Builder Partnerships with Federal Home Loan Banks

Transcription

1 1 Builder Partnerships with Federal Home Loan Banks August 3, 2016 Copyright Click to edit Notice Master title style 2 2 Copyright 2016 National Association of Home Builders. All rights reserved. No part of this webinar may be reproduced, transmitted, or used in any form Third or level by any means, electronic or mechanical, including photocopying, recording, and scanning, or by any information storage and retrieval system without the prior written permission of the National Association of Home Builders. Permission may be requested from NAHB, th Street, N.W., Washington, D.C

2 Disclaimer 3 3 This webinar is intended to provide complete and accurate information on the subject matter covered as of the time of publication; however, NAHB makes no representations or warranties regarding the accuracy and completeness of this webinar s contents. It is offered with the understanding that NAHB is not providing legal, accounting or other professional services. If you need legal, accounting or other expert assistance, you are encouraged to obtain the services of a qualified professional experienced in the subject matter involved. It is also recommended that you check on federal, state and local statutes, ordinances, and regulations. Furthermore, information in this webinar is intended to be accurate as of the time of publication and consistent with standards of good practice in the home building industry. As research and practice advance, however, standards may change. For this reason, it is recommended that participants evaluate the applicability of any recommendation in light of particular situations and changing standards. Trademarks or service marks Fourth of companies level and products are indicated within the webinar. These and all other trademarks or registered trademarks used in this work are the property of their respective owners. Please note that any sample» applications, Fifth level websites, vendors, or product provisions, as well as any references to a commercial product, service or process by trade name, trademark or service mark, or manufacturer, etc., included in these materials are for informational or illustrative purposes only, and their inclusion herein does not constitute endorsement, recommendation or favored status by NAHB. Learning Click to edit Objectives Master title style Participants in this webinar will: Realize how the Federal Home Loan Banks (FHLBanks) support the purchase, construction and renovation of affordable owneroccupied to edit and Master rental text housing stylesthrough the Affordable Housing Click Program Second level (AHP) and Community Investment Program (CIP) Recognize Third the level benefits of the AHP and the CIP for home builders and developers Explain how home builders and developers can access AHP and CIP funds through» Fifth their level community partners Discuss the application, review and selection process for funding requests 4 4 2

3 Speakers 5 Moderator: Panelists: Robert Dozier Executive Vice President and Chief Business Officer Federal Home Loan Bank of Atlanta Atlanta, GA Arthur Fleming Senior Vice President and Director of Community Investment Services, Federal Home Loan Bank of Atlanta Atlanta, GA Wade McGuinn Chief Executive Officer, McGuinn Homes Columbia, SC Glenn R. Brooks Senior Vice President and Chief Operating Officer Leon N. Weiner & Associates, Inc., Wilmington, DE Board Member, Federal Home Loan Bank of Pittsburgh, Pittsburgh, PA Our Click Agenda to edit Today Master title style 6 6 How builders and developers can work with lenders across the country to lower their costs and enhance the sales or leasing of their for-sale or rental housing development Federal Home Loan Banks (FHLBanks) FHLBanks Affordable Housing Program The Value Proposition for Builders and Developers What s Next? 3

4 Overview Click to edit of FHLBanks Master title style FHLBanks are cooperatives, originally chartered by Congress in 1932 Eleven regional Banks with $961.5 billion in total assets Offer competitively priced financing, community development grants, Second and level other banking services Regulator: Federal Housing Finance Agency (FHFA) Debt issuer Fourth for System: level Office of Finance The FHLBanks provided over $1 trillion in liquidity to financial institutions at the height of the recent financial crisis 7 7 FHLBanks Play a Key Role in Financial Services 8 FHLBank System Provide wholesale funding for approximately 7,200 financial institutions (members) Provide products and services that help member financial institutions manage their asset-liability and liquidity programs Increase and expand the availability of funds for residential mortgage and community development lending nationwide 4

5 FHLBanks Products and Services 9 Letters of Credit Provide credit enhancement on bonds for residential and economic development Mortgage Partnership Finance (MPF) Program and Mortgage Purchase Program (MPP) Empowers small to medium size FHLB members to originate more mortgages. Provides an alternative to Fannie Mae, Freddie Mac and Ginnie Mae for the sale/securitization of mortgage loans Advances Provides FHLBank members low cost financing for lending in their communities Affordable Housing Program (AHP) Real estate equity for the acquisition, development, construction or rehabilitation of affordable housing Ownership or rental Single- or multifamily What Click is to the edit Affordable Master title Housing style Program? Accessed only through FHLBank members Part of members real estate finance process You can find a member in the member directory Equity-like funding, no interest accrues, and no expectation of repayment if compliance is maintained Secured with a note and security instrument to ensure compliance Maximum 80% of» Area Fifth Median level Income (AMI) 5

6 What is the Affordable Housing Program? 11 AHP Competitive Program $500,000 to $1.5 million for rental or ownership development projects Competitive application $5 billion awarded since 1990 Each FHLBank has its own scoring criteria Accessed only via member AHP Set-aside Program Down payment; closing cost; principal reduction grants for home purchase or home rehabilitation Generally first come/first served $618 million funded since 2007 Accessed only via member Developer/Builder driven New construction Rehabilitation Multifamily Single-family Mortgage driven Single-family products Down payment assistance Closing cost assistance First-time homebuyer FHLBank System Affordable Housing Program (AHP) Scale and Impact Profile December

7 FHLBank System Affordable Housing Program (AHP) Scale and Impact Profile December Beyond Units: Economic Benefit of Federal Home Loan Bank of Atlanta s Affordable Housing Program, The Hendrickson Company in conjunction with The Shimberg Center for Housing Studies, University of Florida, 2010 Value and Benefits for Builders and Developers of For-sale Housing Bridging the gap between cost of development/sale price and a homebuyer s mortgage capacity Lowering the cost of single-family development financing Enhancing sales to fastest-growing customer segments 7

8 For-sale Examples: Lower Out of Pocket/Lower LTV 15 Home Sales Price $199,990 Without AHP: First mortgage $141,671 Homebuyers funds $1,488 Sellers contribution $44,613 Closing costs $10,392 Home Sales Price $112,000 Without AHP: First mortgage $85,250 Homebuyers funds $3,012 Sellers contribution $0 Closing costs $7,092 Member LTV without AHP grant funds (First mortgage/sales price) 67.3% Member LTV without grant funds (First mortgage/sales price) 71.6% With AHP: First mortgage $123,490 Homebuyers funds $1,488 Sellers contribution $44,613 Closing costs $10,392 AHP grant funds $18,182 With AHP: First mortgage $73,250 Homebuyers funds $3,012 Sellers contribution $0 Closing costs $7,092 AHP grant funds $12,000 Member LTV with AHP grant (First mortgage/sales price) 58.7% Member LTV with AHP grant (First mortgage/sales price) 61.5% McCaulley Court Wilmington, Delaware UNITS: 10 Townhomes PROPERTY TYPE: For-sale Single-family (up to 80% AMI) AHP FUNDING: $200,000 for down payment assistance 8

9 17 Examples McGuinn Homes 17 Value and Benefits for Builders and Developers of Multifamily Rental Housing Lower the cost of rental development financing Lower developer equity Enhance debt coverage ratio (DCR) Lower LTV 9

10 Rental Example Rental, New Construction Elderly/Affordable Housing Birmingham, AL, 56 units 19 Total Sources AHP Shareholder Other Sources Acquisition $450,000 $450,000 Construction $5,931,457 $560,000 $656,000 $4,715,457 Soft costs $947,162 $947,162 Other costs $1,353,400 $1,353,400 Total development budget $8,682,019 $560,000 $656,000 $7,466,019 Total shareholder debt First mortgage $656,000 Member Loan-to-Value (LTV)/Cost 7.6% AHP Competitive $560,000 Total member debt if AHP converted to debt $1,216,000 Member LTV/Cost if AHP converted to debt 14.0% DCR 1.41 DCR if AHP converted to debt (7.0% for 15 years) 0.68 Villas at Red Hill Red Hill, Pennsylvania UNITS: 68 PROPERTY TYPE: Senior Multifamily LIHTC rental AHP FUNDING: $375,000 for gap financing 10

11 Connecting with our Lender/Members 21 Websites: FHLBank Atlanta FHLBank Boston FHLBank Chicago FHLBank Cincinnati FHLBank Dallas FHLBank Des Moines FHLBank Indianapolis FHLBank New York FHLBank Pittsburgh FHLBank San Francisco FHLBank Topeka 22 Moderator: Panelists: Robert Dozier Executive Vice President and Chief Business Officer Federal Home Loan Bank of Atlanta Atlanta, GA Arthur Fleming Senior Vice President and Director of Community Investment Services, Federal Home Loan Bank of Atlanta Atlanta, GA Wade McGuinn Chief Executive Officer, McGuinn Homes Columbia, SC Glenn R. Brooks Senior Vice President and Chief Operating Officer Leon N. Weiner & Associates, Inc., Wilmington, DE Board Member, Federal Home Loan Bank of Pittsburgh, Pittsburgh, PA 11

12 23 Thank You! 12