NEW MEXICO MORTGAGE FINANCE AUTHORITY … Housing Inc.(YES) is a 501(c)(3) New Mexico nonprofit...

NEW MEXICO MORTGAGE FINANCE AUTHORITY

Board Meeting 344 4th St. SW, Albuquerque, NM

Wednesday, March 21, 2018 at 9:30 a.m.

AGENDA Chair Convenes Meeting Roll Call (Jay Czar) Approval of Agenda – Board Action Approval of 02/21/18 Board Meeting Minutes – Board Action Employee Introductions: Janice Shije, Housing Programs Analyst – Asset Management Department (Jacobo

Martinez), Kelly Patterson, Administrative Assistant – Community Development (Rose Baca-Quesada)

Board Action Items Action Required? Finance Committee Continued Finance Committee 1 Community Development Borrowing (Jeff Payne/Gina Hickman) YES 2 Down Payment Assistance (DPA) Housing Opportunity Fund (HOF) Appropriation (Yvonne Segovia) YES

Contracted Services/Credit Committee 3 Real Estate Owned Disposition-Loss Approval (Theresa Laredo-Garcia/Jeff Payne) YES 4 HopeWorks Village - HOME, NM Housing Trust Fund & National Housing Trust Fund Loan Requests

(Sabrina Su) YES 5 Approval of Commissioners for Western & Northern Regional Housing Authorities (Gina Bell) YES

6 Compliance Activity Report (Robyn Powell) NO

Other 7 Single Family Program Quarterly Report (René Acuña) NO 8 Investment Report and Market Update (Luke Schneider, Director, PFM Asset Management) NO

Closed Session Action Required 9 Legal Matters YES

Executive Session to be held Pursuant to Section 10-15-1(H) (7) of the Open Meetings Act – Threatened or Pending Litigation: Discuss Status of Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua Allison) (Motion and affirmative vote are required to close the meeting for this limited purpose)

Open Session Action Required 10 Legal Matters YES

Approval of Compromise with Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua Allison)

Other Board Items Information Only 11 (Staff is available for questions)

Staff Action Requiring Notice to Board

Monthly Reports No Action Required 12 (Staff is available for questions)

01/31/2018 Financial Statements Communications Department Reports

Announcements and Adjournment Discussion Only Confirmation of Upcoming Board Meetings April 18, 2018 - Wednesday – 9:30 a.m. (MFA) May 16, 2018 Wednesday – 9:30 a.m. (MFA) May 16, 2018 – Wednesday (Immediately following the Board meeting) -Board Study Session-Servicing

Expansion and Financial Impact to MFA June 13, 2018 – Wednesday 9:30 a.m. (MFA) (moved one week earlier)


Board Meeting 344 4th St. SW, Albuquerque, NM

Wednesday, March 21, 2018 at 9:30 a.m.

AGENDA Chair Convenes Meeting Roll Call (Jay Czar) Approval of Agenda – Board Action Approval of 02/21/18 Board Meeting Minutes – Board Action Employee Introductions: Janice Shije, Housing Programs Analyst – Asset Management Department (Jacobo

Martinez), Kelly Patterson, Administrative Assistant – Community Development (Rose Baca-Quesada)

Board Action Items Action Required? Finance Committee Continued Finance Committee 1 Community Development Borrowing (Jeff Payne/Gina Hickman). Staff proposes approval and authorization to

borrow up to $5,000,000 from financial institutions seeking Community Reinvestment Act credits who wish to participate in providing funding for MFA’s DPA lending program. The borrowed funds would be part of the Housing Opportunity Fund, accounted for and designated specifically for use in MFA’s down payment assistance program under the loan terms proposed. YES

2 Down Payment Assistance (DPA) Housing Opportunity Fund (HOF) Appropriation (Yvonne Segovia). The DPA Program has exhausted all available appropriations due to increased demand in the Single Family Mortgage Program. Therefore, Staff recommends $2,500,000 of new funds be appropriated to the DPA Loan Program to support anticipated demand through 9/30/18. YES

Contracted Services/Credit Committee 3 Real Estate Owned Disposition-Loss Approval (Theresa Laredo-Garcia/Jeff Payne). Staff is recommending

Board approval for losses greater than $50,000 on Hobbs Workforce, Habitat for Humanity Valencia County and Tierra De Esparanza REO properties. MFA expects to realize losses of approximately $662,437.72. Staff is requesting approval of said losses. In accordance with Generally Accepted Accounting Principles (GAAP), these REO properties have been written down a combined $714,283.05 to their fair market value. If all three REO properties are sold during FY2018, based on the net proceeds projected, MFA would recognize a gain of $51,845.33 in FY2018. YES

4 HopeWorks Village - HOME, NM Housing Trust Fund & National Housing Trust Fund Loan Requests (Sabrina Su). NMHTF, HOME & NHTF Loan Requests (Sabrina Su) - Staff recommends approval of a $1,300,000 NM Housing Trust Fund loan, a $630,000 HOME loan, and a $3,000,000 National Housing Trust Fund loan for HopeWorks Village, a 42-unit, new construction, permanent supportive housing project in Albuquerque. YES

5 Approval of Commissioners for Western & Northern Regional Housing Authorities (Gina Bell). Western and Northern Regional Housing Authorities have vacancies on its Board of Commissioners for Hidalgo and Los Alamos Counties. Both candidates, Irene Galvan and Andrew Harnden fulfill the requirements per the state statute SB 48 and have expressed interest in serving as commissioners. Staff recommends Board approval and submission of the recommendations to Governor Martinez for approval and appointments. YES

6 Compliance Activity Report (Robyn Powell). The activities described in this report are intended to provide the Board of Directors with assurance that MFA is effectively managing compliance with Federal and State consumer financial laws applicable to the products and services being provided by MFA and mitigating related risk. Compliance activities will be reported to the Board through the Contracted Services/Credit Committee no less than twice per year, and as needed to fulfill the compliance department’s responsibility to inform the Board of any critical compliance issues. There were no significant compliance concerns identified during this reporting period. NO

Other 7 Single Family Program Quarterly Report (René Acuña). Ongoing. NO

MFA Board Agenda March 21, 2018 Page 2

Page 2 of 2

8 Investment Report and Market Update (Luke Schneider, Director, PFM Asset Management). Staff from PFM Asset Management, MFA’s contracted Investment Advisor, will be presenting a review of MFA’s 2017 investment performance. NO

Closed Session Action Required 9 Legal Matters YES

Executive Session to be held Pursuant to Section 10-15-1(H) (7) of the Open Meetings Act – Threatened or Pending Litigation: Discuss Status of Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua Allison) (Motion and affirmative vote are required to close the meeting for this limited purpose)

Open Session Action Required 10 Legal Matters YES

Approval of Compromise with Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua Allison)

Other Board Items Information Only 11 (Staff is available for questions)

Staff Action Requiring Notice to Board

Monthly Reports No Action Required 12 (Staff is available for questions)

01/31/2018 Financial Statements Communications Department Reports

Announcements and Adjournment Discussion Only Confirmation of Upcoming Board Meetings April 18, 2018 - Wednesday – 9:30 a.m. (MFA) May 16, 2018 Wednesday – 9:30 a.m. (MFA) May 16, 2018 – Wednesday (Immediately following the Board meeting) -Board Study Session-Servicing

Expansion and Financial Impact to MFA June 13, 2018 – Wednesday 9:30 a.m. (MFA) (moved one week earlier)

Minutes

NEW MEXICO MORTGAGE FINANCE AUTHORITY Board Meeting Minutes

344 4th St. SW, Albuquerque, NM Wednesday, February 21, 2018 at 9:30 a.m.

Chair Burt convened the meeting on February 21, 2018 at 9:33 a.m. Secretary Czar called the roll. Members present: Chair Dennis Burt, Angel Reyes, Sally Malavé (designee for Attorney General Hector Balderas) and Treasurer Tim Eichenberg. Absent: Lieutenant Governor John Sanchez, Randy McMillan and Steven Smith. Czar informed the Board that everyone had been informed about today’s meeting in accordance with the New Mexico Open Meetings Act. Approval of Agenda - Board Action. Motion to approve the February 21, 2018 Board agenda as presented: Malavé. Second: Eichenberg. Vote: 4-0. Approval of 2/21/17 Board Meeting Minutes – Board Action. Motion to approve the 1/24/17 Board Meeting Minutes as presented: Malavé. Second: Reyes. Vote: 4-0. Finance Committee 1 12/31/17 Quarterly Financial Statements (Gina Hickman). Hickman began her presentation by informing

the board that MFA had issued the 2017 B single family bond issue in the amount of $67.3 mm ($45mm new money, and $12.3mm refunding). She then reviewed the comparative year to date metrics and variances which included the following: Production, Balance Sheet, Income Statement, Moody’s Benchmarks and Servicing. Hickman noted tab 12, FY 2018 Q1 Strategic Plan Benchmark Report which has a new format and includes status and comments. She also made note of tab 14 the Quarterly Board Report which summarizes all production in the organization for the first quarter. Hickman then reviewed the monthly and quarterly graphs and combined statement of net position. She explained the effect of GASB31 on the financials graph and the 5-10 year treasury interest rate history. Motion to approve the 12/31/17 Quarterly Financial Statements as presented: Reyes. Second: Eichenberg. Vote: 4-0.

2 12/31/17 Quarterly Investment Review (Kathy Keeler). Keeler presented the Quarterly Investment Review packet behind tab two which will be included in the official board packet. She explained that staff had begun implementing the new asset allocation plan adopted at the October 2017 Board meeting as of the first quarter 2018. She reviewed the changes per the new asset allocation strategy. Keeler reviewed the portfolio compliance report and discussed the investment asset classes, balances, investment policy targets and ranges for each investment class. It was noted that the Cash Held for Operations/Warehoused MBS and both the Intermediate Term and Long Term MFA Mortgage Backed Security portfolios are slightly out of compliance with the investment policy. She informed the Board about additional movement of funds in the second quarter of 2018 to bring the Cash Held for Operations/Warehoused MBS into compliance with the asset allocation plan. Keeler informed the board that PFM Investment Advisors and the Ad Hoc Investment Committee will be meeting after the March Board meeting and will address the Mortgage Backed Securities asset class allocation along with other agenda items. Motion to approve the 12/31/17 Quarterly Investment Review as presented: Malavé. Second: Eichenberg. Vote: 4 - 0.

3 MFA 401(k) Retirement Plan Amendment Relating to Change in Trustee (Dolores Wood). Wood began her presentation with background information as indicated in the memo located behind three which will become a part of the official board packet. She further informed the board that MFA commenced a review of 401(k) and 457(b) plan services and decided that it was in MFA’s best interest to seek competitive bids for a new trustee. At the conclusion of review, in accordance with the MFA Delegations of Authority, the Policy Committee selected and approved BOKF, NA dba Bank of Albuquerque to serve as Plan Administrator for the 401(k) and 457(b) Plans. The 401(k) Plan requires an amendment to the Plan document to name BOKF as Trustee. As a result of this Plan Amendment BOKF will also become trustee for the 457(b) Plan. The 457(b) Plan does not require a plan amendment to name BOKF as trustee nor does it require any other amendments for the change from Wells Fargo to BOKF. Staff recommends that the Board approve the amendment located

Amended MFA Regular Board Meeting Minutes February 21, 2018 Page 2

behind the memo to the 401(k) Plan to name BOKF as Trustee of the 401(k) Plan. As part of the amendment, the Plan will be modified to provide that the trust agreement in the Plan will be used, that such agreement provides that there is no indemnification and to name BOKF as the 3(21) fiduciary. Motion to approve the MFA 401(k) Retirement Plan Amendment Relating to Change in Trustee as presented: Reyes. Second: Eichenberg. Vote: 4-0.

4 External Audit Findings Status Update (Yvonne Segovia/Izzy Hernandez). Segovia provided a description of the processes in place to resolve external audit findings. Hernandez provided a status update on the findings received during the 2017 annual audit of the financial statements and federal programs as provided in the memo and reports located behind tab four. Non Action Item.

5 Lender Compensation for Single Family Programs-Policy Revision (Jeff Payne). Payne began by

explaining that staff had been considering this proposal for some time. He made reference to the background information which explains the history on lender compensation. Payne went on to explain that staff is proposing approval for participating program lenders to charge borrowers an origination fee from zero percent up to one half percent (.5%) for both the First Home and Next Home single family mortgage programs. This fee would be optional for participating lenders and the change would be effective March 1, 2018. The purpose of this change is to address lender concerns regarding the cost of originating MFA loans in relation to the lender compensation provided and proactively avoid curtailed use of MFA single family programs. Discussion ensued regarding possible effects to the profitability of the program, and the appeal of MFA Down Payment Assistance Program in the face of competition. Motion to approve the Lender Compensation for Single Family Programs-Policy Revision as presented: Reyes. Second: Malavé. Vote: 3-1 (Eichenberg).

Contracted Services/Credit Committee 6 Eastern Regional Housing Authority Request to Sell Rio Felix Apartments (Gina Bell). Eastern Regional

Housing Authority Request to Sell Rio Felix Apartments (Gina Bell). Bell began by explaining why this item was coming from the Contracted Services/Credit Committee without a recommendation. Further explaining that additional information was requested as well as a number of questions asked which staff was not able to answer at that time. She stated that the questions had been addressed and additional items requested at committee were made available in the board packet. She reviewed the sales transaction as well as what is required by Senate Bill 20. She further informed the board that Chris Herbert executive director of Eastern Regional Housing Authority (ERHA) and Cesar Morenco director of real estate development (ERHA) were in attendance and available to answer any technical questions the board might have. She explained that staff is seeking MFA Board approval of the sale of the Rio Felix Apartments located in Hagerman, NM to P&R Investments LLC in the amount of $505,000. Rio Felix Apartments is owned by the Carlsbad Housing Corporation, a wholly owned subsidiary of ERHA. She reviewed the process of the sale of the property provided in the memo located behind tab six, which will become a part of the official board packet. Malavé stated that the issue wasn’t so much with the actual transaction as much as what the committee’s role is in connection with that transaction. We have general statements of the oversight that MFA has to perform in evaluating these and it wasn’t clear at the committee level what the criteria is. That’s why we deferred and waited until today to get this information. Board Counsel Josh Allison discussed the Board’s statutory role and authority to provide oversight of certain aspects of the operations of each of the three Regional Housing Authorities. Allison explained the reasons that the Board’s approval of the disposition of this asset is required. He also explained that the responsibility, obligation, and authority to govern each of the Regional Housing Authorities are vested in the Board of Commissioners for each of those entities. The MFA Board’s role is limited to oversight and, in certain instances, approval. For example, the Board’s role in this instance is to verify that the Board of Commissioners for ERHA has undertaken a sufficient process to dispose of the asset in accordance with a fair and open process that is free from conflicts of interest. Allison further advised the Board that there are no statutory limits to the scope of the Board’s inquiries. Malavé suggested a check list of the list of processes the RHA boards are required to do. These items should always be included in the packet so that we know the RHA board has done their due diligence. Mr. Herbert explained that this is a first and a checklist would be helpful. Motion to approve the Eastern Regional Housing Authority Request to Sell Rio Felix Apartments as recommended: Eichenberg. Second: Malavé. Vote: 4-0. Member Reyes stated that the board had received the RHA reports in December stating that as he recalled the ERHA report was very good; met all


the marks. He didn’t recall seeing anything in the report of a property being contemplated for sale. He wasn’t sure if it’s not on the existing checklist for review – it would be useful to have some component that gives us an idea of any significant challenges or concerns or if something is being contemplated, which would have prepared the board for today’s transaction. He thought perhaps this should be part of the check list as well.

Other 7 2018 Series A Single Family Bond Resolution (Kathy Keeler). Keeler presented a bond resolution for the

2018 Series A bond issue. She explained staff is recommending the approval of the 2018 Series A Single Family Bond Resolution in the aggregate amount of not to exceed $75 million which is anticipated to refund up to two prior bond issues and provide funds for $50-$60 million of new Single Family mortgage loans. Keeler further explained that MFA is anticipating issuing bonds in April and closing in May. The Trustee is Zions Bank. The underwriters on this bond transaction will be RBC Capital Markets LLC as Senior Manager and Raymond James & Associates, Inc. as co-manager. Keeler reviewed Exhibit A highlighting the bond maximum parameters as follows: Maturity Date not to exceed 1/1/2052, Principal Amount not to exceed $75mm, Interest Rate not to exceed 5% and Authority Contribution not to exceed $975k. Motion to approve the 2018 Series A Single Family Bond Resolution as recommended: Malavé. Second: Eichenberg. Vote: 4-0.

8 Information Technology Update (Joseph Navarrete). Navarrete provided the Board an IT Operational

Update which included information on MFA’s vulnerability scanning processes, new software initiatives, disaster recovery enhancements, department support and training, and implementation of vendor management. . Non Action Item

9 Board Update-Real Estate Owned (REO) Portfolio (Theresa Laredo-Garcia/Yvonne Segovia). Laredo Garcia informed the board that staff is providing an update of the REO portfolio to the Board as requested at the December 2017 Board meeting. She informed the board that MFA holds a Real Estate Owned (REO) portfolio consisting of three single family residences (“SFR”) and eighteen multifamily properties (vacant land) acquired through foreclosure or deed in lieu of foreclosure. Laredo-Garcia reviewed Exhibit A - REO Status Report as of 12/31/17 provided behind tab nine, which will become a part of the official board packet, and discussed the current details regarding each property. She then turned it over to Segovia to discuss MFA’s financial impact. Segovia informed the board MFA Management conducts an annual REO loss analysis based on updated Broker’s Opinion of Value or appraisals. Generally Accepted Accounting Principles requires that the REO assets be written down to fair market value when a revised value is determined by Management. Therefore, over the years, the REO properties have been written down to their fair market value. She reviewed Exhibit A - REO Status Report A in reference to the write downs as well as the net gain/loss recognized in prior fiscal years and the potential gain/loss in the current fiscal year in the event of disposition. Non Action Item

Closed Session Action Required 10 Legal Matters – Executive Session to be held Pursuant to Section 10-15-1(H) (7) of the Open Meetings

Act – Threatened Litigation: Discuss Options for Initiating Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua Allison). Motion to go into closed session for the sole purpose of discussing threatened litigation against Commonweal Conservancy, Inc.: Malavé. Second: Eichenberg. Vote: 4-0. (Malavé, Eichenberg, Reyes, and Burt voting for; no members voting against). Secretary Czar called the Roll. Members present: Chair Dennis Burt, Angel Reyes, Sally Malavé (designee for Attorney General Hector Balderas) and Treasurer Tim Eichenberg. Absent: Lieutenant Governor John Sanchez, Randy McMillan and Steven Smith. Also present: Jay Czar, Gina Hickman, Izzy Hernandez, and legal counsel Joshua A. Allison and Eleanor C. Werenko. The Board discussed threatened litigation against Commonweal Conservancy, Inc. with its legal counsel.

Open Session Action Required 11 Legal Matters - Initiating Litigation Against Commonweal Conservancy, Inc. (Izzy Hernandez/Joshua

Allison) Motion to come into open session: Reyes. Second: Malavé. Vote: 4-0.


Chairman Burt made a statement that the only issue discussed In closed session were attorney-client privileged communications with legal counsel, Josh Allison and Ellie Werenko, regarding threatened legal action against Commonweal Conservancy, Inc. A motion was made to authorize staff and legal counsel to initiate legal proceedings, including a foreclosure action, against Commonweal Conservancy, Inc., seeking to recover from Commonweal Conservancy on its obligations to MFA. Malavé. Second: Reyes. Vote: 4-0.

Other Board Items - Information Only 12 There were no questions asked of staff

Staff Action Requiring Notice to Board FY 2018 Q1 Strategic Plan Benchmarks

Monthly Reports - No Action Required 13 There were no questions asked of staff

Communications Department Reports Quarterly Reports - No Action Required 14 There were no questions asked of staff

Quarterly Board Report Announcements and Adjournment - Confirmation of Upcoming Board Meetings. Chair Burt informed the Board that the next board of directors meeting will be on March 21, 2018 at the offices of the MFA at 9:30 a.m. There being no further business the meeting was adjourned at 12:31p.m. Approved: March 21, 2018

Chair, Dennis Burt Secretary, Jay Czar

New Mexico Mortgage Finance Authority 344 Fourth St. SW, Albuquerque, NM 87102 tel. 505.843.6880 toll free 800.444.6880 housingnm.org

MEMORANDUM

TO: MFA Board of Directors

Through: Finance Committee - March 13, 2018

Through: Policy Committee - March 1, 2018

FROM: Jeff Payne, Senior Director of Homeownership DATE: March 21, 2018 SUBJECT: Community Development Borrowing

Recommendation: MFA Staff requests authorization to borrow up to $5,000,000 as per the attached borrowing resolution, as a funding source from banks and federal savings associations that seek to meet their responsibility under the Community Reinvestment Act (CRA) based on the proposed loan terms. This type of borrowing would provide regulatory benefit to these institutions and assist funding MFA’s down payment assistance program.

Background: MFA provides down payment assistance (DPA) financing for first time homebuyers to purchase a primary residence. The goal of homeownership would otherwise be impossible to realize for many low to moderate income New Mexicans. These DPA loans are funded from MFA’s Housing Opportunity Fund (HOF) with allocations from General Fund net revenues along with repayments from DPA loans that are already outstanding. Most recent trends indicate MFA funds as many as 200 DPA loans per month. As demand for the MFA DPA loan program has grown, the pressure on the HOF has increased. Staff is seeking additional funding sources to meet the demand and provide additional liquidity. Based on the last twelve months MFA HOF DPA repayments only support approximately 36% of needs. Discussion: Banks and other regulated institutions are required by their regulator to lend in areas where they receive deposits as a way of building and revitalizing communities. The CRA requirements that align with MFA’s mission and activity are1:

• Support affordable housing for low- and moderate-income (LMI) individuals. • Target community services to LMI individuals • Revitalize and stabilize LMI geographies, designated disaster areas, or distressed or

underserved nonmetropolitan middle-income geographies.

1 Office of the Comptroller of the Currency, “CRA: Community Development Loans, Investments, and Services.”

Banks often have difficulty meeting these requirements and frequently seek to purchase mortgage loans originated by mortgage companies and other banks to meet their CRA requirements. Depending on their CRA plan, these institutions are given credit for the number of loans they own/originate and the dollar amount of loans they own/originate. When banks that need CRA credit purchase loans in the secondary market, they typically pay a premium for loans made to borrowers with certain characteristics like low/moderate income, low loan amounts, rural areas or specific neighborhoods that have these characteristics. As an example, a lender could spend $1,000,000 and purchase 10 loans, each $100,000 in size. In order to obtain loans with the characteristics they need, they may have to pay up to two additional points in premium for the CRA rights in addition to the loan price which is typically four points over par for a total premium of six points. For the institution to earn the CRA credit for 10 loans using the above example they will have to spend $60,000 and take the credit and prepayment risk on these loans. MFA currently sells mortgage backed security pools to institutions that seek these types of loans for their CRA value. MFA specializes in the type of borrower that the banks seek to serve for CRA purposes. The DPA second mortgages from MFA that assist first time homebuyer’s purchase of their own home have many of these desired characteristics. The DPA loans average about $5,500 and the same $1,000,000 invested MFA DPA loans could fund over 180 loans, thus greatly increasing the CRA value to the institution. A loan from a bank (or several participating banks) to MFA to fund DPA loans would be guaranteed by MFA based on its issuer credit rating and financial strength. A single individual DPA loan would not be good security for the lender but bundled together into a portfolio of many DPA loans, the loans would provide good security and might be a consideration for lending institutions to consider if they require collateral. Because of the benefit to the bank for lending these funds, the interest rate would be either zero or very low. The terms would be very favorable for MFA. MFA would earn the spread between the cost of funds for the CRA lending and the DPA loan mortgage rate which is currently 6%. This is structure is far more favorable for a bank, it has less risk and provides substantial CRA benefits for the institution. Proposed loan terms are as follows:

Loan Terms Comments

Loan Amount Minimum of $500,000 per Community Development

DPA loan up to a maximum of $5,000,000 in total, combined Community Development DPA loans

Interest Rate 0% interest but not to exceed 2% per annum, simple interest

Loan Term Minimum of 1 year up to 10 years

Loan Payments

Quarterly payments of interest. Principal due upon maturity

Interest payments only if applicable; MFA would have the ability to repay the outstanding principal balance of the loan in full or in part without penalty.

Collateral

Security interest in existing DPA second portfolio in the amount of 110% of Community Development loan

principal balance. MFA to replace/substitute loans in the event of collateral payoff or runoff. MFA to

guarantee loan repayment as borrower

Collateral for the loan would be offered if required by the

lender; lender would have the right to conduct an underwriting

review of the collateral. The CRA Lending program would be marketed through general outreach activities as well as participation in the Federal Reserve Bank of Kansas City Investment Connection program. Summary: Staff proposes approval and authorization to borrow up to $5,000,000 from financial institutions seeking Community Reinvestment Act credits who wish to participate in providing funding for MFA’s DPA lending program. The borrowed funds would be part of the Housing Opportunity Fund, accounted for and designated specifically for use in MFA’s down payment assistance program under the loan terms proposed.

1

Community Development Borrowing Resolution

A RESOLUTION

OF THE NEW MEXICO MORTGAGE FINANCE AUTHORITY (THE “AUTHORITY”) AUTHORIZING THE BORROWING OF UP TO $5,000,000 IN THE AGGREGATE FROM ONE OR MORE FINANCIAL INSTITUTIONS SEEKING TO MEET THEIR RESPONSIBILITIES UNDER THE COMMUNITY REINVESTMENT ACT TO ASSIST IN FUNDING THE AUTHORITY’S DOWN PAYMENT ASSISTANCE PROGRAM FOR FIRST-TIME HOMEBUYERS. WHEREAS, the Legislature of the State of New Mexico (the “State”), at its 1975 regular

session, adopted Chapter 303, Laws of New Mexico, 1975, known and cited as the Mortgage Finance Authority Act, being Sections 58-18-1 through 58-18-27, inclusive, NMSA 1978, and subsequently adopted Chapter 173, Section 1, Laws of New Mexico, 1981, being Section 2-12-5, NMSA 1978, as amended (collectively, the “Act”); and

WHEREAS, there was created by the Act, a public body politic and corporate, separate

and apart from the State, constituting a governmental instrumentality known and identified as the New Mexico Mortgage Finance Authority (the “Authority”), the Authority being created and established to serve a public purpose and to act for the public benefit by improving the health, safety, welfare, and prosperity of the State and the general public; and

WHEREAS, the purposes of the Authority are to provide decent, safe, and sanitary

residential housing to persons of low or moderate income, and the Authority has determined that it will serve and fulfill the purposes for which it was created by the establishment of a program to finance the purchase of mortgage loans made by eligible mortgage lenders for the financing of residential housing; and

WHEREAS, the Authority is authorized by the Act to purchase and contract to purchase,

mortgage loans, or securities backed by mortgage loans, originated by mortgage lenders to finance residential housing for persons of low or moderate income under rules adopted by the Authority; and

WHEREAS, the Authority funds a down payment assistance program to support first-

time homebuyers utilizing the Authority’s mortgage loan programs and allocates General Fund net revenues to the Housing Opportunity Fund for such purpose; and

WHEREAS, the United States Congress enacted the Community Reinvestment Act in

1977 (the “CRA”) (12 U.S.C. Sections 2901 et seq.) for the purpose of encouraging depository institutions to help meet the credit needs of the communities in which they operate, and banks and other financial institutions may fulfill its Community Development activities under the CRA by providing financial resources in support of affordable housing for persons of low or moderate income; and

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WHEREAS, the Authority desires to engage in Community Development borrowing with depository and financial institutions to support the demands of the Authority’s down payment assistance program for first-time homebuyers; and

WHEREAS, the Authority has determined that the supply of funds available in the private banking system in the State for residential mortgages is inadequate to meet the demands of persons of low or moderate income for residential mortgage financing and that the making of loans by the Authority will help to alleviate the inadequate supply of residential mortgage money in the State’s banking system; and

WHEREAS, the Authority has determined that it will be able to increase the funds

available for its Single Family Mortgage Program and its down payment assistance program for first-time homebuyers by borrowing funds from depository and other financial institutions that are seeking to fulfill their Community Development activities under the CRA; and

WHEREAS, the Authority has determined that by borrowing these funds from depository

and other financial institutions, it will support the Authority’s increased demand for down payment assistance for first-time homebuyers and will also provide additional liquidity for its Single Family Mortgage Program.

IT IS THEREFORE RESOLVED: The Authority is authorized to borrow up to $5,000,000 (five million dollars) in the

aggregate from depository and other financial institutions that are interested in seeking Community Reinvestment Act credits by providing funding for the Authority’s down payment assistance program for low to moderate income first-time homebuyers in connection with the Authority’s Single Family Mortgage Program (each such loan being referred to in this Resolution as a “Community Development DPA Loan”).

The primary terms for each Community Development DPA Loan are as follows:

• Minimum of $500,000 per Community Development DPA Loan up to a maximum of $5,000,000 in total, combined Community Development DPA Loans;

• Simple interest for each Community Development DPA Loan of 0% per annum, not to exceed 2% per annum;

• Initial loan term of a minimum of 1 year, up to 10 years;

• Quarterly payments of interest only; principal due upon maturity.

The Authority is authorized to pledge as collateral for each Community Development

DPA Loan the income from the Authority’s existing down payment assistance loans in an

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amount not to exceed 110% of the outstanding principal balance of the Community Development DPA Loan.

The Authority is authorized to use the proceeds of each Community Development DPA

Loan for the sole purpose of providing down payment assistance to eligible first-time homebuyers in accordance with the requirements of the Authority’s approved Single Family Mortgage Program.

The appropriate officers of the Authority, including without limitation, the Chair, Vice

Chair, Secretary, Executive Director, Deputy Director of Finance and Administration, and Controller are hereby authorized and directed to execute and deliver all notes, pledges, loan documents, and other instruments necessary or convenient to consummate the transactions contemplated by this resolution.

This resolution shall become effective immediately upon its adoption.

Aye: Abstain: Nay: Absent: PASSED AND APPROVED BY THE NEW MEXICO MORTGAGE FINANCE

AUTHORITY THIS 21st day of March, 2018.

___________________________

Chairman (SEAL) ATTEST: ______________________ Secretary


MEMORANDUM TO: Board of Directors

Through: Finance Committee – 3/13/2018

Through: Policy Committee – 3/6/2018 FROM: Yvonne Segovia, Controller DATE: March 21, 2018 SUBJECT: Down Payment Assistance (DPA) Housing Opportunity Fund Appropriation Recommendation: As specified on the attached Resolution, Staff recommends $2,500,000 of new funds be appropriated to the DPA loan program. Background: The Housing Opportunity Fund (HOF) was created in 1992 to support MFA’s legislative responsibility to provide decent, safe, and affordable housing programs to benefit all New Mexicans. The HOF programs are funded by MFA’s General Fund reserves through appropriations designated by the Board. The programs that comprise the General Fund HOF include: Primero Investment Fund Program, Partners Loan Program, First Down DPA Program, and Access Loan Program. The Board has appropriated General Fund reserves to various programs in the HOF throughout the years. Total appropriations to date are $102.6 million. Discussion: The DPA Program has exhausted all available appropriations due to increased demand in the Single Family Mortgage Program, resulting in a need for funds of $2.5mm through 9/30/18 to support anticipated demand. MFA currently has $42.8mm in DPA portfolio

Board of Directors March 21, 2018 Page 2

loans on its statement of net position. The current interest rate on these loans is 6%. This program supports MFA’s mission by providing affordable homeownership opportunities in New Mexico. This appropriation would result in $2,500,000 in new funds being appropriated to the HOF. As of 1/31/2018, MFA has $23,163,000 in General Fund reserves which have been designated for use in the Single Family and Multifamily housing programs.

Summary: The DPA Program has exhausted all available appropriations due to increased demand in the Single Family Mortgage Program. Therefore, Staff recommends $2,500,000 of new funds be appropriated to the DPA Loan Program to support anticipated demand through 9/30/18.

NEW MEXICO MORTGAGE FINANCE AUTHORITY (MFA)

RESOLUTION WHEREAS the New Mexico Mortgage Finance Authority Board of Directors (the "Board") met in a Regular meeting at the MFA, 344 Fourth St. SW, Albuquerque, New Mexico on March 21, 2018 at 9:30 a.m.; and

WHEREAS there exists a need to provide statewide down payment assistance (DPA) to borrowers that have limited financial resources; and

WHEREAS the legislated responsibility of the MFA is to help provide decent, safe

and affordable housing to all New Mexicans; and WHEREAS the designation of General Fund reserves to the Housing Opportunity

Fund for the use in the HERO First Mortgage Program has been fully disbursed; and WHEREAS the Board has designated repayments from the Housing Opportunity

Fund HERO First Mortgage loans to the DPA Program; and WHEREAS the Board has designated repayments from various DPA loans to the

DPA Program; and WHEREAS the MFA recommends an additional appropriation of $2,500,000 plus

repayments from the HERO First Mortgage loans and the various DPA loans be designated to the First Down DPA Loan Program; therefore

IT IS RESOLVED that the MFA Board agrees to appropriate an additional

$2,500,000, plus repayments of HERO and DPA loans to the First Down DPA Loan Program.

After discussion, the foregoing Resolution was duly moved by __________________, and seconded by____________________; adopted by the following vote:

Aye Nay Absent

Date Adopted: March 21, 2018


MEMORANDUM

TO: MFA Board of Directors Through: Contracted Services Committee – March 13, 2018 Through: Policy Committee – March 6, 2018

FROM: Theresa Laredo-Garcia, Director of Servicing Jeff Payne, Senior Director of Homeownership DATE: March 21, 2018 SUBJECT: Real Estate Owned Disposition (REO) – Loss Approval Recommendation: Staff is recommending Board approval of losses greater than $50k on Hobbs Workforce, Habitat for Humanity Valencia County and Tierra De Esparanza multifamily properties that are, or have been held in MFA’s REO portfolio. MFA expects to realize a combined loss of approximately $662,437.72 upon sale or disposition. Staff is requesting approval of said losses. Background: The properties listed below are or have been in MFA’s REO portfolio. The decline in property values and capitalized expenses combine to exceed the current value of the properties, resulting in projected loss exposures upon sale or disposition. Discussion: Hobbs Workforce Housing Upon approval of projected losses, MFA will enter into a listing agreement on Hobbs Workforce which consists of approximately 60 acres of undeveloped land earmarked for rental housing. MFA has not incurred capitalized expenses and the property is exempt from property taxes. Due to the market in the area at the time of acquisition, MFA management made a decision to “land bank” these tracts of land. The projected net proceeds for the listed sales price will cause a loss to MFA of approximately $310,000. Valencia Habitat for Humanity These properties have not been listed for sale and consist of seventeen (17) improved lots. Again, due to market conditions at the time of acquisition, MFA management made a decision to “land bank” these vacant lots. MFA is working with local municipal agencies to attempt to donate the lots and further MFA’s affordable housing mission. The donation of the properties will cause a loss to MFA of $274,000 which requires Board approval.

Tierra De Esparanza In January 2018, MFA sold three vacant lots which were acquired on August 26, 2011 through deed in lieu of foreclosure. The acquisition originally included five lots, one with a manufactured housing unit, funded by MFA’s Housing Trust Fund. On November 20, 2014 one of the lots was sold. On January 29, 2016 MFA sold the lot with the manufactured home and on January 9, 2018 the remaining three lots were sold. MFA realized an actual loss of $78,173.81 from the sale of all five lots which requires Board approval. MFA staff incorrectly calculated the projected loss to be below $50K and consequently did not obtain Board approval as required prior to the sale. The loss is reported on February 2018 Staff Action Report. Summary of Loss Calculations

Hobbs Workforce

Valencia County Habitat for Humanity

Tierra De Esparanza

(Disposed Jan 2018)

Unpaid Principal Balance

$612,776.74 $254,983.00 $107,460.65

Capitalized Expenses $0.00 $18,904.17 $1,518.19

Total Exposure $612,776.74 $273,887.17 $108,978.84 Projected Net Proceeds $302,400.00 $0.00 $30,805.03*

Projected Loss ($310,376.74) ($273,887.17) ($78,173.81)** *Actual Proceeds **Actual Loss

Advance approval of both Hobbs Workforce and Habitat for Humanity Valencia County projected losses will enable staff to expedite the marketing and disposition of those properties. Given the complexity of the acquisition and management of REO properties, staff is in the process of creating a proposal to revise existing REO policies regarding delegation of authority, approval and Board reporting to provide clarity and transparency to the process. Financial Impact: It is important to understand the current financial implication of the sale or disposition of these REO properties compared to the projected losses calculated above which are based on unpaid loan balances. In accordance with Generally Accepted Accounting Principles (GAAP), acquired REO are recorded at fair market value. MFA management conducts an annual REO loss analysis based on updated Broker’s Opinion of Value or appraisals. GAAP requires that the REO assets be written down to fair market value when a revised value is determined by management. Therefore, over the years, the above REO properties have been written down a combined $714,283.05 to their fair market value. If all three REO properties are sold during FY2018, based on the net proceeds projected, MFA will recognize a gain of $51,845.33 in FY2018. This gain represents a reversal of prior year write downs and is calculated by comparing sales proceeds against the current fair market value. The current request, in

contrast, considers only the actual losses based on unpaid loan balances without regard to accounting write downs in prior years. Summary: Staff is recommending Board approval for losses greater than $50,000 on Hobbs Workforce, Habitat for Humanity Valencia County and Tierra De Esparanza REO properties. MFA expects to realize losses of approximately $662,437.72. Staff is requesting approval of said losses. In accordance with Generally Accepted Accounting Principles (GAAP), these REO properties have been written down a combined $714,283.05 to their fair market value. If all three REO properties are sold during FY2018, based on the net proceeds projected, MFA would recognize a gain of $51,845.33 in FY2018.

Albuquerque7,800,260$

4% or 9%NA

NC =AR =AMI = MR =

03/01/18 $4,565,844MFA Guidelines Loan Request

$1,500,000 construct, $500,000 perm

$1,300,000 construct, $850,000 perm

3.0% up to 3%

NA NA2 yr construct, 30 yr

perm2 yr construct, 30 yr perm

Mthly during perm Mthly during permSubordinate allowed 1st lienMin 20 yrs, 60% AMI 30 yrs, max. AMI: 50%1.2 to 1.4 to 1 on all

must-pay debtwithin guidelines

50-100 points 63

03/01/18 $965,107MFA Guidelines Loan Request

$630,000 $630,000 0.0% to 3.0% 0%

NA NA2 yr construct, 40 yr

perm2 yr construct, 30 yr perm

20 to 80 years NASubordinate allowed 2nd lienMin 20 yrs, 60% AMI 20 yrs, max. AMI: 30%1.2 to 1.4 to 1 on all

must-pay debtwithin guidelines

NA NA

03/01/18 $5,400,000MFA Guidelines Loan Request

None $3,000,000 0% 0%NA NA

2 yr construct, 40 year perm

2 yr construct, 30 yr perm

variable 30 yrsSubordinate allowed 3rd lien

Min 30 yrs 30 yrs

1.2 to 1.4 to 1 on all must-pay debt

within guidelines

40-100 points 60

50%, 30%

NA

HopeWorks Village

Borrower

Target AMIs

NATIONAL HOUSING TRUST FUND (NHTF) LOAN INFORMATION

EXCEPTIONS/CONDITIONS/NOTESMaximum Loan Amount

YEAR BUILT (AR)

NC 42

Scoring Criteria

Lien PositionAffordability Requirements

DSCR

NHTF UNITS: 21

Maximum Loan AmountRates

Maximum Loan Term

Loan Amortization

Loan Fees

Funds Available as of:

Funds Available as of:

Affordability Requirements

Loan Fees

EXCEPTIONS/CONDITIONS/NOTES$850,000 perm ($450,000 paid down after 24 months) requested due to deep income targeting of requested due to deep income targeting; actual rate to be determined upon final underwriting

DSCR

Scoring Criteria

Maximum Loan Amount

Rates

Maximum Loan Term

Loan Amortization

Maximum Loan Term

Loan AmortizationLien Position

RatesLoan Fees

PROJECT INFORMATION SUMMARY

EXCEPTIONS/CONDITIONS/NOTES

NC, AR, or

NC/AR

Total # Units

forgivable loan (allowed for 30% AMI)

Project Name CitySizes

1-BED

LIHTC ALLOC

Total Development Cost

ManagementDeveloper

HOME LOAN INFORMATION

to-be-formed single-asset entity (see Award Summary)Supportive Housing Coalition of New MexicoYES Housing, Inc.

New ConstructionAcquisition/Rehab

Market Rate apartmentsArea Median Income

NA

5NUMBER OF HOME UNITS:

NUMBER OF NM HTF UNITS:NM HOUSING TRUST FUND (NMHTF) LOAN INFORMATIONFunds Available as of:

16

Lien PositionAffordability Requirements

Scoring Criteria

DSCR

forgivable loan (allowed under NHTF program)

NUMBER OF

PROJECT INFORMATION SUMMARY

% TDC Cost/GSF*6% 12.98$

53% 110.00$ 17% 34.06$ 5% 10.94$ 3% 6.10$ 0% 0.24$ 1% 1.45$ 0% -$ 3% 6.96$

11% 23.24$ 100% 205.96$ 91% 187.06$

37,872

% of Total Per Unit16.7% 30,952$ 7.3% 13,500$

38.5% 71,429$ 14.9% 27,744$ 17.9% 33,333$ 4.7% 8,762$ 0.0% -$ 0.0% -$ 0.0% -$ 0.0% -$ 0.0% -$

100.0% 185,720$

% of Total Per Unit10.9% 20,238$ 8.1% 15,000$

38.5% 71,429$ 18.6% 34,577$ 19.2% 35,714$ 4.7% 8,762$ 0.0% -$ 0.0% -$ 0.0% -$ 0.0% -$ 0.0% -$

100.0% 185,720$

TotalCONSTRUCTION SOURCES

Project:

263,587$ 880,000$

7,800,260$

HopeWorks Village

414,195$ 231,034$

9,000$ 55,000$

-$

7,084,428$

Acquisition Costs (land, building acquisition, & other acquisition costs)

Construction Hard CostsOther Construction Costs (contractor O&P, general req, GRT, landscaping, furnishings, etc)

Professional Services/Fees (architect, engineer, real estate legal, etc)

Reserves (rent-up, operating, replacement, escrows, etc)Developer Fees (inc consultant fees)

Total Development Costs (TDC)

1,300,000$ 567,000$

3,000,000$ 1,165,245$ 1,400,000$

MFA NMHTF

St. Martin's HopeWorks

MFA NHTFCity of AlbuquerqueBernalillo County

368,015$

Total Permanent Sources 7,800,260$

1,500,000$ 368,015$

5th Lien holder Bernalillo CountyDeferred Developer Fee St. Martin's HopeWorksLIHTC EquityOther sourceOther sourceOther source

Other source

Other source

Perm Lender - 1st Lien MFA NMHTF2nd Lien holder MFA HOME

3,000,000$ 1,452,245$

3rd Lien holder MFA NHTF4th Lien holder City of Albuquerque

Total Construction Sources 7,800,260$

850,000$

PERMANENT SOURCESProject:

630,000$

HopeWorks Village Total

Other sourceOther source

Construct. Lender - 1st Lien2nd Lien holder

Other Soft Costs (tax credit fees, environmental reports, appraisals, accounting, etc)

Syndication-Related Costs (organization, bridge loan, tax opinion, etc)

Project:

Construction Financing Costs (interest, insurance, inspections, fees, etc)

Permanent Financing Costs (fees, title/recording, etc)

3rd Lien holder

*Gross square footage: TDC w/o Land, Reserves & Commercial

HopeWorks Village

Deferred Developer FeeLIHTC EquityOther source

5th Lien holder

MFA HOME

4th Lien holder

TOTAL DEVELOPMENT COST INFORMATION SUMMARYTotal

491,527$ 4,165,920$ 1,289,997$

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2018 RENTAL AWARD SUMMARY

Project Name & Address

HopeWorks Village 3rd St. NW (between Summer & Mountain), Albuquerque, NM 87102 - Bernalillo County

Borrower If the project qualifies as a Community Housing Development Organization (CHDO) project, the borrower during the construction period will be a to-be-formed single-asset entity that will be solely owned by YES Housing Inc. After completion, the loans will be assumed by a to-be-formed single-asset entity that will be solely owned by St. Martin’s HopeWorks. If the project does not qualify as a CHDO project, the borrower will be a to-be-formed single-asset entity that will be solely owned by St. Martin’s HopeWorks (St. Martin’s), during construction and throughout the terms of the loans.

Management Supportive Housing Coalition of New Mexico is a 501(c)(3) New Mexico nonprofit organization founded in 1996 and headquartered in Albuquerque. Led by Executive Director Steve Ross, it currently manages 228 rental housing units, of which 126 are affordable units; of the affordable units, 102 are supportive housing units.

Developer

YES Housing Inc. (YES) is a 501(c)(3) New Mexico nonprofit organization created in 1990. It has a current full time staff of 22 including EVP/COO Joe Ortega & VP of Real Estate Development Michelle Den Bleyker, both experienced developers. YES has been designated by MFA as a Community Housing Development Organization (CHDO) for past projects. It has constructed or rehabilitated over 2,400 units of affordable rental housing in New Mexico, Arizona & Texas. Consolidated (i.e. includes affiliates) audited financial statements for FYE 12/31/16 show substantial assets of $109.1 million, unrestricted cash of $1.8 million, and net worth of $48.3 million. Operating cash flow was negative, but traditional cash flow (i.e. net earnings plus depreciation, amortization, and interest) was positive at $3.9 million. The debt-to-worth ratio was 1.26 to 1.

Owner The owner will be a single-asset entity solely owned by St. Martin’s HopeWorks. St. Martin’s is a 501(c)(3) New Mexico nonprofit organization founded in 1985 in response to increases in the number of individuals experiencing homelessness in Albuquerque. It has a current full-time staff of 93 led by Executive Director Greg Morris. St. Martin’s has become the largest multi-service provider to individuals experiencing or at risk of homelessness in New Mexico, currently assisting over 400 individuals daily, with services including a day center, employment training, behavioral health services, and housing assistance. St. Martin’s receives Rental Assistance Program and Continuum of Care funding from MFA. Consolidated audited financial statements for FYE 6/30/16 show assets of $4.6 million, unrestricted cash of $1.2 million, and net worth of $3.5 million. Operating cash flow was over $765,000, and traditional cash flow was $927,428. The debt-to-worth ratio was 0.31 to 1.

Project Type & Size

New construction of 42 one-bedroom units, composed of 5 HOME units for households earning 30% or less of area median income (AMI), 21 NHTF units for households earning the higher of 30% AMI or the federal poverty level, and 16 NMHTF units for 50% AMI households.

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Project Description

The project is new construction of a single apartment building in Albuquerque with 42 one-bedroom units of approximately 450 sq. ft. each; it will provide permanent supportive housing for homeless individuals with severe mental health and substance abuse disorders. The project expects to receive at least 21 project-based vouchers allowing residents to pay 30% of their income in rent. Residents will not pay utilities. The building will be 37,872 sq. ft., consisting of 18,900 sq. ft. for rental units, and 18,972 sq. ft. of common space. Units will be ADA (Americans with Disabilities Act) accessible and have features targeted to the needs of the population served. All units will be furnished. An elevator will accommodate residents with physical disabilities. Common space will include areas for social service provision, community rooms on each residential floor, a management office, and laundry facilities. Outdoor amenities will include a patio, two raised bed gardens, bike racks, and picnic tables. The project will meet LEED certification standards, which is a requirement of the City of Albuquerque funds. The site is adjacent to the current St. Martin’s day shelter and counseling space, which will facilitate social service provision, and it is convenient to medical services (Presbyterian Hospital and Health Care for the Homeless), retail, and public transportation. The project will implement a “Housing First” model, in which homeless households are quickly placed in permanent housing without preconditions and barriers to entry, and supportive services are provided to prevent a return to homelessness. Potential residents will be referred by the St. Martin’s HopeWorks Outreach team and other local homeless service providers such as Healthcare for the Homeless, Heading Home, The Rock at Noonday, Bernalillo County’s MATS Detox Program, and the Veteran’s Administration. Services will include case management, emergency financial assistance, screening and intake for behavioral health services, psycho-social rehabilitation, group and individual therapy, nursing/medication monitoring/management, and employment services. The need for permanent supportive housing of this type in Albuquerque is great. Based on the annual Point-in-Time Count led by the New Mexico Coalition to End Homelessness, on January 23, 2017, there were 1,070 homeless households in Albuquerque, of which 592 were in emergency shelters, 182 were in transitional housing, and 296 were unsheltered. (The Point-in-Time Count does not include persons living in motels or staying with family or friends.) Among those counted were 419 adults categorized as having a serious mental illness and 381 adults categorized as having a substance use disorder. Further data documenting the need for these units will be included in a market study/appraisal that will be required prior to closing.

Affordability Requirements

NMHTF Requirements: Sixteen (16) units for households earning at or below 50% AMI. The affordability period is 30 years: 20 years as required by Affordable Housing Act rules and 10 years for MFA’s extended affordability period (i.e. in concurrence with the loan term). The affordability period starts on the date on which the Certificate of Occupancy is issued. HOME Requirements: Five (5) one-bedroom units for households earning at or below 30% AMI and restricted to Low HOME rents. The affordability period is 30 years: 20 years as required by HOME rules and 10 years for MFA’s extended affordability period. The affordability period starts on the date of acceptance by HUD of a final HOME project completion report and ends 30 years later. NHTF Requirements: Twenty-one (21) units for households earning 30% AMI or the federal poverty level, whichever is higher. The affordability period is 30 years, starting on the date of acceptance by HUD of a final NHTF project completion report.

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Repayment and Disbursement

NMHTF Loan: Payments: Interest monthly during the construction period not to exceed 24 months; 360 equal P & I payments during the permanent loan period. Outstanding principal and interest due at the earlier of maturity, refinance or sale of the project. Disbursement: Multiple disbursements upon evidence of costs incurred, not more frequently than monthly. HOME Loan: Payments: No payments & no interest for the term of the loan. If all of the conditions contained in the loan documents are met the loan will be forgiven in full after 30years. Disbursement: Allow three draws, one at construction closing, one during the construction period, and final disbursement upon submission of a HUD project completion report. NHTF Loan: Payments: No payments & no interest for the term of the loan. If all of the conditions contained in the loan documents are met the loan will be forgiven in full after 30 years. Disbursement: Allow three draws, one at construction closing, one during the construction period, and final disbursement upon submission of a HUD project completion report.

Special Conditions 1. Awards/commitment letters for City of Albuquerque and Bernalillo County capital funds must be issued by July 31, 2018;

2. Awards/commitment letters for rental assistance for at least 10 units must be issued by July 31, 2018;

3. Awards/commitment letters for all sources of development funds, operating assistance, and/or rental subsidy necessary to demonstrate financial feasibility must be issued by November 30, 2018;

4. All loans are subject to MFA’s final underwriting for project feasibility if needed. Loan amounts may be reduced if the financing gap decreases, and/or terms (i.e. interest rate & amortization) may be revised in line with projected cash flow at closing;

5. Any changes or additions to the following development team members listed in the loan application must be approved by MFA: developer, contractor, management company, consultant or architect;

6. Financing commitments must be acceptable to MFA prior to funding on all funding sources, 7. Plans/construction monitoring/draws must be approved by a third party acceptable to MFA (i.e.

hired by MFA or another funder) and shared with MFA. Cost to be paid by applicant; 8. All units may only be used for permanent housing; 9. Other conditions as may be determined by staff; and 10. Subject to availability of funds. Additional Conditions: NM HTF Loan

1. Loan to be in first lien position; 2. Loan-to-value ratio as determined by an appraisal must be no more than 90%; and 3. YES Housing, Inc. must provide a guarantee during the construction period.

Additional Conditions: HOME Loan 1. Loan to be in second lien position; 2. If other than minimal funds are used during construction (i.e. $50,000 or less), YES

Housing, Inc. must provide a guarantee; 3. HUD Environmental Review approval must occur prior to acquisition and construction start,

and any Environmental Review approval conditions must be met; and 4. If HOME CHDO (Community Housing Development Organization) funds are to be used,

YES Housing, Inc. must be approved by MFA as a CHDO, the project must be approved by MFA as a CHDO project per HUD definition, and any transfers of ownership must be in accordance with HUD’s CHDO rules.

Additional Conditions: NHTF Loan

1. Loan to be in third lien position;

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2. YES Housing, Inc. must provide a guarantee during the construction period; and 3. HUD Environmental Provisions requirements must be met prior to acquisition and

construction start. MFA Commitments to Other Projects

YES Housing, Inc.: 1999 LIHTC (9%) - Otero Village - $243,715 1999 HOME CHDO - Otero Village - $400,000 2000 Risk Share - Otero Village – $583,147 2000 LIHTC (4%) - Wildewood Apartments - $142,560 2001 LIHTC (4%) - Brentwood Gardens - $229,137 2001 LIHTC (4%) - Montana Meadows - $170,606 2002 LIHTC (4%) - Apple Ridge - $205,484 2003 LIHTC (4%) - Vista Grande - $148,910 2007 HOME CHDO - Bella Vista - $366,000 2007 LIHTC (9%) - Bella Vista - $904,052 2007 HOME CHDO - Roswell Summit - $490,000 2007 LIHTC (9%) - Roswell Summit - $328,473 2008 Risk Share - Roswell Summit - $762,790 2009 NSP - La Hacienda - $2,318,214 2010 NMHTF - Mountain View - $447,489 2011 HOME CHDO - Mountain View - $390,027 2011 LIHTC - Mountain View - $556,678 2012 LIHTC - Mesa del Norte - $515,026 2012 NMHTF - Mesa del Norte - $455,331 2012 HOME CHDO - Mesa del Norte - $476,563 2013 LIHTC (9%) – Sunset Hills - $966,241 2013 HOME CHDO - Sunset Hills - $372,463 2013 NMHTF - Sunset Hills - $594,047 2014 LIHTC (9%) – The Imperial Building - $1,150,000 2014 NMHTF – The Imperial Building - $493,949 2014 LIHTC (9%) – New Leaf - $959,500 2014 HOME CHDO – New Leaf - $436,875 2014 NMHTF – New Leaf - $487,791 2016 Risk Share – New Leaf - $1,430,375 2017 LIHTC (9%) – Solar Villa - $1,150,000 2017 HOME CHDO – Solar Villa - $600,000 2017 NMHTF – Solar Villa - $1,000,000 (Notes: Risk Share loans carry 10% MFA risk - loan balances as of 2/21/18) St. Martin’s HopeWorks: None

MFA Exposure YES Housing, Inc.: $12,105,061 (excludes LIHTC & loans pending approval) St. Martin’s HopeWorks: None

Prepared by Sabrina Su, Program Manager Date March 6, 2018 Reviewed by Shawn Colbert, Director of Housing Development


MEMORANDUM


Through: Contract Services – March 13, 2018 Through: Policy Committee – February 27, 2018

FROM: Gina Bell DATE: March 21, 2018 SUBJECT: Regional Housing Authority – Commissioner Recommendations for Western and Northern Regional Housing Authorities Recommendation: Approve the recommendations of Irene Galvan as a commissioner for Western Regional Housing Authority and Andrew Harnden as commissioner for Northern Regional Housing Authority.

Background: As required with the Regional Housing Act, Section 5. 11-3 A-6, Powers of Regional Housing Authority in Board of Commissioners, appointments of Board of Regional Housing Authorities and Terms, all recommendations for appointments as Commissioners are required to be reviewed and approved by MFA’s Board of Directors prior to being recommended to the Governor.

Discussion:

The Executive Directors of both Western and Northern Regional Housing Authorities contacted stakeholders for the purpose of filling commissioner vacancies. Letters of interest and resumes were received from Irene Galvan to fulfill the vacancy in Hidalgo County and Andrew Harnden to replace the position of current board member, Paul Andrus, who is resigning from representing Los Alamos County. The threshold requirements for commissioners of regional housing authorities are that commissioners have expertise and experience in housing construction, real estate, architecture, law, banking, housing finance, business, property management, accounting, residential development, public housing programs, community development, social services or health care. Ms. Galvan has been a member on the boards and committees of Southwest Council of Governments, Lordsburg Housing and Southwestern Regional Housing and Community Development Corporation. In addition, she served as the director of operations and service for the City of Lordsburg. These experiences have provided her with a strong housing background.

Mr. Harden’s experience includes working as a housing and special projects manager for Los Alamos County, planning housing projects in the Jicarilla Apache Nation, working for the City of Santa Fe as a development review planner and he worked as a senior planner for Southwest Planning and Marketing.

Summary: Western and Northern Regional Housing Authorities have vacancies on its Board of Commissioners for Hidalgo and Los Alamos Counties. Both candidates, Irene Galvan and Andrew Harnden fulfill the requirements per the state statute SB 48 and have expressed interest in serving as commissioners. Staff recommends Board approval and submission of the recommendations to Governor Martinez for approval and appointments.

ANDREW CHARLES HARNDEN

Housing & Special Projects Manager

Los Alamos County, 1000 Central Avenue

Los Alamos, New Mexico, 87544

[email protected] Tel: 505-709-7511

Home: 24 Alondra Road, Santa Fe, New Mexico, 87508

KEY QUALIFICATIONS:

High level experience developing and administering affordable housing and community planning

programs for successful long-term impacts

Knowledge of rental housing development financing including Low Income Housing Tax Credits

(LIHTC) framework and New Mexico Mortgage Finance Authority (MFA) Qualified Action Plan

Strong ability in interpreting and applying local, New Mexico and Federal legislation and policy

for housing and land development, and performing compliance reporting

Proven effectiveness establishing inter-agency partnerships to leverage knowledge and resources

for new housing projects

Adept at managing staff, consultants and budgets and leading stakeholder consultation, project

risk assessment, and presenting to official bodies

EDUCATION:

M.A. Degree in Geography, 1997, University of Toronto, Ontario, Canada.

Innovative strategies for community-based enterprise and affordable and workforce housing

B.A. Honors Degree in Geography, 1992, Queen’s University, Kingston, Ontario, Canada.

Focus on the practical application of urban and regional development theory

PROFESSIONAL EXPERIENCE:

07/16 – present Housing & Special Projects Manager, Los Alamos County, New Mexico, USA

Developed new County Homebuyer Assistance Program with senior staff and in collaboration

with non-profit Los Alamos Housing Partnership, Inc (LAHP) to be administered by LAHP.

Performed program marketing and outreach, prepared vendor contract, and established program

Ordinance and Policies & Procedures

Managed Home Renewal Program services contract for LAHP and program budget for

completion of 11 projects in Year 1 with positive homeowner testimonials. Led Year 2 outreach

efforts and helped coordinate Loan Review Committee meetings for approval of 10 more

qualifying households. Updated Policies & Procedures as needed

Coordinated development application process to County and assisted in drafting land

development agreement in support of application for Low Income Housing Tax Credit (LIHTC)

to MFA for 70-unit multi-family Affordable Housing project

Created county lands infill sites list with individual maps and summary of development potential

for possible sale or donation to affordable housing developers

Produced Housing Demand White Paper for County Council towards identifying housing

priorities and establishing new programs to address housing shortage

Assisted with drafting new County ‘Umbrella’ Housing Programs Ordinance to authorize new

programs and initiatives needed to address housing needs

mailto:[email protected]

2

08/13 – 07/16 Senior Consultant, Enterprise Development Institute, Cambodia

Habitat for Humanity International Cambodia: Affordable Housing Value Chain & Market

Mapping Study. Research and analysis per Global Housing Indicators Framework on land rights,

finance, infrastructure and planning to identify market constraints. Practical recommendations for

policy, partnerships and actions to remove housing market bottlenecks to enable business

environment

Cambodian Center for Human Rights: Organizational Assessment towards improving

effectiveness for Core Operations and 8 rights advocacy projects including Human Rights

Defenders, Land Reform, Business Rights, and Freedom of Expression. Identified best practices

for operational effectiveness and 2 promoting rights dialogue, empowering beneficiaries, and

human rights policy changes

Indigenous Communities Support Organization (ICSO): Evaluation of Rattanakiri, Mondulkiri

and Phnom Penh 2013-15 Programs for Indigenous Persons (IPs) communal land title, economic

empowerment, and IP Organizations development, empowerment and advocacy. Development of

Strategic Plan 2016-2020 in consultation with ICSO staff and key management team

Community Legal Aid Centre: Project Cycle Management Training. Designed and co-delivered

3-day training for 25 staff on: concepts and approaches to project design and logframe; designing

projects with participatory planning, implementation and M&E; and putting project management

tools into practice

08/10 – 06/13 Principal Environmental Officer, Queensland Department of Environment &

Heritage Protection, Brisbane, Queensland, Australia Led North Region development assessment coordination team for complex applications with

multiple state interests per planning and environmental legislation and statutory timeframes.

Flagged key matters early for work units

with clear work flows and user-friendly guidelines and assessment templates

Coordinated state-wide Regulatory Practice Help Desk providing concise and helpful advice

responses within timeframes to regional staff for complex industrial queries

Team member recipient of Greentape award for outstanding leadership in implementing

regulatory reform

Led teams of staff and industry to produce useful guidelines for waste classification and industrial

composting for performance-based outcomes and red tape reduction

Assisted with modernizing web pages for easier public access to helpful information

Trained and mentored staff ensuring results achieved with departmental requirements

Summarized and articulated key departmental interests for input into local planning schemes,

environmental impact assessments and policy development for strategic cropping land and

aquaculture

Prepared concise and timely Ministerial correspondence as required

12/09 – 07/10 Senior Planner, Tablelands Regional Council, Atherton, Queensland, Australia

Efficiently co-ordinated and managed a range of development applications per statutory

requirements under Council’s planning scheme and state legislation

Supervised and mentored junior planning officers and administrative staff

Led site inspections and applicant meetings in a timely manner to resolve key issues including for

difficult terrain, traffic, flood potential and high agricultural land values

08/08 – 06/09 Senior Planner, Aurecon Consulting, Townsville, Queensland, Australia

Produced successful project proposals and assembled expert project teams for new projects

Project managed development application for large diesel storage facility at Mackay Port meeting

project milestones and delivering final outputs. Review and analysis of development guidelines

3

and legislative requirements for infrastructure, chemical storage, traffic and environmental

management plan. Managed project budget and maintained reporting system

Project manager for review of Townsville and Thuringowa City Planning Schemes and Policies.

Recommendations for “best bang for the buck” changes for Water Quality Improvement Plan

goals

03/08 – 07/08 Senior Planner, Southwest Planning & Marketing, Santa Fe, New Mexico, USA

Project manager leading stakeholders to create Corridor Management Plan for ‘Trail of the

Ancients’ Scenic Byway for NW New Mexico Council of Governments. Facilitation to identify

archaeological, historic, cultural, scenic, and recreational assets and establish vision, goals and

objectives for Plan. Provided advice for network traffic review including volumes and activity;

“hot spots”; roadway design and safety standards. Developed plan for signage, interpretation,

marketing, tourism, and implementation

Affordable housing land use analysis for Silver City, New Mexico. Evaluated and summarized

potential of land sites for medium to large affordable housing projects

Affordable housing background report for City of Santa Fe, New Mexico

09/06 – 01/08 Advisor, Ministry of the Environment, Tonle Sap Environmental Management

Project (TSEMP), VSO Partnership, Cambodia

Assisted with selection of new Biodiversity Conservation Areas on Tonle Sap Lake in

communities illustrating high natural values and political will. Helped lead biodiversity and

livelihoods surveys and workshops, establish management committees, and deliver training for

new livelihoods activities

Worked with United Nations Development Program (UNDP) and Asian Development Bank

(ADB) staff to meet milestones implementing management plans for Core Protected Areas.

Developed new linkages between Department of Fisheries, Ministry of the Environment, NGOs,

CBOs, and donors for better project coordination

Designed and applied important awareness raising and environmental education materials with

staff

Prepared illustrative articles for Tonle Sap Biosphere Reserve Bulletin: highlighted and

articulated environmental issues related to the Tonle Sap Lake

Provided support in timely preparation of reports and environmental education activities

04/03 – 09/06 Supervising Planner, City of Santa Fe, New Mexico, USA

Development review planner: successful case management, analysis, and staff reports for

complex applications including annexations, master plan amendments, re-zonings, subdivisions

and infill

Undertook technical review and analysis including field work for environmental compliance,

water and sanitation, zoning, terrain management, and traffic analysis

Presented planning reports to Council, committees as well as neighbourhood groups

Researched and updated Zoning Code and other legislation as appropriate

Operated Traffic Calming Program. Prioritized traffic calming applications and administered

planning and approval process. Led public education meetings

Assisted in managing Capital Improvement Program (CIP) budgets; oversaw traffic calming

engineering design; scheduled and monitored construction; all in coordination with other city

departments and agency stakeholders. Oversaw the city’s traffic count program and speed trailer

program

4

12/01 - 04/03 Planner, Jicarilla Apache Nation, Dulce, New Mexico, USA

Project Manager for Southridge residential subdivision involving the first Jicarilla homes with

private mortgages. Managed project budget, inspections, authorized change orders and payments

to contractor. Closed out Federal Housing grants

Helped initiate and provided support and coordination for development initiatives including

housing, buildings, transportation and water and sanitation projects

Liaised with agencies for development agreements and grant funding applications

Performed useful demographic and labour force studies for official Tribal use

10/00 - 11/01 Site Acquisition Specialist, SBA Towers Inc., Denver, Colorado, USA

Acquired and inspected sites for the construction of communication towers

Directed services of architects and environmental and engineering consultants

Presented tower proposals at municipal and community meetings

06/97 - 10/00 Junior Appraiser, Integris Real Estate Valuers & Counsellors, Toronto, Ontario,

Canada Appraisal report writing. Supervised and trained two researchers in various tasks

Developed comprehensive knowledge of development approval process

LANGUAGES: Fluent English, working French, basic ability in Spanish and several other languages

GEOGRAPHIC EXPERIENCE: US, Canada, Australia, East Asia, and Eastern Europe

PROFESSIONAL AFFILIATIONS: Member, American Planning Association

HONORS/AWARDS: Queensland Department of Environment Team member recipient of Greentape

award for outstanding leadership in implementing regulatory reform

SELECTED PUBLICATIONS:

‘Cambodia Global Housing Policy Indicator Study and Market Mapping’ (2014). For Habitat for

Humanity Cambodia. Andrew Harnden and Vann Piseth, EDI.

Highway Corridor Management Plan: Trail of the Ancients’ (2008). For US Federal Highway

Administration. Andrew Harnden, SWPM Consulting.

‘Towards Accountability, Efficiency and Reform in Ontario Co-housing Sector’ (1997). MA

Major Research Paper. Andrew Harnden, University of Toronto.


MEMORANDUM


Through: Contracted Services – March 13, 2018 Through: Policy Committee – March 6, 2018

FROM: Robyn Powell, Compliance Officer DATE: March 21, 2018 SUBJECT: Compliance Activities Report for the period August 2017 through January 2018 Recommendation: The compliance officer is responsible for communicating with the Board of Directors regarding compliance matters. The compliance activities report is intended to provide information to the Board regarding compliance management activities and the results of related oversight, audits, training, monitoring and corrective action. During this reporting period, no significant compliance concerns were identified. Background: The compliance officer is responsible for maintaining a comprehensive compliance program to address legal, regulatory and internal requirements for MFA’s single family mortgage lending and servicing functions, ensure MFA is meeting regulatory compliance requirements related to mortgage operations, and maintain oversight of MFA’s contracted subservicer performance. Discussion: The following is a summary of compliance activities related to vendor management, subservicing oversight, loan quality control, and tracking of regulatory compliance and consumer complaints from August 2017 through January 2018. Vendor Management Vendor management and oversight is an ongoing function within the compliance management system and is conducted according to the underlying vendor management policy. Staff identifies vendors who provide services to MFA which are subject to regulation and oversight by the CFPB, or any entity contracted to provide services that would cause MFA to face risk if the vendor or service provider fails to meet contractual obligations, regulatory requirements, or engages in activities that could adversely impact MFA consumers.

Vendors are evaluated for inherent risk, compliance systems and controls, and business performance. This evaluation is completed by the compliance officer, in cooperation with appropriate department directors. Summary of Vendor Management Risk Assessment Completed during FY2017Q4

The most recent vendor review did not identify any vendors with critical weaknesses which present a significant risk of violating the law and causing consumer harm.

Ongoing Vendor Management Risk Mitigation Activities:

• Mitas: During ongoing vendor management monitoring, Mitas continued to be assessed based on their assigned risk rating, MFA’s operational reliance and annual investment level. Staff is currently mitigating risk exposure by restricting Mitas staff system access, which allows for improved monitoring and supervision of the change management process. System access is requested and provided for specific jobs, then re-restricted when work is complete. Staff is also evaluating and defining internal controls that support the change management and testing processes.

• Advanced Network Management: Advanced Network Management (ANM) is being monitored according to the vendor management policy. ANM does not obtain a Service Organization Control (SOC) report. SOC Reports are used to assess and address the risks associated with an outsourced vendor specifically related to financial and technology controls. Staff did however, identify alternative risk mitigation controls currently in place at ANM, which include the vendor’s annual risk assessments to industry standard, quarterly security awareness training, and monthly vulnerability scans. Advanced Network Management will be monitored according to the vendor management policy.

Vendor Name & Service Category Review Period FY17Q4

Next Review Date

Advanced Network Management Hardware and software support provider

FY2019

VMWare Software support provider 4th party vendor

FY2020

Datto Software support provider 4th party vendor

FY2020

PDS/Clickscan Document management software provider 4th party vendor

FY2020

HDS Software provider, Section 8 Housing vouchers

FY2020

CSG Advisors Municipal advisor

FY2020

Subservicing Oversight Idaho Housing & Finance Association (IHFA) is MFA’s contracted subservicer, and MFA is responsible for oversight of delegated functions. This oversight responsibility is a result of the Servicing Expansion project and MFA’s ownership of master servicing rights, and is required by secondary market investors to confirm loan servicing is conducted in compliance with regulatory requirements. Staff receives monthly reports from IHFA related to servicing quality control which are reviewed and analyzed for any negative trends or issues.

Category Results - November, 2016, - April 2017

Results – May, 2017- January, 2018

Average Customer Service Rating1

80.28% (IHFA goal is 85%) Average 83.9% % (IHFA goal is 85%)

Collections and Foreclosure Review

Findings addressed by management

Findings addressed by management. MFA is receiving foreclosure reports and tracking collections issues. IHFA is providing information regarding the remediation process for ongoing collections findings.

Delinquency Rates

Average 2.37% Average 4.09%

Count of Subserviced Loan Portfolio

1835 Loans / $258,771,420.00 UPB as of April 30, 2017

3838 Loans / $541,133,456.92 UPB as of January 31, 2018

Staff conducted an annual subservicing oversight review of IHFA which focused on regulatory compliance, financial condition, operational oversight and loan servicing procedures. IHFA provided satisfactory assurance of their ability to meet regulatory requirements and maintain financial and operational stability. IHFA provides consistent reporting which allows for tracking and trend analysis. Potential risk areas identified by staff related to MFA’s subserviced portfolio are as follows:

• regulatory violations by IHFA • management of delinquent loans and foreclosures • repurchased loans and delayed claims • escrow administration (principal and interest (P&I) advances) • acquired properties (REO).

Staff is currently developing tracking and reporting systems to track performance and trends related to the identified risks on the operational side. Staff will continue to monitor service level performance

1 Customer service reps keep a log of every call by loan number, logs are collected weekly, a survey is mailed to selected customers based on a random sampling from each log.

to ensure IHFA staffing levels support MFA needs and that controls over data integrity are in place. As the subservicing portfolio continues to grow, the expectation is that oversight activities will continue to increase and mature. One area staff has been focusing on is in relation to increasing first mortgage delinquency trends through discussions with IHFA and their loan quality control staff. The below graph illustrates how the subserviced loan portfolio is trending in comparison to state and national delinquency rates. The subserviced portfolio consists of 88% FHA loans.

Loan Quality Control Compliance activities for this reporting period include development of the loan quality review process and MFA’s quality control plan. MFA relies on IHFA to conduct loan quality control reviews, however, MFA has a regulatory responsibility to oversee the quality control process and define expectations with our quality control vendor, IHFA. This responsibility also comes as a direct result of the Servicing Expansion project and MFA’s role as a master servicer, and it is necessary for MFA to have systems in place for loan quality control review in order to complete the next phase of the Servicing Expansion. Loan quality control reports and portfolio management reports received from IHFA alert staff to loan level issues and also provide insight regarding trends and performance of specific lenders and loan officers. MFA staff takes a proactive approach in communicating with our partner lenders in order to mitigate the risk of material findings or repurchase. Compliance and homeownership management work together to complete independent, targeted loan review to resolve loan level defects. We are reviewing software options to mitigate reliance on staff and anticipate that quality control oversight capabilities will be enhanced through software solutions. Quality control software will be evaluated for cost benefit, regulatory and risk mitigation potential and in contrast with outsourcing quality control functions. MFA is ultimately responsible for delivering quality loans to secondary market

investors. Staff is concentrating on the early payment defaults, as these loans pose a high risk to the subserviced portfolio. There are no significant, unresolved loan quality concerns to report. Regulatory Compliance Tracking regulatory information related to federal consumer financial law, and implementation of new processes resulting from changing requirements is completed by the compliance officer and mortgage operations staff and management. There were not significant changes in the regulatory environment in this reporting period that required staff action. Training The Consumer Financial Protection Bureau requires that supervised entities have a training program in place. MFA is currently providing compliance related training to mortgage operations staff on a quarterly basis. Compliance is working with management to provide access to a comprehensive online mortgage industry training tool which will be to all available staff. This training tool covers topics related to mortgage underwriting and origination, quality control and servicing. In this reporting period, staff completed training:

• A Brief History of Mortgage Markers and Mortgage Cycle presented by Alan Fowler of Fowler Financial Education and Consulting, (related to servicing expansion) (12.17.17)

• Data Breach Notification Procedures (10.18.17) • Mortgage Fraud and Red Flags (9.13.17)

Consumer complaints Tracking, investigating and responding to consumer complaints is a function of the Compliance Management System. No consumer complaints were received in the current reporting cycle. Summary: The activities described in this report are intended to provide the Board of Directors with assurance that MFA is effectively managing compliance with Federal and State consumer financial laws applicable to the products and services being provided by MFA and mitigating related risk. Compliance activities will be reported to the Board through the Contracted Services/Credit Committee no less than twice per year, and as needed to fulfill the compliance department’s responsibility to inform the Board of any critical compliance issues. There were no significant compliance concerns identified during this reporting period.

MEMORANDUM TO: MFA Board of Directors FROM: Rene Acuña, Director of Homeownership DATE: March, 2018 SUBJECT: Quarterly Single Family Production Report from October 1, 2017

through December 31, 2017.

• Interest Rate History:

2

• Reservations by Program-(10/01/2017 through 12/31/2017)

• Average Historical Weekly Reservations and Cancellations from October 1, 2017 Through December 31, 2017

Program Reservations (Total)

Avg. Weekly Reservations

Avg. Weekly Cancellations

(Total)

Cancellations (Total)

Percent Cancellations

FIRST HOME CONV $8,124,963 $624,997 $49,543 $594,520 7.32%

FIRST HOME GOV'T $65,577,238 $5,044,403 $632,894 $7,594,724 11.58%

NEXT HOME CONV $7,366,204 $566,631 $91,180 $1,094,160 14.85%

NEXT HOME GOV'T $19,284,633 $1,483,433 $140,710 $1,688,524 8.76%

TOTAL (All Programs) $100,353,038 $7,719,464 $914,327 $10,971,928 10.93%

3

• Comparison of Down Payment Assistance (DPA) Sources -(10/01/2076 through 12/31/2017) purchased loans.

• Comparison of Loan Types-(10/01/2017 through 12/31/2017)

4

• Financing Execution:

• Borrower Demographics:

Qtr 1 (FY)

Prior Fiscal Year (10/01/16 -

9/30/17) Average Sales Price $151,198 $146,734 Average Loan Amount $148,007 $143,618 Average Down Payment Assistance Amount $5,915 $5,736 Average Household Income $49,274 $49,906

Average Family Size 2.5 person household

2.5 person household

Ethnicity 40.5 percent

Minority 37.5 percent

Minority Average Borrower Age 37 years old 36 years old Average Number of Dependents 1 dependent 1 dependent

Borrower Gender 44.25% female /

55.75% male 44.08% female /

55.92% male Average FICO score 682 684

5

• MFA Program Utilization: Program utilization is calculated by taking the total number FHA purchase money loans originated within the state and dividing it by the number of FHA loans originated by MFA.

QTR 1 (CBMI data) FYTD

2016 HMDA Data (LAR)

19.50% 19.50% 23.76%

19.5 percent of the purchase money FHA loans within the state were originated though MFA’s program for the period of October 1, 2017 through December 31, 2017.

New Mexico Mortgage Finance Authority

Client Management Team PFM Asset Management LLC

1620 E Ray Rd.Chandler, AZ 85225

1735 Market Street

43rd Floor

Philadelphia, PA 19103

215-567-6100

2017 Investment Performance Review

Luke Schneider, CFA, DirectorPaulina Woo, DirectorEllen Clark, Senior Managing Consultant Joseph Federico, Senior Analyst

Markets and Economy

QUARTERLY MARKET SUMMARYFor the Quarter Ended December 31, 2017

Multi-Asset Class Management

QTD YTD 1 Year 2 Years 3 Years 5 Years 7 Years 10 YearsDOMESTIC EQUITY

S&P 500 6.64% 21.83% 21.83% 16.79% 11.41% 15.79% 13.76% 8.50%Russell 3000 Index 6.34% 21.13% 21.13% 16.86% 11.12% 15.58% 13.50% 8.60%Russell 1000 Value Index 5.33% 13.66% 13.66% 15.49% 8.65% 14.04% 12.46% 7.10%Russell 1000 Growth Index 7.86% 30.21% 30.21% 18.08% 13.79% 17.33% 14.81% 10.00%Russell Midcap Index 6.07% 18.52% 18.52% 16.13% 9.58% 14.96% 12.76% 9.11%Russell 2500 Index 5.24% 16.81% 16.81% 17.20% 10.07% 14.33% 12.25% 9.22%Russell 2000 Index 3.34% 14.65% 14.65% 17.93% 9.96% 14.12% 11.62% 8.71%Russell 2000 Value Index 2.05% 7.84% 7.84% 19.19% 9.55% 13.01% 10.84% 8.17%Russell 2000 Growth Index 4.59% 22.17% 22.17% 16.62% 10.28% 15.21% 12.34% 9.19%

INTERNATIONAL EQUITYMSCI EAFE (net) 4.23% 25.03% 25.03% 12.38% 7.80% 7.90% 6.04% 1.94%MSCI AC World Index (net) 5.73% 23.97% 23.97% 15.64% 9.30% 10.80% 8.73% 4.65%MSCI AC World ex USA (Net) 5.00% 27.19% 27.19% 15.29% 7.83% 6.80% 4.93% 1.84%MSCI AC World ex USA Small Cap (Net) 6.56% 31.65% 31.65% 16.96% 11.96% 10.03% 6.54% 4.69%MSCI EM (net) 7.44% 37.28% 37.28% 23.55% 9.10% 4.35% 2.56% 1.68%

ALTERNATIVESFTSE NAREIT Equity REIT Index 1.51% 5.23% 5.23% 6.86% 5.62% 9.46% 10.48% 7.43%FTSE EPRA/NAREIT Developed Index 3.83% 11.42% 11.42% 8.16% 5.38% 7.20% 8.02% 4.09%Bloomberg Commodity Index Total Return 4.71% 1.70% 1.70% 6.62% -5.04% -8.45% -8.15% -6.83%

FIXED INCOMEBarclays Aggregate 0.39% 3.54% 3.54% 3.09% 2.24% 2.10% 3.20% 4.01%Barclays U.S. Government/Credit 0.49% 4.00% 4.00% 3.52% 2.38% 2.13% 3.43% 4.08%Barclays Intermediate U.S. Gov/Credit -0.20% 2.14% 2.14% 2.11% 1.76% 1.50% 2.45% 3.32%Barclays U.S. Treasury: 1-3 Year -0.28% 0.42% 0.42% 0.64% 0.62% 0.57% 0.69% 1.45%Barclays US Corp: High Yield 0.47% 7.50% 7.50% 12.21% 6.35% 5.78% 7.04% 8.03%Credit Suisse Leveraged Loan Index 1.17% 4.25% 4.25% 7.03% 4.50% 4.33% 4.68% 4.57%BofA Merrill Lynch Global HY Constrained (USD) 0.76% 10.18% 10.18% 12.45% 6.61% 5.50% 6.94% 7.91%Barclays Global Aggregate Ex USD 1.63% 10.51% 10.51% 5.90% 1.77% -0.20% 1.05% 2.40%JPM EMBI Global Diversified 1.16% 10.26% 10.26% 10.20% 7.11% 4.58% 6.72% 7.29%

CASH EQUIVALENT90 Day U.S. Treasury Bill 0.28% 0.86% 0.86% 0.55% 0.38% 0.25% 0.20% 0.38%

Market Index PerformanceAs of December 31, 2017

Source: Investment Metrics. Returns are expressed as percentages. Please refer to the last page of this document for important disclosures relating to this material.

1.1



T H E E C O N O M Y

• The U.S. gross domestic product (GDP) grew at an annualized rate of3.2% in the third quarter, according to the Bureau of Economic Analysis’(BEA) final estimate. Despite being slightly below the estimate of 3.3%,this has been the highest growth rate since the beginning of 2015 andthe first time since 2014 that the economy grew by more than 3% fortwo straight quarters. This growth was supported by both businessinvestment and consumer spending. Consumer spending added 2.2%and was the largest contributing sector to GDP growth.

• Unemployment fell to 4.1%, a level that normally signals fullemployment, although the underemployment rate is much higher at8.1%. Non-farm payrolls had a strong October and November, adding211,000 and 252,000 jobs respectively but slowed down in December,adding 148,000 versus the 190,000 estimated. Average hourly earningsgrew 0.3% in the quarter, raising the annual growth to 2.5%. Overall thejobs report was a bit disappointing but did not raise any major red flagsand shows that the economy is still growing at a healthy pace.

• Fourth quarter estimated year-over-year corporate earnings growth ratein the S&P 500 is 10.5%, according to FactSet Earnings Insight as ofJanuary 5, 2018, with all sectors expected to report growth. Althoughenergy is expected to report the highest year-over-year growth, mostof this is due to the low earnings from last year. The InformationTechnology, Materials, and Utilities sectors are expected to reportdouble digit earnings growth while Telecom and Industrials are expectedto report the lowest growth.

• On December 22, President Trump signed into law the “Tax Cuts andJobs Act.” The reduction in the corporate tax rate from 35% to 21% isexpected to boost corporate profits which would flow directly into strongearnings reports for the quarter. However, the one-time repatriation taxcould partially offset some gains from companies with a large amount ofassets kept overseas.

U.S. Real GDP Growth(Seasonally Adjusted)

Source: Bloomberg. Blue bars indicate actual numbers; taupe bars indicate forecasted estimates.

1.8%1.2%

3.1%3.2%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

2013 2014 2015 2016 2017 2018

QoQ

% C

hang

e, S

A, A

nnua

lized

Change in Non-Farm Payrolls

Source: Bloomberg.

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-100

0

100

200

300

400

Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17

Une

mpl

oym

ent R

ate

Cha

nge

in N

on-F

arm

Pay

rolls

(Tho

usan

ds)

Change in Non-Farm Payrolls (left) Unemployment Rate (right)

Unemployment Rate: 4.1%

1.2



W H A T W E ’ R E W A T C H I N G

• The official minutes from the December Federal Open Market Committeemeeting were released in early January. The Federal Reserve (Fed)hiked the fed funds rate by 25 basis points (bps) with most of its officialssupporting its current plan of a gradual increase in borrowing costs. TheFed has currently penciled in three rate hikes for 2018, citing the stronglabor market and the record lows for the unemployment rate. However,weak inflation could serve as the primary barrier for the pace of rate hikes.The Core Personal Consumption Expenditure (the Fed’s preferred gaugeof inflation) has consistently come in below the Fed’s targeted 2% rate. TheFed also debated the impacts of the $1.5 trillion tax bill signed by PresidentTrump. The Fed sees “fiscal stimulus” caused by the bill as pro-cyclical,which may lead to an overheating economy and rising inflation.

• The European Central Bank (ECB) made no changes to its deposit rateand refinancing rate in its latest policy meeting held in mid-December. TheECB’s decision to cut the monthly asset purchases in half to €30 billionis effective January and will last until at least September. The Europeaneconomy picked up pace in 2017. Positive consumer sentiment, decliningunemployment figures and strengthening industrial production are theprimary factors that drove more robust economic growth. The EurozoneManufacturing Purchasing Managers Index reading for December reachedits highest level since its inception and is widely seen as an indicator ofeconomic growth and confidence amongst businesses across the continent.

• Synchronized global growth was a major trend in 2017 as most of theeconomies across the world experienced significant growth despite the longlist of geopolitical risks that continue to dominate headlines. The pick-up ineconomic growth drove equity prices higher, resulting in valuations risingto above average levels; credit spreads also continued to tighten. Whilewe expect the global economy to continue to grow at above trend levels,given the strong performance of equity markets in 2017, we believe that apullback or correction over the next several months remains a possibility.

Fed Funds Target Rate

Source: Bloomberg.

ISM Manufacturing & Services PMI

Source: Bloomberg.

30

35

40

45

50

55

60

65

70

Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17

Manufacturing Services

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 Dec '18 Dec '19

Mid Fed Funds Fed Futures (Dec 31, 2017) Fed Futures (Sep 30, 2017)

1.3



D O M E S T I C E Q U I T Y

• Equity markets, as represented by the S&P 500 Index (S&P), rose 6.6%in the fourth quarter, a continuation of this year’s rally. The 2017 returnreached 21.8%, driven by stronger corporate earnings and tax reform.Rather than having a correction as many expected, the market volatilitywas near all-time lows and valuations continued to rise.

• Returns were positive across all sectors in the S&P. Utilities was theworst performing sector with a 0.2% return on the quarter, but still didwell over the year with a 2017 return of 12.1%. The top two sectors inthe quarter were Consumer Discretionary, up 9.9% in the quarter and22.9% on the year, and Information Technology, up 9.0% in the quarterand 38.8% on the year. The only two sectors in the red for the yearwere Energy (-1.0%) and Telecom (-1.3%)

• Large-cap stocks, as represented by the Russell 1000 Index, finishedthe fourth quarter strong, outperforming mid-cap (Russell Mid CapIndex) and small-cap (Russell 2000 Index) stocks on the quarter andfor the year. Large-caps rose 6.6% on the quarter, pushing their 2017return up to 21.7%. Mid-caps finished closely behind at 6.1% for thequarter while small-caps finished up 3.3%. Mid-caps also outperformedsmall-caps for the year.

• As has been a theme in 2017, growth-oriented indices continued tooutpace value-oriented indices across all market capitalizations over thecourse of the year across Russell indices. The difference was greatestwithin large caps as growth stocks returned 30.2% versus 13.6% in2017 for value stocks.

Source: Bloomberg.

ConsumerDisc.

ConsumerStaples Energy Financials H'lthcare Industrials Info. Tech Materials Real

Estate Telecom Utilities

Q4' 17 9.87% 6.49% 6.02% 8.59% 1.47% 6.03% 9.01% 6.93% 3.22% 3.61% 0.21%

2017 22.98% 13.49% -1.01% 22.14% 22.08% 21.01% 38.83% 23.84% 10.85% -1.25% 12.11%

3 Years 12.80% 8.42% -0.18% 13.84% 8.28% 11.89% 18.72% 9.80% 4.30% 8.03% 7.44%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

S&P 500 Index Performance by SectorPeriods Ended December 31, 2017

Source: Bloomberg.*P/E ratios are calculated based on one-year forward estimates and adjusted to include onlypositive earnings results for consistency.

12

13

14

15

16

17

18

19

20

21

22

Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17S&P 500 S&P 500 5-Year AverageRussell 2000 Russell 2000 5-Year Average

P/E Ratios of Major Stock Indices*

1.4



N O N - U . S . E Q U I T Y

• Developed markets outside of North America, as measured by theMSCI EAFE Index, increased 4.2% during the fourth quarter, ending2017 strong and pushing the 2017 return to 25.0%. Performancethroughout the year was consistently strong as returns were positive for10 months and relatively flat the other two months. Singapore was thestrongest performer for the quarter, rising 10.1% while Sweden was theworst performer, down 3.8%.

• Emerging markets (EM), as measured by the MSCI Emerging MarketsIndex, continued its strong performance during the fourth quarter, rising7.4%, pushing the year-to-date return up to 37.3%. The weakeningdollar during the year was one of the key factors driving the rally inemerging markets. Mexico was the worst performing region within EM,down 8.1%. South Africa was the top performer, rising 21.4%.

• Within the MSCI All Country World Index (ACWI) ex-U.S., whichincludes both developed and emerging markets stocks, sectorperformance was mostly positive, with only one sector having negativeperformance. Materials continued its strong run and was the bestperforming sector in the quarter, rising 8.4%, pushing the 2017 return to32.2% making it the second best performing sector behind informationtechnology, which had a 51.1% return on the year. Utilities was theworst performing sector and was the only one to have a negative returnon the quarter, falling 0.4% but has done well on the year up 18.6%.

• In both Developed markets and EM, small caps outperformed largecaps. Developed small caps rose 6.1% vs. 3.9% for large caps, whileEM small caps rose 9.2% vs. 7.4% for large caps. Growth stocksalso outperformed value stocks in both Developed markets and EM.Developed growth stocks rose 5.2% vs. 3.2% for value stocks, while EMgrowth stocks rose 7.9% vs. 6.8% for value stocks.

Source: Bloomberg.

ConsumerDisc.

ConsumerStaples Energy Financials Healthcare Industrials Info. Tech Materials Real

Estate Telecom Utilities

Q4 '17 6.10% 5.47% 7.39% 4.21% 1.29% 4.78% 6.21% 8.43% 5.35% 1.46% -0.44%

2017 28.11% 23.95% 16.46% 10.16% 18.14% 29.37% 51.06% 32.16% 25.89% 14.53% 18.56%

3 Years 7.99% 8.48% 6.04% -2.55% 2.81% 9.88% 18.04% 10.58% 7.75% 1.64% 1.33%

-10%

0%

10%

20%

30%

40%

50%

60%

MSCI ACWI ex-U.S. SectorsPeriods Ended December 31 2017

Source: Bloomberg. *P/E ratios are calculated based on one-year forward estimates and adjusted to include onlypositive earnings results for consistency.

8

9

10

11

12

13

14

15

16

17

Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17

MSCI EAFE MSCI EAFE 5-Year AverageMSCI Emerging Markets MSCI Emerging Markets 5-Year Average

P/E Ratios of MSCI Equity Indices*

1.5



F I X E D I N C O M E

• Yields across all U.S. Treasury tenors increased except for the 30-year this quarter. The increases were greater for the shorter term asyields between the three- and 12-month tenors rose 33 to 44 bps.Intermediate-term yields increased at a decreasing rate and the 30-yearfell 12 bps. This movement further flattened the yield curve, continuing2017’s trend. As many expected, the Federal Reserve raised rates inDecember and are now targeting a range of 1.25% to 1.50%.

• Investment grade fixed income returns were positive despite theTreasury yield increases. The Bloomberg Barclays U.S. AggregateIndex rose 0.39% on the quarter while the Bloomberg Barclays U.S.Universal Bond Index (which includes high yield and other allocations)rose a slightly higher 0.41%. Investment-grade credit within theAggregate rose 1.1% and returns were tilted towards lower-quality withBBB rising 1.2%. A-rated bonds rose 1.1%, with AA (0.8%) and AAA(0.1%) lagging behind.

• On the speculative side of the credit spectrum, high yield — representedby the Bloomberg Barclays U.S. Corporate High Yield Index — rosea 0.5% as high yield credit spreads ended flat. Spreads modestlytightened over the year, leading to a 7.5% return in 2017.

• The fixed-rate mortgage market, as measured by the BloombergBarclays U.S. Mortgage-Backed Securities (MBS) Index, rose 0.2%while the Bloomberg Barclays U.S. CMBS Index (measuring commercialMBS) increased 0.4%.

• USD-denominated Emerging Market debt rose 0.6% on the quarter, asmeasured by the Bloomberg Barclays EM USD Aggregate Index.

Source: Bloomberg. “Blmbg BC” is Bloomberg Barclays.

Blmbg BC U.S.Aggregate Blmbg BC U.S. Treasury Blmbg BC U.S. MBS Blmbg BC U.S.

CorporateBlmbg BC U.S. High

YieldQ4 '17 0.39% 0.05% 0.15% 1.17% 0.47%

2017 3.54% 2.31% 2.47% 6.42% 7.50%

3 Years 2.24% 1.39% 1.88% 3.89% 6.35%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Returns for Fixed-Income SegmentsPeriods Ended December 31, 2017

Source: Bloomberg.

1.89%

2.21%

2.41%

2.74%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

12/31/20169/30/201712/31/2017

3mo 2yr 5yr 10yr 30yr

U.S. Treasury Yield Curve

1.6



A L T E R N A T I V E S

• U.S. Real Estate Investment Trusts (REITs), as measured by the FTSENAREIT Equity REIT Index, continued moderate gains for 2017 byrising 5.2% during the quarter. The Retail REITs sub-sector (6.8%) wasthe top performer for the quarter although it finished the year as theworst performing, falling 4.8%. Healthcare REITs (-5.3%) finished as theworst performing sector for the second consecutive quarter. Industrialsand Data Centers had only moderate gains on the quarter but ended2017 up 20.6% and 28.4% respectively during the year.

• Private real estate, as measured by the NCREIF Index of 7,161commercial properties nationwide, increased 1.7% during the thirdquarter (fourth quarter data is not yet available). The third quarter returnconsisted of 1.1% income return and 0.6% appreciation.

• Commodities, represented by the Bloomberg Commodity Index of 19raw materials futures, had a strong quarter, rising 4.4% and pulling theannual return out of the red to 0.8%. Oil prices were one of the factorscontributing to the strong return as oil ended at $60.4 per barrel, upfrom $51.7 per barrel at the beginning of the quarter. Commodity-relatedequities, as measured by the S&P North American Natural ResourcesSector Index, followed last quarter’s rebound with another strongquarter, gaining 5.9%.

• Hedge funds rose 2.5% during the fourth quarter. The HFRI FundWeighted Composite Index, a global index of over 2,000 hedge funds,has increased 8.5% during the year.

• After a disappointing third quarter, private equity fundraising reboundedin the fourth quarter with strong results. According to Preqin estimates,261 funds closed during the quarter, raising a combined $162 billionin investor commitments. This was a record setting year as 1,420 totalfunds closed, raising $754 billion in 2017.

Source: Bloomberg.

Apartments Diversified Healthcare Hotels Industrial Office Retail StorageQ4' 17 -1.48% -1.96% -5.26% 5.36% 1.78% 3.34% 6.79% 3.30%

2017 3.72% -0.10% 0.87% 7.16% 20.58% 5.25% -4.77% 3.74%

3 Years 7.49% 3.11% -0.15% 0.24% 17.38% 6.10% 0.17% 10.25%

-10%

-5%

0%

5%

10%

15%

20%

25%

FTSE NAREIT SectorsPeriods Ended December 31, 2017

Sources: Bloomberg and Hedge Fund Research, Inc.

U.S. REITS International REITS Commodity Futures Commodities HFRI Fund WeightedComp.

Q4' 17 1.51% 6.39% 4.39% 5.94% 2.51%

2017 5.23% 20.82% 0.75% 1.23% 8.54%

3 Years 5.62% 6.03% -5.45% 0.11% 4.20%

-10%

-5%

0%

5%

10%

15%

20%

25%

Returns for Alternative AssetsPeriods Ended December 31, 2017

1.7

Asset Class Current Market Value ($)

Current Market Value (%) Target Minimum Maximum Within Range?

Short-TermCash Held for Operations/Warehoused MBS $16,825,328 23.9% 14.0% 9.0% - 19.0% NoLocal Government Investment Pool $3,110,709 4.4% 6.0% 1.0% - 11.0% Yes

Intermediate-Term Bond Ladder $16,010,833 22.8% 27.0% 22.0% - 32.0% YesIntermediate MFA Mortgage Backed Security Portfolio $2,047,606 2.9% 13.0% 8.0% - 18.0% No

Domestic EquityLarge Cap Index Fund $9,388,340 13.4% 11.0% 6.0% - 16.0% YesSmall/Mid Cap Fund $1,645,975 2.3% 5.0% 0.0% - 10.0% Yes

International EquityNon-US Developed Markets Fund $1,999,306 2.8% 6.0% 1.0% - 11.0% YesNon-US Emerging Markets Fund $672,545 1.0% 2.0% 0.0% - 7.0% Yes

Fixed IncomeCore Plus Bond Fund-Active $10,705,824 15.2% 12.0% 7.0% - 17.0% YesMFA Mortgage Backed Security Portfolio $7,889,533 11.2% 4.0% 0.0% - 9.0% No

4%

12%

2%

6%

5%

11%

13%

27%

6%

14%

11%

15%

1%

3%

2%

13%

3%

23%

4%

24%

7%

3%

-1%

-3%

-3%

2%

-10%

-4%

-2%

10%

-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

MFA Mortgage Backed Security Portfolio

Core Plus Bond Funds-Active

Non-US Emerging Markets Fund

Non-US Developed Markets Fund

Small/Mid Cap Fund

Domestic Large Cap Index Fund

Intermediate MFA Mortgage Backed Security Portfolio

Bond Ladder

Local Government Investment Pool

Cash Held for Operations/Warehoused MBS

Difference Actual Asset Allocation Target Asset Allocation

3.5

New Mexico Mortgage Finance Authority Total Investments

As of December 31, 2017

Asset Allocation Compliance

Allocation

MarketValue

($)%

Performance(%)

1Quarter

20171

Year3

Years5

YearsSince

InceptionInception

Date

SIC Funds 24,411,990 100.00 2.31 8.76 8.76 5.28 N/A 5.15 07/01/2014

Blended Benchmark - SIC Funds 1.56 6.88 6.88 4.06 N/A 4.24 07/01/2014

Domestic Equity

Domestic Large Cap Index Equity Fund 9,388,340 38.46 7.32 22.54 22.54 11.51 15.88 11.50 07/01/2014

Russell 1000 Index 6.59 21.69 21.69 11.23 15.71 11.26 07/01/2014

Small/Mid Cap Fund 1,645,975 6.74 N/A N/A N/A N/A N/A N/A 01/01/2018

Russell 2500 Index 5.24 16.81 16.81 10.07 14.33 N/A 01/01/2018

International Equity

Non-US Developed Markets Fund 1,999,306 8.19 N/A N/A N/A N/A N/A N/A 01/01/2018

MSCI AC World ex USA (Net) 5.00 27.19 27.19 7.83 6.80 N/A 01/01/2018

Non-US Emerging Markets Fund 672,545 2.75 N/A N/A N/A N/A N/A N/A 01/01/2018

MSCI Emerging Markets Index 7.50 37.75 37.75 9.50 4.73 N/A 01/01/2018

Fixed Income

Core Plus Bond Funds-Active 10,705,824 43.85 0.97 6.38 6.38 4.20 3.75 3.96 07/01/2014

Blmbg. Barc. U.S. Aggregate 0.39 3.54 3.54 2.24 2.10 2.48 07/01/2014

SIC FundsAsset Allocation & Performance


Returns are gross of fees.Returns are expressed as percentages.

2.2

Market ValueAs of

01/01/2017

NetTransfers

Contributions Distributions Fees IncomeCapital

Apprec./Deprec.

Market ValueAs of

12/31/2017

SIC Funds 22,466,465 - 9,474,664 (9,474,660) (20,865) 597,731 1,368,656 24,411,990

Domestic Large Cap Index Equity Fund 4,732,522 - 3,590,000 - (641) 79,896 986,562 9,388,340

Small/Mid Cap Fund - - 1,630,000 - - 1,492 14,483 1,645,975

Non-US Developed Markets Fund - - 1,960,000 - - 2,439 36,867 1,999,306

Non-US Emerging Markets Fund - - 650,000 - - 674 21,871 672,545

Core Plus Bond Funds-Active 8,534,931 - 1,644,664 - (17,437) 298,953 244,713 10,705,824

Core Plus Bond Fund-Index 9,199,011 - - (9,474,660) (2,787) 214,276 64,159 -

SIC Funds Financial Reconciliation

1 Year Ending December 31, 2017

2.4

Core Fixed Income SIC FundInterest Rate Shock Analysis Summary


4.6

*Starting market value of the portfolio is based on Bloomberg Portfolio and Risk Analytics (PORT) pricing.Source: Bloomberg Portfolio and Risk Analytics (PORT).

• . Core-plus managers for SIC are currently PIMCO, Prudential and Loomis Sayles.

The estimated impact of interest rate changes on the Authority’s core-plus pool is summarized in the table below. The assumptions made are the following:

All interest rate changes are assumed to be instantaneous and parallel

The beginning par values of the portfolio is assumed to be $10,705,824*

•

•

•

Housing Trust - Performance Review

Allocation

MarketValue

($)%

Performance(%)

1Quarter

20171

Year3

Years5

YearsSince

InceptionInception

Date

Housing Trust Fund 9,357,855 100.00 0.79 6.06 6.06 3.87 3.67 3.70 07/01/2014

Blended Benchmark - Housing Trust 0.39 3.54 3.54 2.24 N/A 2.48 07/01/2014

Fixed Income

Core Plus Bond Fund-Active 9,357,855 100.00 0.79 6.06 6.06 3.87 3.67 3.70 07/01/2014

Blmbg. Barc. U.S. Aggregate 0.39 3.54 3.54 2.24 2.10 2.48 07/01/2014

Asset Allocation & Performance

Housing Trust As of December 31, 2017

Returns are gross of fees.Returns are expressed as percentages.

3.1

Market ValueAs of

01/01/2017

NetTransfers

Contributions Distributions Fees IncomeCapital

Apprec./Deprec.

Market ValueAs of

12/31/2017

Housing Trust Fund 11,019,248 - 958,079 (3,190,269) (19,601) 327,340 263,058 9,357,855

Core Plus Bond Fund-Active 11,019,248 - 958,079 (3,190,269) (19,601) 327,340 263,058 9,357,855

Housing Trust SIC Funds Financial Reconciliation

1 Year Ending December 31, 2017

3.3

Individually Held Fixed Income Holdings Detail

Total Fixed Income Overview


4.1

119 2.51 years3.20 years2.69 years

2.75%2.87%

Portfolio Statistics

Number of HoldingsDurationAverage MaturityAverage Maturity to CallAverage Market YieldAverage CouponAverage Quality Aaa

CallableAgency

50%

Non-Callable Agency12%

MBS38%

Sector Allocation

Aaa100%

Credit Quality (Moody’s)

0%

10%

20%

30%

40%

50%

0-1 yrs 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs >5 yrs

Maturity DistributionTo Maturity To Call

Source: Bloomberg, Portfolio data as of 12/31/17. MBS uses weighted average life instead of maturity, as of 02/14/18.

Agency SummaryFixed Income As of December 31, 2017

4.3

Federal HomeLoan Bank

44%

Fannie Mae25%

Freddie Mac19%

Federal FarmCredit Bank

13%

IssuerCallable:Quarterly

31%

Callable:Anytime

25%

Callable:Onetime

25%

Not Callable19%

Call Feature

0%10%20%30%40%50%60%


Duration Distribution

Fixed

$0

$2

$4

$6

$8

$10

$12


(mill

ions

)

Maturity DistributionTo Maturity To Call

Source: Bloomberg, Portfolio data as of 12/31/17.

MBS SummaryFixed Income As of December 31, 2017

4.4

GovernmentNational

Mortgage A61%

Fannie Mae35%

Freddie Mac4%

Issuer

MBS 30yr96%

MBS Other4%

Structure Type

Fixed100%

Coupon Type

Source: Bloomberg, Portfolio data as of 12/31/16. MBS data as of 02/14/18.

Total Fixed Income (Ex. SIC Fund)New Mexico MFA Interest Rate Shock Analysis Summary


4.5

*Starting market value of the portfolio is based on Bloomberg Portfolio and Risk Analytics (PORT) pricing.Source: Bloomberg Portfolio and Risk Analytics (PORT).

• The underlying mortgage pools for the mortgage-backed holdings in the Authority’s general fund exhibit characteristics that make themrelatively less sensitive to interest rate changes. The table below shows a brief summary of those characteristics.

• The estimated impact of interest rate changes on the Authority’s general fund portfolio is summarized in the table below. The

assumptions made are the following:

• All interest rate changes are assumed to be instantaneous and parallel

• The beginning market value of the portfolio is assumed to be $26,370,112*

Mortgage Pool Characteristics

Average Par Amount Outstanding $94,639Average Loan Age (seasoning) 189 monthsAverage Loan-to-Value Ratio 92

PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separateagreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specificrecommendation, as it was prepared without regard to any specific objectives or financial circumstances.

Investment advisory services are provided by PFM Asset Management LLC which is registered with the Securities and Exchange Commissionunder the Investment Advisers Act of 1940. The information contained is not an offer to purchase or sell any securities. Additional applicableregulatory information is available upon request.

PFM asset management professionals have exercised reasonable professional care in the preparation of this performance report. Information inthis report is obtained from sources external to PFM’s asset management business and is generally believed to be reliable and available to thepublic; however, we cannot guarantee its accuracy, completeness or suitability. We rely on the client's custodian for security holdings and marketvalues. Transaction dates reported by the custodian may differ from money manager statements. While efforts are made to ensure the datacontained herein is accurate and complete, we disclaim all responsibility for any errors that may occur. References to particular issuers are forillustrative purposes only, and are not intended to be recommendations or advice regarding such issuers.

It is not possible to invest directly in an index. The index returns shown throughout this material do not represent the results of actual trading ofinvestor assets. Third-party providers maintain the indices shown and calculate the index levels and performance shown or discussed. Indexreturns do not reflect payment of any sales charges or fees an investor would pay to purchase the securities they represent. The imposition ofthese fees and charges would cause investment performance to be lower than the performance shown.

The views expressed within this material constitute the perspective and judgment of PFM’s asset management business at the time of distributionand are subject to change. Any forecast, projection, or prediction of the market, the economy, economic trends, and equity or fixed-income marketsare based upon certain assumptions and current opinion as of the date of issue, and are also subject to change. Some, but not all assumptions arenoted in the report. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your orour control. Changes in assumptions may have a material effect on results. Opinions and data presented are not necessarily indicative of futureevents or expected performance.

For more information regarding PFM’s services or entities, please visit www.pfm.com.

© 2017 PFM Asset Management LLC. Further distribution is not permitted without prior written consent.

IMPORTANT DISCLOSURES

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Tab 10

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Tab 11

1 G:\Board Reports\Staff Actions\Staff Actions 2018

Staff Actions Requiring Notice to Board During the Period of February 28, 2018

Department and Program

Project Action Taken Comments

Servicing Dept. REO Final Settlement Sale of REO #HTF07003 in Roswell for $3,230.69

Final claim settlement resulted in loss of ($78,173.81)

Servicing January 2018 Quality Control Review Loan Servicing

Approval of report issued by REDW. No findings.

Approved by Policy Committee on February 27, 2018

Housing Development - State Tax Credit

Oshara Village Phase III-Santa Fe Habitat for Humanity

$120,000 state tax credit award Approved by Policy Committee on 2/27/18

Community Development – EHAP

New Mexico Coalition Against Domestic Violence

$5,364 approved for NMCADV from the 2017 ESG carry-over funds

Approved by Deputy Director of Programs on February 28, 2018

Tab 12

New Mexico Mortgage Finance Authority

Combined Financial Statements

and Schedules

January 31, 2018

NEW MEXICO MORTGAGE FINANCE AUTHORITYFINANCIAL REVIEW

For the four‐month period ended January 31, 2018

SUMMARY OF NEW BOND ISSUES: Single Family Issues: $45 mm 2017 Series B Bonds‐New Money (November)

$12.3 mm 2017 Series B Bonds‐Refunding (November)Multi‐family Issues: None

COMPARATIVE YEAR‐TO‐DATE FIGURES (Dollars in millions):4 months 4 months % Change Forecast Actual to Forecast/Target 1/31/2018 1/31/2017 Year / Year 1/31/18 Forecast 9/30/18

PRODUCTION1 Single family issues (new money): $45.0 $50.0 ‐10.0% $45.0 0.0% $82.52 Single family loans sold (TBA): $90.9 $59.8 52.0% $64.2 41.7% $192.53 Total Single Family Production $135.9 $109.8 23.8% $109.2 24.5% $275.04 Multifamily issues: $0.0 $0.0 0.0% $0.0 0.0% $20.05 Single Family MBS Payoffs: $20.4 $27.3 ‐25.3% $21.7 ‐6.0% $65.1STATEMENT OF NET POSITION

6 Avg. earning assets: $934.9 $965.4 ‐3.2% $926.6 0.9% $934.67 General Fund Cash and Securities: $87.5 $72.7 20.4% $81.2 7.7% $78.08 General Fund SIC FMV Adj.: $0.4 ($0.5) 180.0% $0.0 N/A $0.09 Total bonds outstanding: $678.3 $713.4 ‐4.9% $653.1 3.9% $669.5STATEMENT OF REVENUES, EXPENSES AND NET POSITION

10 General Fund expenses (excluding capitalized assets): $4.3 $3.5 22.9% $5.0 ‐14.0% $15.011 General Fund revenues: $7.8 $5.6 39.3% $6.4 21.9% $19.212 Combined net revenues (all funds): $3.6 $3.0 20.0% $4.5 ‐19.5% $12.313 Combined net position: $228.2 $215.3 6.0% $229.0 ‐0.3% $236.914 Combined return on avg. earning assets: 1.06% 0.85% 25.2% 1.33% ‐19.8% 1.32%15 Net TBA profitability: 1.48% 2.06% ‐28.2% 1.35% 9.6% 1.35%16 Combined interest margin: 1.04% 0.87% 19.5% 1.70% ‐38.8% 1.70%

MOODY'S BENCHMARKS17 Net Asset to debt ratio (5‐yr avg): 28.98% 26.03% 11.3% 30.82% ‐6.0% 30.82%18 Net rev as a % of total rev (5‐yr avg): 9.39% 8.39% 11.9% 10.74% ‐12.6% 10.74%

SERVICING19 Mortgage Operations net revenues: $1.4 $1.3 7.7% $0.5 196.2% $1.320 Subserviced portfolio $501.3 $143.2 250.1% $471.0 6.4% $630.221 Servicing Yield (subserviced portfolio) 0.39% 0.36% 8.3% 0.36% 8.3% 0.36%22 Combined delinquency rate (MFA serviced) 11.70% 12.54% ‐6.7% 11.79% ‐0.8% 11.79%23 DPA loan delinquency rate (all) 11.67% 12.84% ‐9.1% N/A N/A N/A24 Default rate (MFA serviced) 0.49% 33.00% ‐98.5% 1.61% ‐69.6% 1.61%25 Subserviced portfolio delinquency rate (first mortgages) 5.48% N/A N/A N/A N/A N/A26 Purchased Servicing Rights Valuation Change (as of 12/31) $1.7 $0.6 183.3% N/A N/A N/A

Legend: Positive Impact, Negative Impact, Caution/Known Trend

Page 1 of 2

NEW MEXICO MORTGAGE FINANCE AUTHORITYFINANCIAL REVIEW

For the four‐month period ended January 31, 2018

SIGNIFICANT MONTHLY/QUARTERLY FINANCIAL VARIANCES:

In the budgeting and financial forecasting processes, staff makes assumptions regarding projected loan and investment yields based on estimated asset balances. It has been determined that the primary cause of current return/yield variances is due to the overstatement of anticipated mortgage loan balances tied to the warehousing function. Single family mortgage loans are moving through the pipeline more quickly than anticipated, thus reducing loan warehousingneeds and the related spread earned on that program. All other differences identified are determined to be related to the timing of projected inflows andoutflows of earning asset balances. The forecast will be updated to reflect more accurate warehousing program projections.In comparison to FY2017 trends do indicate stable production and improved prepayments, net revenues, interest margin, and Moody's ratios.Incurred $552k in single family bond cost of issuance expense for 2017 Series B. The refunding component of this issue is estimated to generateapproximately $1.4mm (net present value) of benefit over time to MFA.

CURRENT YEAR FINANCIAL TRENDS & VARIANCES:

TBA transaction fees are currently exceeding budget by approximately $1.0mm or 121% due to production trends. This additional revenue is offset by related lender compensation expense which is exceeding budget by $.2mm or 51%. Servicing expansion continues to provide additional revenues as the subserviced portfolio and purchased servicing rights asset bases increase. This fiscal year MFA is providing a full mortgage warehouse line to Idaho Housing which will also provide additional revenues. Fair market value for purchased servicing rights as of 12/31/17 was $6.2mm, an increase of approximately $1.7mm over cost. GASB requires MFA to utilize "lower of costor market" accounting for this asset. Therefore, no valuation adjustments are anticipated. Current purchased servicing rights are recorded at a cost of $4.5mm as of 12/31/17. Valuations are obtained on a quarterly basis.Based on Moody’s issuer credit rating scorecard, MFA’s 28.98% net asset ratio (5‐year average), which measures balance sheet strength, indicates a strong and growing level of resources for maintaining HFA's creditworthiness under stressful circumstances (> 20%). The net revenue as a percent of total revenue measures performance and profitability and MFA’s 9.39% ratio (5‐year average) points to a satisfactory profitability with consistent trends (5%‐10% range).

Page 2 of 2

MONTHLY FINANCIAL GRAPHS

Target

2017 2018

Loans Effective yield 4.49% 4.54% Cash & Investments Effective yield 1.91% 2.25% Rate of Return on Average Earning Assets 1.32% 1.32%

(1) Weatherization Assistance Programs; Emergency Shelter Grant; State Homeless; Housing Opportunities for People With Aids; NM State Tax Credit; Governor's Innovations; EnergySaver; Tax Credit Assistance Program; Tax Credit Exchange; Neighborhood Stabilization Program; Section 811 PRA; Homeownership Preservation Program (2) NM Affordable Housing Charitable Trust Fund; Land Title Trust Fund; Housing Trust Fund

1,024,233 965,425 957,337 919,808 977,868

$2,530,234 $2,549,825 $2,649,500

$3,029,148 $3,212,433

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2014 2015 2016 2017 2018

Assets Under Management as of 9/30/2018 ($ in thousands)

Subserviced Portfolio

Other Grants (1)

HOME

Section 8

Low Income Housing Tax Credit

Trusts (2)

Rental Housing Program

General Fund

Single Family Mortgage Program

Book Assets

4.00%

1.06%

1.65%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%Yield Targets 9/30/2018

2014-2015 3,090

2015-2016 2,374

2016-2017 2,983

2017-2018 3,617

Target 2017-2018

4,475

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

YTD Excess Revenues over Expenses as of 1/31/2018

2014-2015 2015-2016 2016-2017 2017-2018 Target 2017-2018

($ th

ousa

nds)

0.00%1.00%2.00%3.00%4.00%5.00%

0.00%5.00%

10.00%15.00%20.00%25.00%

YTD Annualized Payoffs as a Percentage of Single Family Mortgage Portfolio as of 9/30/2018

Payoffs/Portfolio

10 year Treasury rate

2/15/2018 3:45 PM

YTD 1/31/18 YTD 1/31/17

ASSETS:

CURRENT ASSETS:

CASH & CASH EQUIVALENTS $38,721 $24,428

RESTRICTED CASH HELD IN ESCROW 10,425 10,298

SHORT-TERM INVESTMENTS - -

ACCRUED INTEREST RECEIVABLE 3,098 3,243

MORTGAGE PAYMENT CLEARING - 99

OTHER CURRENT ASSETS 1,455 1,878

ADMINISTRATIVE FEES RECEIVABLE (PAYABLE) - -

INTER-FUND RECEIVABLE (PAYABLE) (0) -

TOTAL CURRENT ASSETS 53,699 39,947

CASH - RESTRICTED 45,417 52,914

LONG-TERM & RESTRICTED INVESTMENTS 59,338 59,277

INVESTMENTS IN RESERVE FUNDS 53 21

FNMA, GNMA, & FHLMC SECURITIZED MTG. LOANS 570,163 598,855

MORTGAGE LOANS RECEIVABLE 244,359 200,297

ALLOWANCE FOR LOAN LOSSES (2,067) (2,657)

NOTES RECEIVABLE - 29,442

FIXED ASSETS, NET OF ACCUM. DEPN 1,166 977

OTHER REAL ESTATE OWNED, NET 427 435

OTHER NON-CURRENT ASSETS 21 -

INTANGIBLE ASSETS 4,711 1,488

TOTAL ASSETS 977,286 980,995

DEFERRED OUTFLOWS OF RESOURCES

REFUNDINGS OF DEBT 582 760

TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES 977,868 981,755

LIABILITIES AND NET POSITION:

LIABILITIES:

CURRENT LIABILITIES:

ACCRUED INTEREST PAYABLE 7,549 7,626

ACCOUNTS PAYABLE AND ACCRUED EXPENSES 6,106 4,356

ESCROW DEPOSITS & RESERVES 10,366 10,298

TOTAL CURRENT LIABILITIES 24,021 22,280

BONDS PAYABLE, NET OF UNAMORTIZED DISCOUNT 678,294 713,426

MORTGAGE & NOTES PAYABLE 47,144 30,510

ACCRUED ARBITRAGE REBATE - 22

OTHER LIABILITIES 245 245

TOTAL LIABILITIES 749,704 766,483

NET POSITION:

INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT 1,167 977

UNAPPROPRIATED NET POSITION (NOTE 1) 61,910 65,457

APPROPRIATED NET POSITION (NOTE 1) 165,088 148,839

TOTAL NET POSITION 228,165 215,272

TOTAL LIABILITIES & NET POSITION 977,868 981,755


COMBINED STATEMENT OF NET POSITION

JANUARY 31, 2018

(THOUSANDS OF DOLLARS)

2/15/2018 3:45 PM

YTD 1/31/18 YTD 1/31/17

OPERATING REVENUES:

INTEREST ON LOANS $10,854 $11,474

INTEREST ON INVESTMENTS & SECURITIES 779 785

LOAN & COMMITMENT FEES 422 493

ADMINISTRATIVE FEE INCOME (EXP) 2,672 2,398

RTC, RISK SHARING & GUARANTY INCOME 39 15

HOUSING PROGRAM INCOME 467 265

LOAN SERVICING INCOME 714 221

OTHER OPERATING INCOME - 150

SUBTOTAL OPERATING REVENUES 15,947 15,801

NON-OPERATING REVENUES:

ARBITRAGE REBATE INCOME (EXPENSE) - 30

GAIN(LOSS) ASSET SALES/DEBT EXTINGUISHMENT 333 (88)

OTHER NON-OPERATING INCOME 35 10

GRANT AWARD INCOME 14,627 13,172

SUBTOTAL NON-OPERATING REVENUES 14,995 13,125

TOTAL REVENUES 30,942 28,926

OPERATING EXPENSES:

ADMINISTRATIVE EXPENSES 4,230 3,224

INTEREST EXPENSE 8,397 9,461

AMORTIZATION OF BOND/NOTE PREMIUM(DISCOUNT) (595) (823)

PROVISION FOR LOAN LOSSES 12 29

MORTGAGE LOAN & BOND INSURANCE - -

TRUSTEE FEES 27 29

AMORT. OF SERV. RIGHTS & DEPRECIATION 78 57

BOND COST OF ISSUANCE 552 652

SUBTOTAL OPERATING EXPENSES 12,703 12,629

NON-OPERATING EXPENSES:

CAPACITY BUILDING COSTS 46 156

GRANT AWARD EXPENSE 14,577 13,158

OTHER NON-OPERATING EXPENSE - -

SUBTOTAL NON-OPERATING EXPENSES 14,622 13,314

TOTAL EXPENSES 27,325 25,943

NET REVENUES 3,617 2,983

OTHER FINANCING SOURCES (USES) - -

NET REVENUES AND OTHER FINANCING SOURCES(USES) 3,617 2,983

NET POSITION AT BEGINNING OF YEAR 224,548 212,289

NET POSITION AT 1/31/2018 228,165 215,272

FOR THE FOUR MONTH ENDED JANUARY 2018

(THOUSANDS OF DOLLARS)


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

NOTES TO FINANCIAL STATEMENTS

(For Informational Purposes Only)

(Thousands of Dollars)

(Note 1) MFA Net Position as of January 31, 2018:

UNAPPROPRIATED NET POSITION:

$ 33,619 is held by Bond Program Trustees and is pledged to secure repayment of the Bonds.+

$ 28,170 is held in Trust for the NM Housing Trust Fund and the NM Land Title Trust Fund.

$ 121 held for New Mexico Affordable Housing Charitable Trust .

$ 61,910 Total unappropriated Net Position

APPROPRIATED NET POSITION: GENERAL FUND

By actions of the Board of Directors on various dates, General Fund net assets have been appropriated as follows:

$ 102,569 for use in the Housing Opportunity Fund ($84,686 in loans plus $17,883 unfunded, of which $4,368 is

committed).

$ 23,163 for future use in Single Family & Multi-Family housing programs.

$ 9,740 for loss exposure on Risk Sharing loans.

$ 1,167 invested in capital assets, net of related debt.

$ 4,709 invested in mortgage servicing rights.

$ 12,147 for the future General Fund Operating Budget Y E 9/30/18 ($17,873 total budget

less $5,726 expended budget through 01/31/18.)

$ 153,495 Subtotal - General Fund

APPROPRIATED NET POSITION: HOUSING

By actions of the Board of Directors on December 7, 1999, Housing assets have been appropriated as follows:

$ 12,759 for use in the federal and state housing programs administered by MFA.

$ 12,759 Subtotal - Housing Program

$ 166,254 Total appropriated Net Position

$ 228,165 Total combined Net Position at January 31, 2018

Total combined Net Position, or reserves, at January 31, 2018 was $228.2 million, of which $62.0 million was pledged

to the bond programs, Affordable Housing Charitable Trust and fiduciary trusts. $166.3 million of available reserves, with

$87.5 million primarily liquid in the General Fund and in the federal and state Housing programs and $78.8 million illiquid

in the programs of the General Fund, have been

- for use in existing and future programs

- for coverage of loss exposure in existing programs, and

- for support of operations necessary to carry out the programs.

MFA's general plan for bond program reserves as they may become available to MFA over the next 30 years is to

use the reserves for future programs, loss exposure coverage, and operations.

ONE YEAR TO YEAR TO DATE UNDER/(OVER) UNDER/(OVER) EXPENDED

MONTH DATE PRO RATA YTD ANNUAL ANNUAL ANNUAL BUDGET

ACTUAL ACTUAL BUDGET BUDGET BUDGET BUDGET PERCENTAGE

REVENUES

OPERATING REVENUES

INTEREST INCOME 660,823 2,509,256 2,742,795 233,539 8,228,385 5,719,129 30.50%

ADMIN INCOME 849,535 3,653,620 2,425,437 (1,228,183) 7,276,312 3,622,692 50.21%

OTHER OPERATING INCOME 651,540 1,219,520 1,231,184 11,664 3,693,553 2,474,033 33.02%

SUBTOTAL OPERATING REVENUES 2,161,898 7,382,396 6,399,417 (982,979) 19,198,250 11,815,854 38.45%

NON-OPERATING REVENUES 216,857 415,589 (9,300) (424,889) (27,900) (443,489) -1489.57%

TOTAL REVENUES 2,378,755 7,797,985 6,390,117 (1,407,868) 19,170,350 11,372,365 40.68%

EXPENSES

OPERATING EXPENSES

COMPENSATION 522,414 2,098,397 2,429,481 331,083 7,288,442 5,190,045 28.79%

TRAVEL & PUBLIC INFO 32,125 95,539 159,201 63,662 477,603 382,064 20.00%

OFFICE EXPENSES 88,162 341,578 296,819 (44,759) 890,458 548,880 38.36%

OTHER OPERATING EXPENSES 202,957 1,622,489 1,539,649 (82,840) 4,618,946 2,996,457 35.13%

SUBTOTAL OPERATING EXPENSES 845,658 4,158,003 4,425,150 267,147 13,275,449 9,117,446 31.32%

NON-OPERATING EXPENSES 18,102 45,807 288,700 242,893 866,100 820,293 5.29%

SUBTOTAL OPERATING & NON-

OPERATING EXPENSES 863,761 4,203,810 4,713,850 510,040 14,141,549 9,937,739 29.73%

EXPENSED ASSETS 22,812 50,456 27,407 (23,050) 82,220 31,764 61.37%

NON-CASH ITEMS 38,556 90,849 247,087 156,239 741,262 650,414 12.26%

TOTAL EXPENSES 925,128 4,345,115 4,988,344 643,229 14,965,031 10,619,916 29.04%

NET REVENUES 1,453,627 3,452,870 1,401,773 2,051,097 4,205,319 (752,449) 117.89%

PURCHASED SERVICING & CAPITAL OUTLAY

PURCHASED SERVICING RIGHTS 525,530 1,232,081 916,667 (315,414) 2,750,000 1,517,919 44.80%

CAPITALIZED ASSETS 23,720 148,427 52,613 (95,814) 157,840 9,413 94.04%

TOTAL PURCHASED SERVICING & CAPITAL OUTLAY 549,249 1,380,508 969,280 (411,228) 2,907,840 1,527,332 47.48%

TOTAL INCLUDING CAPITALIZED ITEMS 2,002,876 4,833,378 2,371,053 1,639,869 7,113,159 774,883 89.11%

4%

NEW MEXICO MORTGAGE FINANCE AUTHORITY GENERAL FUND & HOUSING

BUDGET VARIANCE REPORT

FOR THE FOUR MONTHS ENDED 1/31/18

February 14 – March 13

MEDIA COVERAGE

2-15 Albuquerque Journal County panel Oks two bond measures 2-18 Las Cruces Sun-News NMMFA set lending record of $370M in 2017 2-22 Ruidoso News Affordable housing board will benefit from existing authority’s experience 2-25 Hobbs News-Sun Parkside Terrace hosts open house

PRESS RELEASES, NEWSLETTERS and LENDER MEMOS

2-14 All lender e-blast Fannie Mae LIHTC fund 2-28 Lender memo 18-05 Allowable loan origination fee 3-2 Lender memo 18-07 March 2018 webinar training schedule

AROUND NEW MEXICO

County panel OKstwo bond measures

JOURNAL AND WIRE REPORTS

The Bernalillo CountyCommission approved two bondproposals at a meeting Tuesday.One was a $7 million industrialrevenue bond measure forVitality Works, an Albuquerquebased manufacturer of dietarysupplements. Vitality Worksreceived another $7 millionIRB in 2011; both function as amechanism for "real, personaland grossreceipts tax breaks,"according to a statement by the bythe county.The other measure was a $23

million project revenue bondproposal for a 240unit affordablehousing complex by DBGProperties. The county said in astatement that the bonds will befunded by private investors withlow income housing tax creditsfrom the New Mexico FamilyMortgage Finance Authority.

NM0082 Albuquerque JournalPage Number: 012Publication Date: 02/15/2018

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County: Bernalillo

Real estate connection

NMMFA set lending record of $370M in 2017GARY SANDLER

LAS CRUCES TheNew Mexico Mortgage Finance Authority servedmore firsttime and nonfirsttime home buyers in2017 than in any otheryear on record, according

to MFA Homeownership RepresentativeTeri Baca. MFA was created by the stateLegislature in 1975 and has providedmortgage loans and down payment assistance to more than 50,000 low and moderateincome home buyers throughout thestate.

In addition to making $370.5 million inlowinterest mortgage loans to over2,500 New Mexico home buyers, MFAprovided $14.5 million in down paymentand closing cost assistance. In Doña AnaCounty alone, MFA made mortgages anddown payment assistance loans andgrants totaling $34.6 million.FIRSTHome buyers utilized $23.9

million worth of mortgages, with mortgages to NEXTHome buyers accountingfor another $8.9 million. The 240 DoñaAna County buyers who utilized MFA financing took out mortgages averaging$136,667. FIRSTHome and NEXTHomebuyers also took advantage of $1.07 million and $267,802, respectively, in downpayment assistance loans and grants.MFA offers programs for both first

time and nonfirsttime buyers. The organization's FIRSTHome program isavailable to firsttime buyers with lowtomoderate income. A firsttime buyeris defined as a buyer who has never

owned a home or owns a home in whichthey have not lived during the past threeyears. FIRSTHome can be used in conjunction with MFA's down payment assistance secondmortgage loan program, FIRSTDown, which lowers theamount of cash buyers have to bring tothe table at closing. MFA requires thatbuyers invest a minimum of $500 of theirown funds when purchasing.For example, a firsttime buyer, pur

chasing a home costing $150,000 whochooses to finance using an MFAFHA

mortgage would typically need a downpayment of 3.5 percent of the purchaseprice ($5,250), plus closing costs ofaround $3,000, for a total of $8,250 toswing the deal. MFA's FIRSTDown assistance is a second mortgage program designed to bridge the gap between the$8,250 and MFA's minimum cash requirement of $500. In this case, the$7,750 required to bridge the gap wouldbe repaid at the rate of $6 per month forevery $1,000 borrowed, adding just$46.50 per month to the normal mortgage payment. None of MFA's loan products contain prepayment penalties.The NEXTHome program is de

signed to assist current homeownerswho want to move up, as well as firsttime buyers who exceed the FIRSTHome income limits. According to Baca, "The NEXTHome program allowsmoveup buyers with annual incomes upto $90,000 to buy a home with a salesprice of up to $340,000 anywhere in NewMexico. If a buyer would prefer to retainthe majority of proceeds from the sale oftheir existing home rather than usingthem towards their next purchase, theymay, since the required minimum investment from the borrower's own fundsis only $500."NEXTHome is a combination first

mortgage loan and down payment assistance grant. The grant, equal to 3 percentof the buyer's total loan amount, does nothave to be repaid and may be applied todown payment, closing costs, and reserves for taxes and insurance.The FIRSTHome/FIRSTDown and

NEXTHome programs may be used to finance singlefamily residences, whichinclude detached sitebuilt homes, townhomes, approved condominiums andpermanently attached doublewide manufactured homes. Buyers must invest atleast $500 of their own funds, none ofwhich can be derived from a gift or loan.MFA requires a minimum credit score of620, however in some cases, a borrowerwith no credit score may still be able toqualify by using alternative credit.VA and USDA Rural Housing loans

both require zero down payment, where

as FHA requires 3.5 percent down andHFA Preferred (conventional) requiresthree percent down. MFA's goal is tokeep interest rates as competitive aspossible in order to enhance affordability. In the case of zerodown loans, MFA'ssecond mortgage or grant can be utilizedto pay all but $500 of the required closingcosts.Income limits for firsttimers pur

chasing in the Las Cruces MetropolitanStatistical Area, which includes all ofDoña Ana County, are currently set at$58,996 for 12 person households, and$67,845 for households of three or more.The total sales price of the home may notexceed $253,809. As with all MFA programs, down payment assistance loansand grants can only be used for the purchase of a home that will be owneroccupied. Funds cannot be used to refinancean existing loan or purchase a rentalproperty.These terrific benefits are as real as

they come and only accessible throughMFAapproved lenders, a list of which isavailable at housingnm.org/homebuyers/finda participatinglender. Notall approved lenders carry the full lineupof MFA products or charge the samefees, so it pays to shop around beforemaking your final selection.

See you at closing!Gary Sandler a fulltime Realtor and

president of Gary Sandler Inc., Realtorsin Las Cruces. He can be reached at 5756422292 or [email protected].

NM0082 Las Cruces SunNewsPage Number: 44Publication Date: 02/18/2018

NMMFA set lending record of $370M in 2017

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367297-02-18_44001.pdf

County: Dona Ana

Affordable housing board will benefit from existing authority's experience Dianne L Stallings, Ruidoso NewsPublished 2:58 p.m. MT Feb. 22, 2018 | Updated 2:28 p.m. MT March 1, 2018

No specific projects proposed yet

(Photo: Dianne Stallings/Ruidoso News)

STORY HIGHLIGHTS

Members wade their way through regulations

CONNECTTWEETLINKEDINCOMMENTEMAILMORE

Members of Ruidoso’s Workforce Housing Advisory Board were scheduled to wade

through a deep packet of information Thursday, including regulation review checklist and

housing credit income limits and maximum rents for any developer interested in building

a housing project financed by the New Mexico Finance Authority.

The seven-member board was appointed by the mayor and council as a cross section of

the community to work toward implementation of the village’s affordable housing plan in

addition to advising the council on related matters and advocating those issues,

Community Development Director Bradford Dyjak said Wednesday. Councilor have

stressed their emphasis is workforce housing, because as a resort community, many

houses, apartments and other units are out of reach for municipal employees and those

in the service and hospitality-related industries.

The board first met Jan. 3.

“They have reviewed the highlights and strategic goals in the housing plan and

subsequent ordinances approved by the council that established the Affordable Housing

Land Bank and the trust fund,” Dyjak said. “At this point, the advisory board is interested

in coordinating the effort on multiple fronts to facilitate future development and to

evaluate criteria for incentives that could be offered to private sector developers (that

could include) rehab of existing housing stock or for development of other qualifying

projects.”

Two representatives from the Eastern New Mexico Regional Housing Authority will be

going over some of the projects that entity has put together with the private sector, the

resources available for communities that have adopted an affordable housing plan and

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details about the New Mexico Mortgage Finance Authority’s tax credit application process

for larger projects, he said.

“The intent is to use them as advisors and to determine some criteria and evaluate the

suitable of potential projects,” Dyjak said. They have preselected developers who

routinely handled affordable housing projects, he said

He toured one of the facilities in Artesia, a former hospital site reclaimed as an affordable

housing complex. Other projects are in Carlsbad and Roswell, he said.

“The board is well suited to implement the plan and to advocate, to take the council’s

vision and carry the torch forward to implementation this year,” he said.

Everything still is in the conceptual stage, no specific projects have been identified by

village, Dyjak said.

“But they are interested in laying the groundwork for potential projects.”

The advisory board members are Clayton Alred representing education, Becky Brooks

representing business, Sylvia Baca for finance and mortgage, Cecile Kinnan for creative

aging, Charles Meeks for hospitality, Todd Oberheu for health and James Russ for real

estate.

Parkside Terrace hosts open houseCURTIS C. WYNNENEWSSUN

Situated in the full city block south of theHobbs Boys and Girls Club and north of theHobbs Fire Department Station No. 1, the newlyconstructed Parkside Terrace affordablehousing complex witnessed a grand openingand ribboncutting Wednesday.The $14.7 million complex, boasting 65 units

in five energy efficient buildings, broke groundin July 2016 and began accepting tenants lastfall. Oregonbased Pavilion Construction builtthe structures in the interim.Leading the grand opening ceremony, Cali

forniabased Chelsea Investment Corp. ProjectManager Tim Baker said, "If all our projectswent as smooth as we have here, it would beterrific."The City of Hobbs provided $2.2 million

toward the $14.7 million project. New MexicoMortgage Finance Authority authorized $10.8million derived from tax credit equity for theproject. Other organizations involved in thecomplex financing include Community Devel

opment Trust, U.S. Bancorp and the RichmanGroup.Mayor Sam Cobb told the group of about 40

attendees, "This is a great day. … The staff,the commission and I had a vision for thisarea before we decided to do the project withChelsea."He displayed and presented to management

company Monarch Properties, Inc., representative Johnny Hamilton a large poster with anaerial photograph of the area before construction, noting the contrast."We've had over $170 million in housing proj

ect in the last six years through public/privatepartnerships. This one, to me, is my favoritebecause it's a true transformation and a truevision we hope we can leave for the residentshere and the residents of the community,"Cobb said. "The city's on the grow again.Our economy is increasing daily and havingaffordable housing is a very important part ofour community's growth."Baker pointed out 13 of the units are spe

cifically designed for special needs tenants,

inviting Parkside Terrace resident Ida Nelsonto say a few words."I'm in one of the special units because

I'm in a wheelchair. It is very roomy. I haveno trouble getting around in my wheelchairthere," Nelson said. "The staff here is wonderful. … They're all friendly. If they think I needhelp, they offer it, but I've been in a wheelchairso long I can do practically anything from mywheelchair. It's a beautiful place. I have feltmore at ease here, happier here because morelight comes in to my apartment and it's just awonderful place to live."Parkside Terrace offers one, two and

threebedroom apartments for monthly rentof about $298895. Available amenities includebalconies, patios, an onsite laundry, a playground, a basketball court, a picnic area, aclubhouse, a computer center, dishwashersand garbage disposals.The affordable housing complex is located at

300 E. White St.Curtis Wynne m¤y be contacted at report

[email protected].

NM0082 Hobbs NewsSunPage Number: 22Publication Date: 02/25/2018

Parkside Terrace hosts open houseCURTIS C. WYNNE NEWSSUN66.34 column inches

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362290-02-25_22003.pdf

County: Lea

PHOTO COURTESY ZION PATTON

City, state, investment, construction and property management officials gathered behind Parkside Terrace resident IdaNelson, sitting, as she cut the ribbon Wednesday to signify the official opening of the 65unit affordable housing complex in downtown Hobbs at 300 E. White St.

NM0082 Hobbs NewsSunPage Number: 22Publication Date: 02/25/2018

Parkside Terrace hosts open houseCURTIS C. WYNNE NEWSSUN66.34 column inches

Title:Author:Size:Hobbs, NM Circulation: 11074

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County: Lea

New Mexico Mortgage Finance Authority 344 4th Street SW, Albuquerque, NM 87102

tel. 505.843.6880 toll free 800.444.6880 housingnm.org

The New Mexico Mortgage Finance Authority (MFA) received the following information regarding a new Fannie Mae LIHTC Fund. MFA encourages interested parties to reach out to Fannie Mae directly for more information. February 05, 2018

Fannie Mae Announces $100 Million Low-Income Housing Tax Credit Fund Fund Will Focus on Supporting Affordable Multifamily Housing in Hurricane Harvey Impacted Areas and Underserved Markets

Aleksandrs Rozens 202-752-7916 WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today it has closed on a $100 million low-income housing tax credit (LIHTC) fund as part of an ongoing effort to provide a reliable source of capital for affordable rental housing and underserved markets. The fund, which will be known as Raymond James Affordable Housing Fund 11 L.L.C., will be managed for Fannie Mae by its partner in the fund, Raymond James Tax Credit Funds, Inc. The Raymond James Affordable Housing Fund 11 L.L.C. will focus on Hurricane Harvey impacted markets, as well as rural markets and Native American housing, by backing multifamily projects in these underserved areas with funding for rehabilitation and construction. The fund will also work to incorporate resiliency features into properties that are situated in markets subject to flood and storm activity. The fund is expected to make its first investment in the first quarter of 2018. The Federal Housing Finance Agency (FHFA) has approved Fannie Mae’s re-entry into the LIHTC market as an equity investor. Fannie Mae’s deep experience, long history, strong leadership, and partnership approach in the LIHTC market positions the company to provide immediate and ongoing support for the production and preservation of affordable rental housing. “With the Raymond James Affordable Housing Fund 11 L.L.C. we can reach out to underserved markets and have a meaningful impact,” said Dana Brown, Vice President, LIHTC Investments, Fannie Mae. “There is a need for capital to help shore up the supply of housing damaged by Hurricane Harvey and other underserved markets. This fund vehicle is an ideal tool to help make this happen and to support affordable multifamily housing overall.” For more information about Fannie Mae’s Low-Income Housing Tax Credit program, visit our LIHTC program website.

Copyright © 2018 MFA, All rights reserved.

You are receiving this email because you are interested in affordable housing.

Our mailing address is:

MFA

344 4th St SW, Albuquerque, NM, United States

Albuquerque, NM 87102

Add us to your address book

https://www.fanniemae.com/multifamily/low-income-housing-tax-credit



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TO: Participating Lenders

FROM: Rene Acuna, Director of Homeownership

DATE: February 28, 2018

RE: Memo No. 18-05

Allowable Loan Origination Fee

Participating lenders may charge an Origination Fee, to the borrower, of no more

than 0.500% on applications dated March 1, 2018 and thereafter. No discount fee

may be charged.

New program policies will be available on the MFA website by March 1, 2018.

MFA also requests that participating lenders inform the appropriate staff within

their organization of the upcoming changes.

Please feel free to contact MFA’s Homeownership Department with any questions

or for further clarification.

Thank you for participating in MFA’s single-family program.



TO: Participating Lenders

FROM: Rene Acuna, Director of Homeownership

DATE: March 2, 2018

RE: Memo No. 18-07

March 2018 Webinar Training Schedule

MFA Single Family and DPA programs regular monthly training

MFA is hosting its regular webinar training for the MFA single family and down

payment assistance (DPA) programs.

This training is designed for staff whose duties involve originating, processing,

closing and shipping MFA loans. This technical training provides Participating

Lenders with the information needed to efficiently originate, fund and deliver loans

under the current programs guidelines.

Single Family and DPA Programs Webinar Training Date:

Tuesday, March 6, 2018 9:30 am-11:00 am MST

To Participate:

Register via the MFA lender training link http://www.housingnm.org/lender-

training.

In order for MFA to e-mail registered individuals the training materials and to track

attendance, please register no later than 5 pm MST on the business day prior to

the training.

Below is the call in number, access code and link for the webinar. Please sign in

at least five minutes before the scheduled webinar time to accommodate any

software requirements.

Conference Dial-in Number: (415) 655-0002

Participant Access Code: 806 656 355

https://housingnm.webex.com/join/aracicot

When signing into the webinar please sign in with your name and do not

choose an automatic setting that will show as “caller #”. MFA uses this

information to track attendance.

Thank you for participating in MFA’s program. Should you have any questions,

please contact a MFA homeownership representative.

Copyright © 2018 MFA, All rights reserved.

You are receiving this email because of your association with MFA.

Our mailing address is:

MFA

344 4th St SW, Albuquerque, NM, United States

Albuquerque, NM 87102

Add us to your address book

http://housingnm.us3.list-manage.com/track/click?u=8b44122bfcdf98fbe6ae13440&id=af23ac95ad&e=45c3dbe0ff

http://housingnm.us3.list-manage.com/track/click?u=8b44122bfcdf98fbe6ae13440&id=af23ac95ad&e=45c3dbe0ff

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