Official Board Packet

Texas State Affordable Housing Corporation

Board Meeting

To be held at the offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin Texas 78701

Friday, March 9, 2007 10:30 a.m.

BOARD MEETING TEXAS STATE AFFORDABLE HOUSING CORPORATION

To be held at the offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin, Texas 78701

March 9, 2007 at 10:30 am

AGENDA CALL TO ORDER, ROLL CALL Jerry Romero CERTIFICATION OF QUORUM Chair The Board of Directors of Texas State Affordable Housing Corporation will meet to consider and possibly act on the following: PUBLIC COMMENT REPORTS

♦ President’s Report David Long ♦ Executive Vice President’s Report Katherine Closmann ♦ Single Family Lending Report Paige McGilloway ♦ Multifamily Lending Report David Danenfelzer ♦ Marketing and Development Report Janie Taylor

♦ Legislative Report ♦ Financial Report Melinda Smith

♦ Presentation of Financial Statements and Budget Report ACTION ITEMS IN OPEN MEETING Tab 1 Presentation, Discussion and Possible Approval of Minutes of the Board Meeting held on January 19, 2007. Tab 2 Presentation and Discussion of the Texas State Affordable Housing Corporation Single Family Mortgage

Revenue Bonds Series 2007A (Professional Educators Home Loan Program) Transaction. Tab 3 Presentation and Discussion of the Texas State Affordable Housing Corporation Single Family Mortgage

Revenue Bonds Series 2007C (Fire Fighter and Law Enforcement or Security Officer Home Loan Program) Transaction.

Tab 4 Presentation and Discussion of the Corporation’s Single Family Drawdown Bond Program. CLOSED MEETING Consultation with legal counsel on legal matters – Texas Government Code § 551.071 Deliberation regarding purchase, exchange, lease, or value of real property – Texas Government Code § 551.072 Deliberation regarding prospective gift or donation to the state or Texas State Affordable Housing Corporation – Texas Government Code § 551.073 Personnel Matters – Texas Government Code § 551.074 Implementation of security personnel or devices – Texas Government Code § 551.076 Other matters authorized under the Texas Government Code OPEN MEETING Action in Open Meeting on Items Discussed in Closed Meeting ADJOURN Individuals who require auxiliary aids or services for this meeting should contact Laura Ross, ADA Responsible Employee, at 512-477-3555, x 400 or Relay Texas at 1-800-735-2989 at least two days before the meeting so that the appropriate arrangements can be made. Texas State Affordable Housing Corporation reserves the right to recess this meeting (without adjourning) and convene at a later stated time, if and to the extent allowed by law. If Texas State Affordable Housing Corporation adjourns this meeting and reconvenes at a later time, the later meeting will be held in the same location as this meeting. Texas State Affordable Housing Corporation also reserves the right to proceed into a closed meeting during the meeting in accordance with the Open Meetings Act, Chapter 551 of the Texas Government Code. If permitted by the Open Meetings Act, Chapter 551 of the Texas Government Code, any item on this Agenda to be discussed in open meeting may also be discussed by the Board (and any other authorized persons) in closed meeting.

President’s Report

Discussion

Executive Vice President’s Report

Discussion

Texas State Affordable Housing Corporation'sFire Fighter and Law Enforcement or Security Officer Home Loan Program Series 2006B

As of June 15, 2006 through February 28, 2007

Month# of

Loans

% ofTotal

LoansTotal

Originated At a Glance Jun-06 26 12% 2,995,944$ Total Amount Originated $21,948,598Jul-06 22 10% 2,409,564$ Average Monthly Income $3,985

Aug-06 29 14% 2,830,929$ Average Purchase Price $105,921Sep-06 25 12% 2,555,651$ Average Loan Amount $104,022Oct-06 23 11% 2,256,943$ Average Household Size 2Nov-06 21 10% 1,853,414$ New/ExistingDec-06 7 3% 608,139$ Existing 77%Jan-07 28 13% 3,188,045$ New 23%Feb-07 30 14% 3,249,969$ Professional Breakdown

Totals 211 100% 21,948,598$ Correctional Officer 29%Peace Officer 40%

Lender Originated # of Loans Total % Fire Fighter 27%Countrywide Funding Corp. $3,118,528 34 16% County Jailer 3%WR Starkey Mortgage, LLC $2,948,150 29 14% Public Security Officer 1%

Wells Fargo Bank NA $2,242,095 21 10% Type of LoanCornerstone Mortgage Company $1,251,173 10 5% FHA 10%

First Magnus Financial $1,039,490 10 5% FNMA 82%DHI Mortgage Company $833,638 6 3% VA 0%

NTFN Inc./Premier Mortgage $829,397 8 4% USDA-RD 7%SFMC, LP fka Service First Mtg. $798,756 7 3% EthnicityMilestone Mortgage Corporation $764,755 7 3% Not specified 68%

CTX Mortgage Corporation $699,916 5 2% White, not of Hispanic origin 23%Wachovia Mortgage Corp. $695,693 7 3% Hispanic 8%

Valley Mortgage Corporation $524,498 5 2% African American 1%Colonial Savings, F.A. $518,194 5 2% Asian, South Pacific 0%

Market Street Mortgage $442,358 3 1% Top Origination Locations # of LoansNew Century Mortgage $431,902 5 2% HOUSTON 8

McAfee Mortgage & Investments $408,262 4 2% SAN ANTONIO 7Rocky Mountain Mortgage Co. $395,450 4 2% KYLE 6

Home Loan Corporation $359,364 4 2% FORT WORTH 6Republic Mortgage Home Loans $351,818 4 2% EL PASO 6

Happy State Bank $335,350 4 2% BEEVILLE 6National City Mortgage Co. $300,564 5 2% DENTON 5

Prime West Mortgage $283,842 4 2% AMARILLO 5Willow Bend Mtg $258,400 2 1% VICTORIA 3

PointBank $230,300 2 1% SNYDER 3Family Lending Services $178,950 1 0% ROUND ROCK 3

American Home Mortgage Corp. $163,905 1 0% RICHMOND 3Universal American Mortgage Co. $150,524 1 0% MISSOURI CITY 3

First Continental Mortgage $146,840 1 0% HUMBLE 3Hammersmith Financial Corp. $144,600 1 0% CYPRESS 3

Residential Home Lending $137,500 1 0% ARLINGTON 3Prime Lending, Inc. $132,000 1 0%

1st National Bank dba 1st Community $131,929 2 1%First Horizon Home Loan Corp $129,476 1 0%

Home Trust Company $114,207 1 0%First United Bank & Trust $107,500 1 0%

Realty Mortgage $91,774 1 0%New South Federal Savings Bank $89,500 1 0%

Castle & Cook Mortgage $87,000 1 0%Maverick Mortgage $81,000 1 0%

Total Committed $21,948,598 211 100%

Total Allocation $23,640,000Remaining to Commit $1,691,402

Texas State Affordable Housing Corporation'sFire Fighter and Law Enforcement or Security Officer Home Loan Program Series 2006B

As of June 15, 2006 through February 28, 2007

Monthly Origination

26 22 29 25 23 21 7 28 31 212$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Totals

Bond ClosedJune 15, 2006

Occupational Origination Amounts

$561,915.00

$10,128,288.00

$5,990,139.00

$211,068.00

$5,057,188.00

Correctional OfficerPeace OfficerFire FighterCounty JailerPublic Security Officer

Texas State Affordable Housing Corporation'sHome Sweet Texas Loan Program Series 2006C

As of October 17, 2006 through February 28, 2007

Month# of

Loans

% ofTotalLoans

TotalOriginated At a Glance

Oct-06 42 17% 4,615,793$ Total Amount Originated $24,834,982Nov-06 75 30% 7,462,712$ Average Monthly Income $3,231Dec-06 46 18% 4,083,584$ Average Purchase Price $100,499Jan-07 66 26% 6,500,598$ Average Loan Amount $98,552Feb-07 23 9% 2,172,295$ Average Household Size 2

Totals 252 100% 24,834,982$ New/ExistingExisting 69%

Lender Originated # of Loans Total % New 31%Countrywide Funding Corp. $7,230,847 83 33% Type of LoanWR Starkey Mortgage, LLC $1,661,847 15 6% FHA 7%

Cornerstone Mortgage Company $1,631,070 15 6% FNMA 88%Rocky Mountain Mortgage Co. $1,455,450 16 6% VA 0%

Home Loan Corporation $1,440,402 15 6% USDA-RD 5%Hammersmith Financial Corp. $1,194,850 9 4% Ethnicity

New Century Mortgage $1,177,047 10 4% Not specified 80%Prime West Mortgage $1,171,363 14 6% White, not of Hispanic origin 10%

First Horizon Home Loan Corp $1,050,895 11 4% Hispanic 7%SFMC, LP fka Service First Mtg $996,541 11 4% African American 3%

Residential Home Lending $923,000 8 3% Asian, South Pacific 0%Market Street Mortgage $797,180 7 3% American Indian/Alaskan Native 0%

Wachovia Mortgage Corp. $663,346 6 2% Top Origination Locations # of LoansWells Fargo Bank NA $591,242 5 2% HOUSTON 22

Milestone Mortgage Corporation $538,094 5 2% ABILENE 17Colonial Savings, F.A. $512,500 4 2% DALLAS 13

Prime Lending, Incorporated $389,559 4 2% SAN ANGELO 12CTX Mortgage Corporation $268,478 2 1% EL PASO 12

1st National Bank dba 1st Community $259,526 3 1% AUSTIN 12NTFN Inc/Premier Natl. $239,528 2 1% FORT WORTH 10

Valley Mortgage Corporation $237,728 3 1% SAN ANTONIO 9Universal American Mortgage Co. $125,504 1 0% ARLINGTON 8

Patriot Mortgage Co. $121,728 1 0% SOCORRO 6Pulaski Mortgage Company $89,295 1 0% GRAND PRIARIE 6

Summit Mortgage $67,962 1 0% GARLAND 5Total Committed $24,834,982 252 100% RICHMOND 4

LEANDER 4Total Allocation $23,650,000 LANCASTER 4

Remaining to Commit -$1,184,982 HUMBLE 4ALVIN 4

WAXAHACHIE 3PLANO 3

PFLUGERVILLE 3FRIENDSWOOD 3

CEDAR HILL 3AMARILLO 3

Texas State Affordable Housing Corporation'sHome Sweet Texas Loan Program Series 2006C

As of October 17, 2006 through February 28, 2007

Monthly Origination

42 75 46 66 23 252$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Totals

Bond ClosedOctober 17, 2006

Texas State Affordable Housing Corporation'sProfessional Educators Home Loan Program Series 2007A

As of February 21, 2007 through February 28, 2007

Month# of

Loans

% ofTotalLoans

TotalOriginated At a Glance

Feb-07 20 100% 2,360,175$ Total Amount Originated $2,360,175Totals 20 100% 2,360,175$ Average Annual Income $47,750

Average Purchase Price $121,998Lender Originated # of Loans Total % Average Loan Amount $118,009

WR Starkey Mortgage $349,000.00 3 15% Average Household Size 0Countrywide Home Loans, Inc. $346,157.00 4 20% New/Existing

Hammersmith Financial, L.P. $315,400.00 2 10% Existing 85%Wachovia Mortgage Corporation $294,500.00 2 10% New 15%

Colonial Savings, FA $235,188.00 2 10% Professional BreakdownService First Mortgage $210,140.00 2 10% Teacher 100.00%

CTX Mortgage Company, LLC $136,595.00 1 5% Teacher Aide 0.00%Cornerstone Mortgage Company $134,653.00 1 5% School Counselor 0.00%

Home Loan Corporation $126,570.00 1 5% School Nurse 0.00%Countrywide - Wholesale $125,400.00 1 5% School Librarian 0.00%Valley Mortgage Co., Inc. $86,572.00 1 5% Type of Loan

Total Committed $2,360,175 20 100% FHA 35%Conventional 60%

Total Allocation $35,000,000 VA 5.00%Remaining to Commit $32,639,825 USDA-RD 0.00%

EthnicityAmerican Indian/Alaskan Native 0.00%

Asian or Pacific Islander 0.00%Black 20.00%

Hispanic 0.00%White 60.00%Other 15.00%

Not Defined 5.00%Top Originating Counties # of Loans

Tarrant 5Dallas 4Travis 2

Fort Bend 2Tom Green 1

Sabine 1Kaufman 1Jasper 1Hidalgo 1Harris 1

Guadalupe 1

Texas State Affordable Housing Corporation'sProfessional Educators Home Loan Program Series 2007A

As of February 21, 2007 through February 28, 2007

Monthly Origination

20 20$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Feb-07 Totals

Bond ClosedFebruary 21, 2007

Occupational Origination Amounts

$2,360,175.00

$0.00$0.00

$0.00

$0.00

TeacherTeacher AideSchool CounselorSchool LibrarianSchool Nurse

Multifamily Lending Report

Discussion

TEXAS STATE AFFORDABLE HOUSING CORPORATIONCOMPARISON OF BUDGETED TO ACTUAL OPERATING ACTIVITY

(For the Five Months Ending January 31, 2007)

% of AnnualRevenues Budget Actual Budget

Servicing Revenue, Net of Subservicer Fees 427,000 215,369 50.44%

Multifamily Revenue 329,000 150,684 45.80%

Federal Home Loan Bank Note Income 110,000 42,966 39.06%

Asset Oversight Revenue 650,000 247,127 38.02%

Investment Revenue 160,000 127,729 79.83% jSingle Family 150,000 34,497 23.00%TOTAL REVENUES 1,826,000 818,372 44.82%

ExpendituresSalaries & Payroll Related Expenditures 1,014,000 396,484 39.10%

Professional Services - Legal, Audit & IT 210,000 83,735 39.87%

Office & Equipment Lease 134,000 54,443 40.63%

Travel & Meals 98,000 23,700 24.18%

Interest on FHLB/Wells Fargo CDC Notes 75,000 27,281 36.37%

Sponsorships & Grants 12,500 3,950 31.60%

Marketing 30,500 2,077 6.81%

Insurance 23,500 9,432 40.14%

Professional Dues & Training 21,000 3,200 15.24%

Communication 16,000 7,283 45.52%

Bank Fees & Charges 10,000 4,058 40.58%

Office Supplies 9,000 1,785 19.83%

Publications, Subscriptions, Office Maintenance 4,000 1,926 48.15%

Freight, Delivery & Postage 7,500 1,147 15.29%

Furniture, Equipment, & Software 10,000 9,967 99.67% kPrinting 3,000 582 19.40%

Program and Loan Administration 7,000 534 7.63%

TOTAL EXPENDITURES 1,685,000 631,584 37.48%

NET INCOME 141,000 186,788 132.47%

Target Percentage = 42%

FY 2007

TEXAS STATE AFFORDABLE HOUSING CORPORATIONCOMPARISON OF BUDGETED TO ACTUAL OPERATING ACTIVITY

(For the Five Months Ending January 31, 2007)

Explanation of Budget Variances:

j Revenue projections for Investment Income have been revised to $260,000 as budgeted revenue was too low.

Investment revenue as a percentage of the revised estimate equals 49% compared to the target of 42%.

k The majority of the Corporation's fixed asset purchases were made during the first four months of FY 2007.

The Corporation is not anticipating any significant additional purchases through year end.

BOARD MEETING TEXAS STATE AFFORDABLE HOUSING CORPORATION

Held at the Offices of Texas State Affordable Housing Corporation

1005 Congress Avenue – Suite B-10 Conference Room Austin Texas 78701

January 19, 2007 at 10:30 am

Summary of Minutes Call to Order, Roll Call Certification of Quorum The Board Meeting of the Texas State Affordable Housing Corporation (the “Corporation”) was called to order by Jerry Romero, Chair, at 10:35 a.m., on January 19, 2007, at the offices of Texas State Affordable Housing Corporation, 1005 Congress Avenue – Suite B-10 Conference Room, Austin, TX 78701. Roll Call certified that a quorum was present. Members Present Jerry Romero, Chair Thomas A. Leeper, Vice Chair Jesse A. Coffey, Member Jo Van Hovel, Member Members Absent Charles G. Rencher, Member Staff Present David Long, President Katherine Closmann, Executive Vice President Melinda Smith, Chief Financial Officer Nick Lawrence, Controller Paige McGilloway, Single Family Programs Manager David Danenfelzer, Multifamily Programs Manager Janie Taylor, Manager of Marketing and Development Emily Lah, Asset Oversight & Compliance Manager Gracie Jackson, Asset Oversight & Compliance Specialist Laura Ross, Corporate Secretary Public Comment Please refer to Tab item 2. Special Guests Daniel Allgeier, NuRock Development Tim Almquist, Countrywide Amanda Arriaga, Office of the Governor

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Cynthia Bast, Locke Liddell Edwina Carrington, Reznick Group Bob Dransfield, Fulbright & Jaworski Rob Dubbelde, Greenberg Traurig Erin Ferris, Texas Department of Housing and Community Affairs Mary Koelling, First Southwest Company Tim Nelson, RBC Capital Markets Joseph Sherman, Rainbow/TX Council Greg Stites, Wells Fargo Reports President’s Report Mr. Long began by introducing Ms. Arriaga with the Governor’s office; Ms. Ferris with the Texas Department of Housing and Community Affairs (TDHCA); and Ms. Carrington, former Executive Director of TDHCA. Mr. Long introduced Mr. Danenfelzer as the new Manager of Multifamily Programs. Executive Vice President’s Report Ms. Closmann began by turning the Board’s attention to the ‘Notice of Protective Advances under the Loan Agreement’ that was issued with regard to the NHT/GTEX portfolio. Ms. Closmann explained that this indicated the bond insurer, MBIA, was making loans to the properties to be used towards property improvements in order to turn things around. Ms. Closmann welcomed Mr. Danenfelzer to the Corporation. Single Family Lending Report Ms. McGilloway began by making the Board aware that the 2006C Program (the Home Sweet Texas Loan Program) was fully originated. Ms. McGilloway then stated that the Homes for Texas Heroes program had seen a steady increase in origination since December. Ms. McGilloway reported that the bond applications for both 2007 programs had been submitted to the Bond Review Board (BRB) on December 29th. Ms. McGilloway made the Board aware that a TEFRA hearing had been held with regard to the programs, and stated that three staff members had attended, as well as a representative from TDHCA. Mr. Romero inquired about the Homes for Texas Heroes program statistics included in the board packet and Ms. McGilloway explained that the amount of funds available in the program that was in the packet was slightly lower then was currently being reported, because that amount included loans pending approval, and the numbers before her did not. Mr. Romero inquired whether she anticipated the numbers in origination to continue to climb and Ms. McGilloway stated that she did. Ms. Van Hovel inquired if new lenders had become involved in the programs, and Ms. McGilloway confirmed that in the past three months close to six lenders had come on board with the programs, three whom had never participated in the programs before and three who had.

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Multifamily Lending Report Mr. Danenfelzer introduced himself to the Board and stated his happiness to be at the Corporation. Mr. Danenfelzer informed the Board that he had reviewed the applications for preliminary allocation under the 2007 Private Activity Bond (PAB) program and the results would be discussed under tab 2. Mr. Danenfelzer stated that he had also been reviewing a lot of the previous portfolio of lending programs and had contacted Federal Home Loan Bank of Dallas and Community Development Trust to reopen the lines of communication with them. Mr. Danenfelzer made the Board aware of his plans to update information on the website and update the materials available there. Mr. Danenfelzer followed by stating his hope to work with Ms. Taylor to market the Corporation’s programs to a broader area, including rural areas in the state. Mr. Romero welcomed Mr. Danenfelzer to the Corporation. Marketing and Development Report Ms. Taylor began by informing the Board that during the first week of February, she would be conducting a media tour and visiting two TV stations, one radio station, and two newspapers to discuss the Corporation’s programs. Ms. Taylor updated the Board, stating that staff was in the process of making changes to the website and its anticipated completion time was the beginning of March. Ms. Taylor then made the Board aware that the Association of Texas Professional Educators would be having their state convention in March and that she and Ms. McGilloway would be there with an exhibit to promote the Professional Educators program. Ms. Taylor turned the Board’s attention to the Legislative session. Ms. Taylor reported that staff had met with Mr. Esparza in Senator Lucio’s office to discuss the Corporation’s programs. Ms. Taylor stated that out of this meeting came the idea to survey the deans of nursing schools around the state regarding the Nursing Faculty Home Loan Program. Ms. Taylor reported that the survey had been conducted and though they hadn’t received all the feedback yet, the preliminary results had brought forth good information. Ms. Taylor anticipated being able to share the results of the survey at the next Board Meeting. Ms. Taylor informed the Board that staff had met with Ms. Kimbol of the Health and Human Services Committee who worked with Senator Nelson, the author of a bill creating a program for allied health education program faculty. Ms. Taylor stated that staff was in the process of determining those individuals the program would benefit and Ms. Kimbol was assisting them in that effort. Ms. Taylor noted the program would be for a total of $5 million. Ms. Taylor then stated that Senator Bonnen of Angleton had authored a bill to add EMS personnel to the Homes for Texas Heroes program. Ms. Taylor informed the Board that staff would be meeting with his office next week to discuss the bill. Ms. Taylor refreshed the Board’s memory that in November Representative Madden had filed a bill that would add Juvenile Correctional Officers to the Homes for Texas Heroes Program.

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Ms. Taylor referred the Board to the legislative update that was emailed to them the previous Monday and asked that if they had any comments or feedback to please let her know. Ms. Van Hovel asked if advertising and marketing would be done in areas of the state in addition to the Austin area, and Ms. Taylor clarified that the media visits she would be conducting were with regard to the class “The Five-Minute Media Connection” put on by Greenlights that she attended in November. Ms. Taylor stated that this was a local program, so therefore she would only be visiting with local Austin media. Ms. Taylor followed by stating that the release of the new Professional Educators and Homes for Texas Heroes Programs would set up the opportunity to meet with media in other parts of the state. Mr. Romero inquired if a marketing budget was in place to use for advertisements. Ms. Taylor stated that because of the marketing budget’s size, placing ads would deplete a significant portion. Ms. Taylor noted that press releases would be issued announcing the release of the new Professional Educators program. Mr. Romero inquired if staff had worked to jointly advertise with lenders and Mr. Long stated that it hadn’t been done in the past. Mr. Long also stated that staff worked with the professional associations representing the eligible borrowers to market the programs. Discussion followed. Asset Oversight & Compliance Report Ms. Lah referred the Board to the Annual Asset Oversight Report Summary and proceeded to explain the findings and clarify the difference between an observation and a finding. Ms. Lah then turned the Board’s attention to the Annual Asset Oversight Report. Ms. Lah referred the Board to the Agape Foundation and their properties Ashton Place and Woodstock. Ms. Lah noted that many of their findings were pending and staff was working with them to get them corrected. Ms. Lah informed the Board that she and Ms. Closmann had met with Agape staff to work on the problems and some of the issues had been resolved, however when ownership changed so did the Agape staff. Ms. Lah stated that she had started over with the new staff at the two properties to get them caught up to the place they were at before. Ms. Lah reported that the two properties were slated to be re-audited in February and at that time their status would be evaluated. Mr. Romero inquired how staff followed up with the properties when findings were not corrected, and Ms. Lah stated that phone calls, emails and certified letters were sent. Ms. Lah explained that generally the properties were visited anytime between January and October and that some properties, according to their bond documents, were visited twice. Ms. Van Hovel inquired as to the problems at the Woodstock Apartments, and Ms. Lah noted the three pages of findings and stated that the property was in disrepair which discouraged individuals from living there. Ms. Lah also noted that another property in the area where Woodstock was located was in a similar state and was just now beginning to recover but only due to lowering prices to improve occupancy. Mr. Coffey inquired about property maintenance and Ms. Lah confirmed there was a lack a funding which contributed to the deterioration of the properties. Ms. Lah confirmed that improvements were being made because of the new staff. Ms. Lah then turned the Board’s attention to Bent Creek and Creekwood Apartments and noted that they both included a finding for the Crime Prevention Plan. Ms. Lah stated that they were required to continue providing the plan until they were given written notice by the Corporation

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that they could stop. Ms. Lah stated that staff would not give this notice until a solid track record for the property was established. Ms. Lah then pointed out that 48 units and building 15 at Bent Creek had been taken offline in anticipation of unit conversion. Mr. Romero inquired if anything had occurred on that yet and Ms. Lah stated that nothing had. Discussion then followed about property visits. Ms. Lah referred the Board to the Quarterly Compliance report. Ms. Lah noted that Woodstock was short on low income units, but as of today they were caught up. Ms. Lah then pointed out that two GTEX properties were not meeting their set asides. Ms. Lah explained that they had recently changed management companies and were working to find problems in the files and correct them so the property could be back in compliance. Ms. Lah then noted that three American Housing Foundation properties were not meeting their set-aside requirements. Ms. Lah stated that she had emailed and called with no answer and planned to send a certified letter the following week to remind them that they were not allowed to lease and/or have market rate units occupied until it was corrected. Ms. Lah turned to the Quarterly Resident Services report. Ms. Lah pointed out that American Opportunity for Housing, as well as GTEX was not providing resident services. Ms. Lah announced to the Board that the following Friday would be her last day at the Corporation. Ms. Lah stated that working at the Corporation had been a wonderful opportunity for her, and that she would continue to help through the transition period once someone new was hired. Mr. Romero and the Board thanked her for her commitment to the programs and for her hard work. Financial Report Ms. Smith began by informing the board that the Corporation had made a profit of $226,000 for the period ending November 30, 2006. Ms. Smith noted that multifamily revenue was overbudget due to the payoff from the sale of Town Oaks apartments, and that investment revenue was overbudget by 51%. Ms. Smith noted that the line item for furniture, equipment and software was overbudget due to the purchase of furniture and equipment in anticipation of new employees. Tab 1 Presentation, Discussion and Possible Approval of Minutes of the Board

Meeting held on December 15, 2006. Mr. Coffey made a motion to approve the minutes of the Board Meeting held on December 15, 2006. Mr. Leeper seconded the motion. Ms. Van Hovel abstained. Motion passed. Tab 2 Presentation, Discussion and Possible Approval of Allocation of the

Corporation's 2007 Multifamily Private Activity Bond Cap Based on Responses to the Corporation's Request for Proposals.

Mr. Danenfelzer referred the Board to the handout regarding the responses to the Request for Proposals (RFP). Mr. Danenfelzer informed the Board that the Corporation received two responses to the RFP on January 5, 2007. Mr. Danenfelzer noted that he along with Ms. Closmann, the Corporation’s financial advisor, general counsel and bond counsel had reviewed

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the responses and that after review, NuRock Companies had obtained a score of 205 points and Rainbow Housing Assistance Corporation had obtained a score of 225 points. Mr. Danenfelzer referred the Board to the handouts that contained the scoring sheets for each application, as well as an application summary and recommendation worksheet. Mr. Allgeier with NuRock Development introduced himself to the Board. Mr. Allgeier stated that they were proposing to use the allocation to acquire and rehabilitate properties, and while they had not signed an agreement to purchase the properties yet, they were looking at properties in Fort Worth, North Richland Hills and Irving. Mr. Allgeier gave an overview of NuRock Development and proceeded to inform the Board of what NuRock’s plan was for the properties. Mr. Allgeier described the Breakout Program and how it would be used at the properties. Discussion followed regarding other NuRock properties and developments. Mr. Sherman with Rainbow Housing Assistance Corporation introduced himself to the Board. Mr. Sherman explained that their proposal sought bond allocation for a portfolio consisting of 909 units of Section 8 housing located in 12 different properties in 8 different cities. Mr. Sherman gave the Board an overview of Rainbow Housing Assistance Corporation and their partners, and then proceeded to inform the Board of what Rainbow’s plan was for the properties. Discussion followed. Ms. Closmann inquired and Mr. Sherman confirmed that Reliant was the Asset Manager for the NHT GTEX 501(c)(3) portfolio. Discussion followed regarding properties in that portfolio and changes that were being made there. Mr. Danenfelzer thanked Mr. Allgeier and Mr. Sherman for their presentations. Mr. Danenfelzer then made the following recommendation: a preliminary allocation of approximately $8 million in private activity bonds be awarded to NuRock Companies, conditioned on their ability to identify and secure property control over one or more sites before March 31, 2007, submit reservation detail packages to the Corporation prior to securing a reservation from the BRB which would need to be done prior to July 1, 2007. Mr. Danenfelzer made a second recommendation: preliminary allocation of approximately $35 million in private activity bonds be awarded to Rainbow Housing Assistance Corporation, conditioned on their acceptance of the Corporation’s preliminary allocation agreement, submission of a reservation detail packages to the Corporation prior to securing a reservation from the BRB which would need to be done prior to July 1, 2007. Mr. Danenfelzer noted that if either applicant was unable to secure reservations within the timeline, the Corporation would begin considering new applications to the PAB RFP. Mr. Romero inquired whether the proposals would be brought back before the Board after today, and Mr. Dubbelde stated that staff would come back to the Board with a resolution regarding the application to the BRB. Mr. Dubbelde noted that this would serve as an inducement resolution. Mr. Dubbelde then stated that a bond resolution would be brought before the Board for both transactions. Mr. Romero made a motion to approve the allocation of the Corporation's 2007 Multifamily Private Activity Bond Cap based on responses to the Corporation's Request for Proposals. Ms. Van Hovel seconded the motion. Motion passed unanimously. Tab 3 Presentation, Discussion, and Possible Approval relating to the Designation

of Master Servicer of the Corporation’s Single Family Mortgage Revenue Bond Programs.

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Mr. Long reported that an RFP for Master Servicer of the Corporation’s single family bond programs had been issued after the December board meeting and based on the responses that were received, staff was ready to make a recommendation. Mr. Long noted that this change in Master Servicer would only apply to the Programs going forward and would not apply to those already issued. Mr. Long stated that the RFP had been sent out, posted in the Texas Register and on the Corporation’s website. Mr. Long informed the Board that staff had received responses from the following firms: Citimortgage (the Corporation’s current master servicer), Countrywide, US Bank and Leader Mortgage. Mr. Long noted that he along with Ms. McGilloway, Mr. Miller with First Southwest (the Corporation’s financial advisor) and Mr. Dransfield with Fulbright & Jaworski (the Corporation’s bond counsel) had reviewed the responses and after review, Mr. Long stated that it was the collective recommendation to have Countrywide be the Corporation’s master servicer going forward. Mr. Long noted that Countrywide’s response was concise and very thorough, and that they were one of the largest Master Servicers in the country. Mr. Long noted that Countrywide was also the largest participating lender, so they would be serving as both master servicer and a lender for the programs. Mr. Long stated his thought that the relationship would be very positive for the Corporation and its programs. Discussion followed regarding the reason for changing. Mr. Coffey made a motion to approve the designation of Countrywide Home Loans as Master Servicer of the Corporation’s Single Family Mortgage Revenue Bond Programs. Ms. Van Hovel seconded the motion. Motion passed unanimously. Tab 4 Presentation, Discussion and Possible Approval of a Resolution Authorizing

the Issuance, Sale and Delivery of Single Family Mortgage Revenue Bonds (Professional Educator Home Loan Program) Series 2007A; Authorizing a Trust Indenture, an Origination, Sale and Servicing Agreement, Bond Purchase Agreement and Continuing Disclosure Agreement, Making Certain Findings and Determinations; Authorizing the Execution of Documents and Instruments Necessary or Convenient to Carry Out a 2007 Texas State Affordable Housing Corporation Professional Educator Home Loan Program; and Containing Other Matters Incident and Related Thereto.

Ms. McGilloway stated that the resolution before the Board would allow staff to proceed with the 2007A Professional Educators Home Loan Program transaction which would include the $76 million in carry forward, but not the $25 million available in 2007 for the program. Ms. McGilloway explained that this money would be put into the market once the $76 million was fully originated. Ms. McGilloway introduced Mr. Dransfield with Fulbright and Jaworski, the Corporation’s bond counsel; Mr. Nelson with RBC Dain Rauscher, the Corporation’s Underwriter; and Ms. Koelling with First Southwest Company, the Corporation’s financial advisor. Discussion followed. Mr. Leeper made a motion to approve a resolution authorizing the issuance, sale and delivery of Single Family Mortgage Revenue Bonds (Professional Educator Home Loan Program) Series 2007A; authorizing a Trust Indenture, an Origination, Sale and Servicing Agreement, Bond Purchase Agreement and Continuing Disclosure Agreement, making certain findings and determinations; authorizing the execution of documents and instruments necessary or convenient to carry out a 2007 Texas State Affordable Housing Corporation Professional Educator Home Loan Program; and containing other matters incident and related thereto. Ms. Van Hovel seconded the motion. Motion passed unanimously.

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Tab 5 Presentation, Discussion and Possible Approval of a Resolution Authorizing

the Issuance, Sale and Delivery of Single Family Mortgage Revenue Bonds (Fire Fighter and Law Enforcement or Security Officer Home Loan Program) Series 2007C; Authorizing a Trust Indenture, an Origination, Sale and Servicing Agreement, Bond Purchase Agreement and Continuing Disclosure Agreement, Making Certain Findings and Determinations; Authorizing the Execution of Documents and Instruments Necessary or Convenient to Carry Out a 2007 Texas State Affordable Housing Corporation Fire Fighter and Law Enforcement or Security Officer Home Loan Program; and Containing Other Matters Incident and Related Thereto.

Ms. McGilloway stated that the resolution before the Board would allow staff to proceed with the 2007 Homes for Texas Heroes program. Ms. McGilloway estimated that the funds remaining for the 2006 program would last 2 more months. Mr. Romero inquired if the new groups being added to the program would be able to participate in the program. Mr. Dransfield discussed this matter, stating that the documents would be modified to include all profession types determined by the Legislature. Discussion followed. Mr. Leeper made a motion to approve the resolution authorizing the issuance, sale and delivery of Single Family Mortgage Revenue Bonds (Fire Fighter and Law Enforcement or Security Officer Home Loan Program) Series 2007C; authorizing a Trust Indenture, an Origination, Sale and Servicing Agreement, Bond Purchase Agreement and Continuing Disclosure Agreement, making certain findings and determinations; authorizing the execution of documents and instruments necessary or convenient to carry out a 2007 Texas State Affordable Housing Corporation Fire Fighter and Law Enforcement or Security Officer Home Loan Program; and containing other matters incident and related thereto. Mr. Coffey seconded the motion. Motion passed unanimously. Tab 6 Presentation, Discussion and Possible Approval of the Fiscal Year Ending

August 31, 2006 HUD Audit Report. Ms. Smith began by explaining that the HUD Audit Report was a regulatory audit required in order to maintain seller-servicer status with HUD and Ginnie Mae. Ms. Smith stated that HUD published an audit guide that the auditor used to perform the audit. Ms. Smith noted that there were specific net worth requirements and insurance requirements. Ms. Smith proceeded to go through the information contained in the audit report. Mr. Romero inquired if the Board had approved the HUD Audit for 2005 and Ms. Smith explained that they had, but it had been presented at the same time as the financial audit instead of separately. Mr. Romero made a motion to approve the Fiscal Year ending August 31, 2006 HUD Audit Report. Mr. Leeper seconded the motion. Motion passed unanimously. Open Meeting After discussion, it was determined that the next Board Meeting would occur on February 9, 2007 at 11:00 am.

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Adjournment Ms. Van Hovel made a motion to adjourn the meeting. Mr. Coffey seconded the motion. Motion passed unanimously. The Texas State Affordable Housing Corporation Board Meeting was officially adjourned at 12:08 pm. Respectfully submitted by________________________________________________ Laura Ross, Corporate Secretary

Tab 2

Presentation and Discussion of the Texas State Affordable Housing Corporation Single Family

Mortgage Revenue Bonds Series 2007A (Professional Educators Home Loan Program)

Transaction.

Discussion

Tab 3

Presentation and Discussion of the Texas State Affordable Housing Corporation Single Family

Mortgage Revenue Bonds Series 2007C (Fire Fighter and Law Enforcement or Security Officer

Home Loan Program) Transaction.

Discussion

Tab 4

Presentation and Discussion of the Corporation’s Single Family Drawdown Bond Program.

Discussion