Fannie Mae MTEB s. Marketing Considerations

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2 Fannie Mae MTEB s Fannie Mae Tax Exempt Bond Product Bonds Secured by Mortgage Backed Securities (MBS) Bond Structured to Mirror MBS Aaa or AA+ Rated Single Term Monthly Pay Pricing driven by 10 Year Treasury (some shops price off the swap rate within 2 bps of treasury) 35 BP Savings over Traditional TE Structure this varies/pick the day Marketing Considerations Public Offering of Bonds Increases Investor Base Structure attracts cross-over buyers from MBS market as well as traditional tax exempt bond, CRA investors; Financial institutions & Insurance companies Pricing Process allows multiple institutions to participate with increased participation, rate may be reduced. Pricing more closely tracks spreads to 10 Year Treasury similar to conventional MBS pricing

3 Fannie Mae Products - Bi-modal Forward M.TEBs Case Study: South Range Crossings Apartments Unique Situation PAB Preservation Initially considering closing on the bonds before 2017 year end with consideration of Tax Reform. Recognized Tax Exempt Bonds and 4% deals where safe we realized that the allocation of bonds from CHFA where 2014 Bonds that would expire at the end of CHFA would allocate 2018 bonds and allow the 2014 bonds to expire by closing on the 2014 Bonds we would preserve more bonds for additional developments in 2018.

4 Fannie Mae Products - Bi-modal Forward M.TEBs Case Study: South Range Crossings Apartments

5 Case Study: South Range Crossings Apartments Carefully thought out site plan design 204 units of high quality housing Amenities: Carpet, luxury vinyl tile flooring, 9 ceilings, in-unit washer and dryers, dishwashers, fully equipped kitchens, central AC, garbage disposal, and walk-in closets Covered parking, community commercial kitchen, clubroom, business center, fitness center and yoga room, fire pits and grill stations, pool and hot tub, 2 playgrounds for a variety of ages, mail kiosk and covered bus stop.

6 Case Study: South Range Crossings Apartments $31,000,000 Issuer: Colorado Housing Finance Authority Multi-family Housing Revenue Bonds Step 1: Short Term Bond Closing think Bridge Bond Financing/cash collateralized We needed time to put the whole deal together (building permits, final Fannie Commitment, etc..) Pricing Date: December 21, 2017 Closed: December 28, 2017 Initial Bond Rating: S&P A-1+ Term: 13 Months (January 2019) *Early redemption feature built in, anytime after Feb 1, 2018 Bond Rate: 1.80% Reinvestment Rate: 1.71% (net of cost associated with reinvestment) Negative Arbitrage: $26,779 Bond Costs: $105,000 (less issuer costs and bond counsel)

7 Case Study: South Range Crossings Apartments Step 2: Long-term Bonds - the deal is now put together Bonds are Remarketed: ASAP reduce interest rate exposure Bond Rating: Aaa Moody s or AA+ S&P Rated Term: 36 months (construction period) cash backed/negative arbitrage, plus 15 years Conversion: Fannie Commitment Converts from cash backed to MBS for 15 years following conversion Amortization: 35 Year after conversion Bond Rate: TBD% (75 80 bps over 10 year today)

8 Fannie Mae Products - Bi-modal Forward M.TEBs Additional Benefit Loan upsizing at conversion: Build into the Bond documents and our Fannie Underwriting package (for pre-approval) the ability to use their mod-rehab supplemental product. This would be in lieu of the ability to increase the size of the MBS by up to 5%. Fannie recognizes that South Range Crossings is brand new so no additional rehab would be required to use it. Fannie customizes this supplemental to new construction deals. You would not have to have additional bonds issued for this. Fannie would fund this through their balance sheet/securitization. A new appraisal would be required at that time. There would not be a 5% limitation, however, we do need to incorporate some limit (10%) into the bond documents upon remarketing.

9 South Range Crossing Proceeds Analysis Estimate Fannie M TEB Freddie TEL LTV 90% 90% DSCR Loan Amount $ 30,207,000 $ 28,000,000 Spread 2.06% 2.65% Index (10-yr T)** 2.40% 2.40% Rate - underwriting 4.46% 5.05% Term at Conversion Amortization Perm Origination Fee 0.75% 0.75% Bond Underwriter Fee 0.75% $ - Standby Commitment Fee 0.20% 0.20% Rebate (one time) -0.75% 0 Annual Negative Arb 2.00% 0.00% Years 2 2 Total Neg Arb (24 mo) % 0.00%

10 Application Fee $ 7,500 $ 7,500 Lender Review Fee - 28,000 Conversion Fee 12,500 12,500 Lender Legal 65,000 65,000 Underwriter Counsel $ 40,000 $ - Bond Counsel 65,000 65,000 Rating agency 15,000 - Total Cost $ 1,700,247 $ 444,000 Net Proceeds: $ 28,506,754 $ 27,556,000 Difference $ 950,754