In The Media – News Release / Statements

Insurers, Bank of America Join Forces to Support Community Investment, Affordable Housing

Investment Creates Secondary Mortgage Market for Affordable Housing

May 21, 2002

Impact Community Capital’s nine insurance company investors recently completed a major community development investment by purchasing $124 million in affordable multi family mortgages from Bank of America.

The portfolio, which Impact purchased on behalf of its member/investors, contains 7,108 units of affordable rental housing in 95 separate properties throughout California and other western states. Properties include housing for families, seniors, and the developmentally disabled. The units are affordable to low income and moderate-income persons and families.

The announcement marks the second and largest community development investment by insurance companies through Impact Community Capital of San Francisco. Impact was formed by nine leading insurers to provide insurance industry investments in underserved communities. The companies are Allstate, Farmers, Nationwide, Pacific Life, PMI, SAFECO, State Farm, TIAA/CREF and 21st Century.

The Bank of America transaction has been approved by the California Organized Investment Network (COIN), a collaborative effort between the California Department of Insurance, the insurance industry, community development organizations, and community advocates. COIN facilitates insurance industry investments in underserved urban and rural communities. The Bank of American transaction is the largest COIN-approved affordable housing investment since a 1999 Fannie Mae single-family home investment opportunity of $159 million. It is the largest COIN-approved multi-family housing initiative ever.

The Bank of America portfolio contains approximately $67 million in mortgages for properties in states other than California.

“Impact is extremely happy to partner with the Bank of America to enhance and expand community development throughout California,” said Daniel F. Sheehy, president and chief executive officer of Impact. “The properties included in the loan portfolio represent some of the finest examples of community investments available. All of these properties are a credit to their communities and a credit to the Bank of America for supporting them.”

Formed in 1998, Impact has pioneered the pooling and securitization of community development loans. The company’s first investment of $40.5 million in loans originated by the California Community Reinvestment Corporation (CCRC) represented the first successful securitization in scale of this type of multifamily mortgage loans in America. Standard & Poor’s awarded unprecedented “A” and “BBB” ratings to 65 percent of the CCRC mortgage pool, allowing Impact to issue investment grade securities. The remaining 35 percent of the pool was retained by Impact.

In contrast, Sheehy said Standard & Poor’s gave investment grade ratings to 88.5 percent of the Bank of America mortgage pool, including 80 percent that received an “AAA” rating.

As expected, Impact combined the earlier CCRC investment with the new Bank of America mortgage pool to create Commercial Mortgage Backed Securities (CMBS) worth $164 million. The investments are providing market rate returns for the insurers who are member/investors in Impact. Additionally, Impact is in the process of finalizing the purchase of approximately $60 million in tax-exempt affordable multifamily mortgage loans from Bank of America.

Most of the properties in the Bank of America loan pool cater to families and/or senior citizens. However, some are specially designed for low-income students or the developmentally disabled. Nearly all of the properties were developed from new construction or acquisition and rehabilitation of existing properties, including some buildings with local historical significance.

Examples of the California properties are:

• Lyric Hotel in San Francisco, which has a clientele that includes emotionally disturbed adults capable of independent living. Residents include some individuals who were formerly homeless.

• Las Casitas Apartments in Hayward, a 61-unit townhouse-style development that features solar-powered water heating.

• Parkside Apartments in downtown Los Angeles features 79 units in a five-story building within walking distance of the Staples Center and downtown shops and businesses. The project features underground parking, play areas, landscaped BBQ areas, and common laundry facilities. Of particular note is an onsite tutorial service and computer facility staffed by teaching professionals and university students at no additional cost to residents.

• University Cooperative Housing in the Westwood area of Los Angeles provides housing and meal service for low-income college students. The students work at the cooperative to accumulated credit for the cost of housing. Students/renters are owners of the cooperative as long as their rent is current. Students comprise one third of the cooperative’s board of directors.

• Casa Heiwa in the Little Tokyo area of downtown Los Angeles has 100 units for very low-income households. The property is situated near the burgeoning toy district.

• Harbor View Apartments in the Wilmington area of Los Angeles occupies an entire block. The 132-unit complex for low- and very low-income tenants was converted from a 183-unit market rent facility. The property has a childcare center and was awarded California Housing and Community Development (HCD) funds to assist in the conversion based on its proximity to the ports of Los Angeles and Long Beach as well as to the Alameda Transportation Corridor. The project was sponsored by the L.A. Community Design Center.