July 2000 Affordable Housing Transaction

Impact invested $40.3 million in 12 low-income, multi-family housing properties consisting of 1,456 units located throughout California. Though small by number of properties, the transaction demonstrated the wide range of affordable housing that Impact supports. The portfolio included a variety of large and small projects located in urban, suburban and rural communities, including properties developed for and owned by farmworkers in California's Central Valley; housing for low-income seniors and the disabled in Huntington Park; apartments for low- and moderate-income families in Roseville; an apartment complex in Los Angeles that houses the Temple/Edgeware Boys and Girls Club; and a mixed-use development in Berkeley that includes low-income housing and small businesses.

These unique transaction features were designed to serve as a prototype for future investments

• Portfolio purchase funded with proceeds from simultaneous securitization

• Insurance company “balance sheet friendly” with internal credit enhancement via a senior/subordinate structure

Two investment-grade tranches plus a third tranche of unrated, first loss position

Over half the pool eligible for NAIC-I classification

Sequential pay-down structure with preference to highest rated tranche to shorten the average life of senior tranches and reduce their risk profile from rating agency perspective

Double-REMIC tax election to ensure efficient tax treatment

•Lifetime call option retains potential to combine the pool with additional collateral at a later time to form a larger, more diversified pool to further improve economies of scale

•Loan modification capability to preserve autonomy in managing the portfolio for credit and prepayment risk

Portfolio Summary (weighted average)

• $3.4 million average loan balance (range $347 thousand to $10.1 million)

• 251 months remaining term/80.5 months seasoning

• 88 months to roll

• 1.17 debt coverage ratio

• 1.996% margin

• 41 months remaining yield maintenance

• 66.7% current loan-to-value

• All loans current and without 30+ day delinquent payments in prior 24 months

• Portfolio purchased on a servicing-released basis (seller/originator retained as subservicer).