Transcript HFA Initiative Webinar

HFA Initiative Webinar
Monday, November 23, 2009
2 p.m. – 4 p.m.
Agenda
1. Accomplishments
2. Securitization Calendar
3. Resolution of Outstanding Issues
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Accomplishments



Program Announced – October 19
Applications Submitted – October 27
NIBP
Applications
NIBP
Requests
State HFAs
51
$17.6 Billion
Local HFAs
97
$4.8 Billion
Allocations Released – November 19, 2009
NIBP
Allocation
NIBP
Deals
TCLP
Allocations
TCLP
Deals
SF
$13.9B
132
$8.4B
18
MF
$4.6B
55
$2.1B
11
$18.5B
187
$10.5B
29
Total
NOTE: NIBP Allocation Includes Bond Credit Enhancement
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Accomplishments


Customer Communication
•
Hosted 6 nationwide webinars with total participation of
over 1,000 people.
•
Prepared detailed answers to over 250 questions
submitted through the HFA Initiative mailbox.
Customer Outreach
•
Over 100 people from Treasury, FHFA and the GSEs have
contributed to the development and implementation of this
Program.
•
Among both GSEs, over 40 deal managers and attorneys
are working side-by-side with nearly 150 individual state
and local housing issuers to help execute and close over
300 discrete transactions by the end of 2009.
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Accomplishments

Program Materials
•
In conjunction with Treasury and FHFA, provided detailed
fact sheets, program applications, due diligence submission
materials, and detailed Program Term Sheets.
•
Program Legal Documents include:
1. New Issue Bond Program:
• Settlement Agreement (SF/MF)
• Placement Agreement (SF/MF)
2. Temporary Credit and Liquidity Program:
• Reimbursement Agreement (SF/MF)
• Temporary Credit and Liquidity Facility (SF/MF)
• Supplement to Indenture (SF)
• Supplement to Indenture (MF)
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Securitization Calendar - NIBP December Close
Due Date
Milestone
Nov 19
• Letter of Intent due
Nov 23
• GSE Counsel Legal Fee Deposit due
Dec 1– 8
• For those HFAs fixing a long-term permanent interest rate in 2009, State Street,
acting as Treasury’s agent, will provide interest rates for the Program Bonds,
subject to confirmation on December 9.
On/before
Dec 9
• Executed final Placement Agreement due to GSE Special Closing Counsel.
• Executed final Settlement Agreement due to GSE Special Closing Counsel.
• HFAs provide final Official Statement and 10b-5 Certificate to GSE Special
Closing Counsel.
Dec 9
• For those HFAs fixing a long-term permanent interest rate, long-term interest rates
confirmed.
Dec 9-13
• HFA and Bond Counsel pre-close Program Bond transactions.
Dec 11
• The HFA shall do all things necessary to register the Program Bonds with DTC
and make the Program Bonds DTC FAST-eligible.
• The HFA Special Advisor shall deliver the completed DTC Eligibility Questionnaire
and the Letter of Representation to DTC, with copies delivered to US Bank, acting
as Closing Agent.
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Securitization Calendar - NIBP December Close
Due Date
Milestone
Dec 14
• All HFA Closing Documents outlined in the Placement Agreement must be
delivered to GSE Special Closing Counsel.
Dec 14-21
• HFA delivers signed Program Bond certificate to Bond Trustee for authentication
and retention as DTC's agent under FAST.
Dec 18
• Bond Trustee delivers certification to US Bank confirming the Bond Trustee holds
a cash deposit from the HFA equal to the required fees (i.e. GSE Legal Counsel
fees, GSE Securitization fees, and other costs of issuance).
Dec 21
• Program Bonds are settled through DTC and delivered directly to US Bank, acting
as Closing Agent, to be held in escrow pending a December 23 closing.
Dec 23
• GSE securities issued to JPMorgan Chase, acting as Treasury’s agent, and
purchased simultaneously by Treasury.
• GSE Legal Counsel fees and GSE Securitization fees are netted against
settlement proceeds and GSE Legal Fee Deposits.
• HFA receives net settlement proceeds.
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Securitization Calendar - NIBP January Close
Due Date
Milestone
Nov 19
• Letter of Intent due
Nov 23
• GSE Counsel Legal Fee Deposit due
Dec 10-17
• For those HFAs fixing a long-term permanent interest rate in 2009, State Street,
acting as Treasury’s agent, will provide interest rates for the Program Bonds,
subject to confirmation on December 18.
On/before
Dec 18
• Executed final Placement Agreement due to GSE Special Closing Counsel.
• Executed final Settlement Agreement due to GSE Special Closing Counsel.
• HFAs provide final Official Statement and 10-b5 Certificate to GSE Special
Closing Counsel.
Dec 18
• For those HFAs fixing a long-term permanent interest rate, long-term interest rates
confirmed.
• The HFA shall do all things necessary to register the Program Bonds with DTC
and make the Program Bonds DTC FAST-eligible.
• The HFA Special Advisor shall deliver the completed DTC Eligibility Questionnaire
and the Letter of Representation to DTC, with copies delivered to US Bank, acting
as Closing Agent.
Dec 18-23
• HFA and Bond Counsel pre-close Program Bond transactions.
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Securitization Calendar - NIBP January Close
Due Date
Milestone
Dec 23-30
• HFA delivers signed Program Bond certificate to Bond Trustee for authentication
and retention as DTC's agent under FAST.
Dec 24
• All HFA Closing Documents outlined in the Placement Agreement must be
delivered to GSE Special Closing Counsel.
Dec 28
• Bond Trustee delivers certification to US Bank confirming the Bond Trustee holds
a cash deposit from the HFA equal to the required fees (i.e. GSE Legal Counsel
fees, GSE Securitization fees, and other costs of issuance).
Dec 30
• Program Bonds are settled through DTC and delivered directly to US Bank, acting
as Closing Agent, to be held in escrow pending a January 12 closing.
Jan 12
• GSE securities issued to JPMorgan Chase, acting as Treasury’s agent, and
purchased simultaneously by Treasury.
• GSE Legal Counsel fees and GSE Securitization fees are netted against
settlement proceeds and GSE Legal Fee Deposits.
• HFA receives net settlement proceeds.
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Closing Calendar - TCLP
Due Date
Milestone
Dec 1
• TCLP Transactions Begin to Close
By Dec 30
• VRDO Bond Trustee gives notice to bondholders of mandatory tender, where
required.
• Execution and delivery of all legal documents to the GSE Special Closing Counsel
for the substitution of credit facilities and payout of fees.
– Reimbursement Agreement
– Temporary Credit & Liquidity Facility
– Supplemental Bond Indenture/Resolution
– Official Statement
– Bond Counsel Opinion
– Other transaction documents
Jan 29, 2010
• Last day HFAs can tender bonds.
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Resolution of Outstanding Issues
1. Allocations
•
Rate Lock Process
State Street Global Advisors (SSgA), acting as Treasury’s
Agent, will provide long-term permanent interest rates for those
HFAs fixing their interest rate in in 2009. Guidance on the
specific process for obtaining rates will be provided by SSgA on
Wednesday, November 25 and posted to the trade association
web sites.
•
Redistribution of Unexpended Allocation
As previously discussed, to the extent there is unused local or
state allocation capacity, there may be a reallocation of unused
capacity. This reallocation is still under consideration with
Treasury and details and timing will be announced when
available.
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Resolution of Outstanding Issues
2. Role of GSE Special Counsel: NIBP
• The overall objectives of the GSE Special Counsel for the NIBP
are:
1.Assist HFAs and their counsels in working through Program
issues, as well as integrating the Program Indenture and its
unique provisions into HFA Resolutions or Indentures;
2.Provide coordination between the bond issuance process
and the securitization process, which is unprecedented in this
form of housing bond financing; and
3.Assure and certify to the GSEs and ultimately to Treasury
that all appropriate requirements and conditions of the
Program are met.
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Resolution of Outstanding Issues
2. Role of GSE Special Counsel: TCLP
• The overall objective of the GSE Special Counsel for the TCLP
are:
1. Prepare new transaction documents and review a wide
variety of issuer documents in order to resolve any conflicts
with current VRDOs and assure consistency with the
Program
2. Support the development of securitization documents and
protocols to support a securitization process for the financing
of Bank Bonds
3. Certify to the GSEs and ultimately to Treasury that all
documents meet the particular requirements of the Program.
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Resolution of Outstanding Issues
3. Legal Fees
Execution
Original
Revised
NIBP
• One Issuance (Simultaneous or Escrow, SF or MF)
• Dual Issuances 1 (Simultaneous & Escrow, SF Only)
• Escrow Release (Per individual SF or MF Release)
– Max of 3 releases for SF and 3 releases for MF
$ 52,500
$ 80,000
$ 7,500
$ 52,500
$ 60,000
$ 7,500
$42,500
$42,500
$10,000
$ 42,500
$ 25,000
$ 1,000
to $ 2,500
TCLP
• 1st Indenture (Includes Initial Series)
• Successive Indentures (Includes Initial Series)
• Additional Series Under Same Indenture
1
For SF NIBP, the escrow and simultaneous issuances must come out of the same
indenture and must close on the same day.
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Resolution of Outstanding Issues
4. Legal Documents
Six HFA Program Legal Documents are currently available on association web
sites, 2 additional documents will be available shortly.
•
Completed and Posted:
1.
2.
•
New Issue Bond Program (updated forms week of 11/23) :
•
SF & MF Settlement Agreements
•
SF & MF Placement Agreements
Temporary Credit and Liquidity Program:
•
Reimbursement Agreement (SF/MF)
•
Temporary Credit and Liquidity Facility (SF/MF)
•
Supplement to Indenture (SF)
•
Supplement to Indenture (MF)
Pending Completion:
1.
Supplement to Indenture (SF)
2.
Supplement to Indenture (MF)
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Resolution of Outstanding Issues
5. Special Advisor
•
In order to ensure the successful settlement of the Program
Bonds and the GSE Securities, HFAs must:
a. do all things necessary to register the Program Bonds
with DTC so they can be settled, released and credited
to the Closing Agent on the pre-settlement day, and
b. provide the GSEs with a 10b-5 opinion with respect to
the Official Statement issued for the Program Bonds.
•
The Special Advisor may be any experienced party able to
successfully perform the duties detailed in the Placement and
Settlement Agreements with regard to properly setting up and
processing bonds through DTC.
•
The 10b-5 opinion need not be delivered by counsel to the
Special Advisor so long as an acceptable 10b-5 opinion is
delivered to the GSEs.
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Resolution of Outstanding Issues
6. Replacement Refundings
•
Focus on New Mortgage Originations
For the purposes of this Program, the objective of a
replacement refunding should be to carry forward unused
volume cap from preexisting issues of bonds into a new issue
of bonds, resulting in new mortgage originations.
•
Use of Market Bonds
For the purposes of this Program, Market Bond proceeds may
be used for:
a. replacement refundings,
b. absorbing any economic refunding associated with
replacement refundings, and
c.
refunding previously issued bonds, the proceeds from
which have been partially invested in mortgage loans.
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Resolution of Outstanding Issues
6. Replacement Refundings (cont)
•
Use of Program Bonds
Based on the parameters described, Program Bond proceeds
may be used for replacement refundings only if:
a. all Market Bond proceeds have first been applied to
replacement refundings, and
b. Program Bond proceeds applied to replacement
refundings are exclusively for the origination of new
mortgages.
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Resolution of Outstanding Issues
7.
NIBP - Withdrawals from Indentures
Covenants in the supplemental indentures for the NIBP have
been revised to provide additional flexibility to Issuers to withdraw
funds from the lien of the Indenture, as follows:
(a) The Issuer shall take all steps necessary to assure that all assets and
revenues of any description pledged to the payment of the Program Bonds and all
other bonds issued under the Indenture shall be applied strictly in accordance
with, and solely for the purposes and in the amounts specified and permitted by,
the terms of the Indenture.
(b) The Issuer shall not exercise any rights it may have to make voluntary
withdrawals of cash or other assets from the lien of the Indenture except under the
following circumstances and within the following limits:
(1) No withdrawals whatsoever shall be made during any period when any of
the long term credit ratings on the Program Bonds are below the initial long
term credit ratings of the Program Bonds required in connection with the
Single Family New Issue Bond Program.
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Resolution of Outstanding Issues
7.
NIBP - Withdrawals from Indentures (cont)
(2) No withdrawals whatsoever shall be made to the extent that such
withdrawal would adversely affect any of the long term credit ratings on the
Program Bonds that are effective immediately prior to such withdrawal.
(3) The withdrawal is made only for internal purposes of the Issuer, including,
but not limited to, funding a program sponsored by the Issuer or paying
administrative expenses of the Issuer.
(4) Withdrawals shall be made only to (i) fund programs sponsored by, or other
administrative expenses of, the Issuer which have been historically funded with
the proceeds of withdrawals from the Indenture, and the annual amount of
such withdrawals shall be consistent with the annual amount of past
withdrawals for such purpose; or (ii) permit the Issuer to withdraw cash for
internal purposes of the Issuer if the amount to be withdrawn is:
(A) a return of capital previously contributed to the Indenture by the
Issuer in cash or as a cash equivalent; or
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Resolution of Outstanding Issues
7.
NIBP - Withdrawals from Indentures (cont)
(B) an unpaid administrative fee payable to the Issuer, unreimbursed
expense incurred by the Issuer on behalf of the Indenture, unpaid
ratable allocation of overheads of the Issuer to its various indentures
and housing programs of the Issuer, unpaid contribution to an official
housing program of the Issuer, or an unpaid item of a similar nature
inuring to the benefit of the Issuer or any of its housing programs,
from a prior period where: (i) under the terms of the Indenture, as in
effect during such period, the payment or withdrawal could have
been made from the Indenture for such purpose; and (ii) if the
payment or withdrawal was then permitted under the applicable
financial release requirements of the Indenture; the Issuer took
official action to retain the amount in the Indenture under terms
where the payment or withdrawal was deferred to a later time.
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Resolution of Outstanding Issues
7.
NIBP - Withdrawals from Indentures (cont)
(5) The Program Bonds are then rated by a Rating Agency and prior to and as
a condition to each withdrawal, the Issuer shall obtain and furnish to the GSEs
and to Treasury a confirmation from each of the Rating Agencies then
maintaining a long term rating on the Program Bonds that, immediately after
such proposed withdrawal: (i) the rating on the Program Bonds will be not less
than [specify exact rating of the Program Bonds as of the issue date]; and (ii)
the rating outlook assigned to the Program Bonds will be either “Stable” or
“Positive” or the equivalent.
(6) Prior to and as a condition to each withdrawal, the Issuer shall provide a
written certification to the GSEs and to Treasury specifying the amount and
purpose of the withdrawal and that the requirements of this subpart (b) have
been met with respect to such withdrawal.
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Resolution of Outstanding Issues
8. I/O Strips
•
The original position on I/O strips is reaffirmed. I/O strips from
Program Bonds or mortgage loans are not permitted.
9. Investment of Escrow Proceeds
•
The specific investment vehicle used for the escrow proceeds
is still being determined.
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Resolution of Outstanding Issues
10. Q&As
• Effective Monday, November 23 at 5 p.m. eastern time, the GSEs
will no longer be responding to questions submitted through the
Kutak website.
• Instead, we urge issuers and members of their working groups to
pose questions directly to their GSE Deal Teams. The Deal Teams
will respond directly to specific deal questions posed by their
assigned issuers and answers to general program questions will
continue to be coordinated between the GSEs and disseminated
through the association websites in the form of Q&As.
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- END -
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