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Program Change to VHDA Interest Only Products

To:     VHDA Originating Lenders

Re:     Program Change to VHDA Interest Only Products

Date:  March 29, 2007

VHDA is pleased to announce the consolidation of our Interest Only products. This change will eliminate confusion between the Flex Alt Interest Only Pilot and lst Choice loan programs and will provide increased flexibility and simplification for our lenders and borrowers.

Flexible Alternative Interest Only Pilot – Increased to 100% Loan to Value
The recently announced Flexible Alternative Interest Only Pilot program has been improved to allow financing up to 100% loan to value. This change will offer the special affordable features of the Interest Only Program with no mortgage insurance and no downpayment along with the reduced documentation requirements of our Flex Alt programs. The higher Flexible Alternative income and loan limits will apply along with the elimination of federal affidavits, tax returns and recapture disclosure. The recent reduction in Flex Alt interest rates will make this an attractive option for all potential interest only borrowers.

lst Choice Interest Only Program Discontinued
As a part of this programmatic change, the lst Choice Interest Only Program funded with mortgage revenue bonds will no longer be available. Current reservations will be honored.

Effective Dates:
These program changes will be effective, Monday, April 2, 2007.

The consolidation of our interest only products will make this special product available to a larger audience while allowing for quicker, easier processing.

Questions regarding this change may be directed to your assigned VHDA Business Development Officer or the VHDA Underwriting Department at 800-783-6755.

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