January 31, 2006

To: VHDA Originating Lenders

VHDA is pleased to announce Round 5 of the SPARC (Sponsoring Partnerships and Revitalizing Communities) loan program. Over $210 million has been allocated for this round of funding.

These special funds will be available at 1/2% to 1% below the standard rate for all of VHDA's first time homebuyer programs financed through mortgage revenue bonds. These include conventional insured, FHA, VA and RHS loans in addition to applicable Step Rate and FHA Plus options. First Choice and Flexible Alternative programs are not eligible. Please note that VHDA pricing options are also not available at this time for SPARC loans. Instead, all fixed rate SPARC loans must be originated using VHDA standard pricing of 1% origination fee and 1% discount point. STEP rate SPARC loans continues to have pricing of 1% origination fee and 2% discount points.

SPARC funds have been allocated to local organizations based on a competitive application process. Attached is a listing of those organizations receiving allocations of these funds. Approved VHDA originating lenders wishing to participate in the origination of these loans are encouraged to contact the SPARC recipient in your area.

Standard VHDA and insurer documents and guidelines will apply, however lenders must contact the SPARC organization to determine any additional program requirements. Each SPARC organization has developed specific criteria to address the special needs for which the funds have been targeted. Additional public and private funds may also be available through the SPARC organization to further increase affordability and assist with downpayment and closing costs.

Reservations for SPARC loans may not be made through the VHDA online reservation system. Reservations must be made by completing the SPARC Round 5 Reservation form and faxing to Gene Griffin or Debra Bailey in VHDA's Reservations area at (804) 783-6728. We will begin accepting reservations on Wednesday, February 1, 2006. To ensure accurate tracking of allocation amounts, the SPARC organization must authorize the reservation of funds for each borrower. Please be sure to fax a copy of the reservation form to the SPARC contact for this authorization prior to submitting to VHDA.

All other standard procedures including delegated underwriting and closing are to be followed. Should you have questions or concerns, please do not hesitate to contact Gene Griffin, Toni Ostrowski or myself.

Sincerely,

Michele G. Watson

Director of Homeownership Programs