage production in lieu of delivering the collateral as security for a bond conversion allowed URFA to open up a like amount of capacity for new loan production.  Opportunistic mortgage loan sales have provided significant economic benefits to URFA.  If URFA fully commits its $25 million allocation then its total mortgage loan production related to NIBP will total $44.4 million, effectively doubling the original goal. Successful NIBP Program Example

3. Morgan Keegan 3  If an HFA’s NIBP program has been fully utilized, the HFA will need to undertake actions to convert the NIBP bonds. Timing of the conversion will depend on a number of factors including: 1.Availability of collateral for transfer into trust estate 2.Profit generated by warehousing of mortgage backed securities 3.Ongoing issuer fees 4.Confirm that the closing date is available  If an HFA’s NIBP program has not been fully utilized, the HFA will still need to undertake actions to convert the NIBP bonds. Each HFA should consider the items listed above as well as the factors detailed below: 1.Determine optimal conversion amount based on existing and future mortgage production 2.Factor in the Short-Term Rate and three month period between the Release Date and the Conversion Date when establishing final file submission and final loan purchase dates NIBP Considerations as December 31, 2011 Approaches

4. Morgan Keegan 4 Current Market Challenges  Tax-exempt, bond funded mortgage rates are considerably higher than those available through traditional avenues.  Negative arbitrage persists as short-term investment rates continue to remain at historic lows.

5. Morgan Keegan 5  Continued dialogue with U.S. Department of Treasury. Seek funding mechanisms that will deliver results similar to NIBP.  Continued monitoring of tax-exempt markets and bond structuring opportunities in an effort to deliver a competitive mortgage product.  Non-bond related mortgage origination opportunities.  Mortgage credit certificates. 2012 and Beyond