Features of Warehouse Line of Credit Agreement, Security Agreement, Servicer Risk Factors and Mitigants  Profiles of Potential Clients/Sponsors— Agreement, and MBS issuance prospectus. Credit Risk Commercial bank and non-bank financial insti-  Repayment—Proceeds from future securitization of Arising when the actual mortgage default rate tutions, Secondary Market Conduit. the subject mortgage portfolio are to be funneled goes beyond the expected level, or the  Currency—US Dollar or local currency of the back to IFC to pay down the drawn WHL. inability of MBS placement. countries specified by IFC.  Standard Fees—Commitment fee of 0.5% per  External Credit Enhancement—Corporate  Security Pledged as Collateral—A qualifying annum on the undisbursed principal amount of guarantee, insurance. mortgages portfolio. the line and one-time up-front fee of 1.0% of the  Internal Credit Enhancement—Over-  Key Documentation—Loan agreement, Trust principal amount of the line. collateralization, liquidity/debt service account. Definition of Warehouse Line of Credit Legal Risk How Warehouse Line of Credit Works? Warehouse Line of Credit (WHL) is a Arising from the ineffectiveness of enforce- The structure described below is a generic one, and it may be modified under different circumstances. revolving facility granted to a Borrower* to ability of lien title in the event that default acquire and warehouse mortgage portfolio for occurs at a significant scale. future securitization. Such portfolio is pledged Originator 3  Legal opinion from local counsel to IFC as collateral of WHL, and is placed Originator 2 Disbursement ABMortgage Mortgage Servicer Risk into a special purpose vehicle (SPV) in the IFC BorrowersBorrowers of WHL Acquisition Originator 1 Arising from the inability of servicers to meantime for the purpose of securitization. perform their obligation. F The proceeds from future securitization will  Identify a strong master servicer be funneled back to IFC, thus replenishing the Proceeds from Securitization Mortgage ultimate WHL for subsequent use. Portfolio Impact of Warehouse Line of Credit C  Help introduce into the domestic capital Preconditions for Warehouse Line of Custodian market such innovative financial instru- Credit E ABS Issuance D Monitoring Securitization Warehouse Trust ments as mortgage backed securities which  The interest from a number of domestic Proceeds from F & Supervision Securitization Securitization Trustee are needed by local institutional investors. mortgage originators to participate in the  Securitization Develop the primary market by improving securitization program. the standardization and efficiency of under-  Existence of standardized, high quality writing, documentation and servicing of A IFC provides warehouse line of credit to an eligible reputable financial institution is also selected as a mortgage production as well as an efficient mortgage business. borrower for the purpose of acquiring and warehousing custodian of the trust property. aggregation network.  Contribute to improving the legal and  Existence of an effective lien registration mortgage portfolio. E When a critical mass of mortgage portfolio is accumu- B With the disbursement from WHL, Borrower purchases lated, the trust issues mortgage backed securities to regulatory environment for housing finance. system to assure IFC’s interest in the collateral qualifying mortgage portfolio from a number of qualified capital market.  Help to leverage funds utilization by having as a lender is recorded timely and accurately. a built-in revolving feature that affords  mortgage originators; In the meantime, the mortgage F The proceeds from each securitization will be funneled Support of pledge of mortgage lien as portfolio is pledged to IFC as collateral under WHL. through trustee back to IFC, thus replenishing WHL for “multiplier” effect. security held by a special purpose vehicle. C Borrower packages and structure the mortgage subsequent use; IFC will continue to have full recourse  A legal and regulatory system enabling portfolio into a bankruptcy-remote Special Purpose to Borrower in the event that the proceeds from some kind of securitization. Vehicle for securitization. securitization of the underlying mortgage portfolio do  Legal system to facilitate foreclosure and D A reputable financial institution is selected as a financial not fully cover the debt obligation to IFC. eviction in the event of default by individual trustee to monitor and supervise the trust property. A sub-borrowers of the underlying mortgages. * Typically, a secondary mortgage institution, or mortagage aggregator. FC, a member of the World Bank Group, Potential Scenarios of Warehouse Line of Credit is the largest multilateral source of loan and Assuming a US$50 million of Warehousing Line of Credit with a maturity of 7 years: Iequity financing for private sector projects in the developing world. IFC’s mission is to Year 0 Availability Period 557Repayment Period 7 promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. AmountAmount WHL NotionalWHL Notional

18th Month 30th Month 42nd Month Contact Information A Housing Finance Group Global Financial Markets Department DRAWDOWN * Paydown through securitization within International Finance Corporation DRAWDOWN availability period may be re-borrowed. 2121 Pennsylvania Avenue, NW SECURITIZATION & PAYDOWN* Washington, DC 20433 SECURITIZATION & PAYDOWN* T: 202.473.4516 Web site: www.ifc.org/housing

Examples of IFC’s Warehouse Lines of Credit Europe and Central Asia  Baltics—BalAEF Latin America and the Caribbean  Argentina—BACS, Banco Hipotecario  Mexico—GMAC, Su Casita