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         2008 ANNUAL REPORT
       2008 AFFORDABLE HOUSING ADVISORY COUNCIL                                                       2008 AFFORDABLE HOUSING
                                                                                                          ADVISORY COUNCIL
                                                                                                    Mark Lindenlaub, Chair
                                                                                                    Housing Partnerships, inc.
                                                                                                    columbus, in

                                                                                                    Harold Mast, Vice Chair
                                                                                                    senior Project consultant
                                                                                                    genesis non-Profit Housing corp.
                                                                                                    grand Rapids, mi

                                                                                                    Adrian M. Brooks, Sr.
                                                                                                    chief executive officer
                                                                                                    memorial community Development corp.
                                                                                                    evansville, in
Seated left to right: Jacquelyn Dodyk, James Davis, michelle laJoie
Standing left to right: J. Jacob sipe, timothy lemanski, Jack Brummett,                             Jack Brummett
mark lindenlaub – Chair, tahirih Ziegler, Harold mast – Vice Chair, Angela gaabo,                   Regional President
Reverend Adrian m. Brooks, sr.                                                                      great lakes capital fund
Not Pictured: Jane clingman-scott                                                                   indianapolis, in

                                                                                                    Jane Clingman-Scott
                                                                                                    transition coordinator
                                                                                                    muskegon, mi
                      2008 BoARD of DiRectoRs
                  AffoRDABle Housing committee                                                      James Davis
                                                                                                    Vice President of finance/cfo
                                                                                                    lacasa, inc.
                                                                                                    goshen, in

                                                                                                    Jacquelyn Dodyk
                                                                                                    executive Director
                                                                                                    Affordable Housing corp.
                                                                                                    marion, in

                                                                                                    Angela Gaabo
                                                                                                    executive Director
                                                                                                    community economic Development Association
                                                                                                     of michigan
                                                                                                    lansing, mi

Seated left to right: Jonathan Bradford – President & CEO, inner city christian federation, grand   Michelle LaJoie
Rapids, mi; Paul clabuesch – Chairman, President & CEO, thumb national Bank & trust,                Housing Assets Director
Pigeon, mi; tim gaylord – President & CEO, mason state Bank, mason, mi; christine coady             chippewa-luce-mackinac community Action
– President & CEO, michigan interfaith trust fund, lansing, mi.                                       Human Resource Authority, inc.
Standing left to right: mike Hannigan – President, the Hannigan company, llc, indianapolis, in;     sault ste. marie, mi
Jim logue – Senior Vice President & COO, great lakes capital fund, lansing, mi; mike Petrie
– Chairman & CEO, greensfork township state Bank, spartanburg, in; chuck crow – Chair-              Timothy Lemanski
man, President & CEO, community Bank, noblesville, in.                                              chief executive officer
                                                                                                    Kalamazoo neighborhood Housing services, inc.
                                                                                                    Kalamazoo, mi

                                                                                                    J. Jacob Sipe
                                                                                                    community Development supervisor
                                                                                                    indiana Housing and community Development
                                                                                                    indianapolis, in

                                                                                                    Tahirih Ziegler
                                                                                                    executive Director
                                                                                                    local initiatives support corp. (lisc)
                                                                                                    Kalamazoo, mi
                                   MESSAGE FROM THE ADVISORY COUNCIL CHAIR

If you work in housing or financial services, you know the crash these intertwined
industries had in 2008. In this short space, I won’t point to causes of the crash or
debate the merits of any of the unfolding solutions. Instead, I will offer concrete
resources that you can grab onto as you work to rebuild distressed neighborhoods.

The role of the Affordable Housing Advisory Council (Council) is to make
affordable housing program recommendations to the FHLBI’s board of directors.
We reviewed the various programs – including results of the most recent funding
rounds, comments from regulators, and our perspectives on local housing needs – and
recommended Implementation Plan changes.
                                                                                                           Mark Lindenlaub
The unusual context of the housing and financial services industries prompted several
adjustments to how we operated. Instead of making minor scoring changes, the staff made major adjustments
to existing programs and developed guidelines for new ones. For example, many of the set-aside programs
now require homebuyers to meet face-to-face with a counselor before receiving financial assistance, helping to
reduce mortgage delinquencies and defaults. Also, many FHLBI board members joined Council discussions
on program changes, which led to the development of the new Neighborhood Stabilization Assistance. And of
course, everybody brought their perspectives and expertise to the deliberations.

The result is a strong set of programs, offering a variety of financial resources to target specific housing needs.
     Fighting foreclosures? Homeowners can call toll free 866-946-7432 in Michigan and 877-Get-Hope in Indiana.
     FHLBI member institutions can access HomeRetain funds to modify or refinance a primary residence. Members can partner
     with non-profits and apply for Neighborhood Stabilization Assistance dollars that match and work with federal Neighbor-
     hood Stabilization Program funds to help stabilize neighborhoods by purchasing abandoned or foreclosed homes.

     Helping homeowners with refinancing? The Refinance Assistance Program helps homeowners refinance under the
     FHA’s HOPE for Homeowners or other future approved programs.

     Promoting repairs for low-income homeowners? The Neighborhood Impact Program provides grants that
     owners can use to repair their homes.

     Promoting homeownership? The Homeownership Opportunities Program provides funds for downpayment and
     closing cost assistance for first-time homebuyers.

     Developing new rental housing or homeownership opportunities? The Affordable Housing Program can
     help fill a financing gap.

     Recovering from a natural disaster? If your community experienced a state- or federally-declared disaster,
     the flexible Disaster Recovery Program provides assistance for repairs or down payments.

In 2009, the Council will continue to promote FHLBI programs and recommends continuing outreach and
training efforts to further develop participants in affordable housing and community investment programs;
promoting the use of set-aside programs to address foreclosure issues; and increasing the use of letters of
credit, particularly since they can now support tax-exempt bond issuances for municipal projects.

Finally, don’t forget the expertise embodied by your Council. Whether you are an FHLBI member, housing
developer, or concerned neighborhood resident, we are here to be of service to you. The challenges ahead are
significant – even unprecedented. Your Council will continue to help to keep the FHLBI properly positioned
to respond to Indiana and Michigan communities’ housing needs. We are honored to serve as your representa-
tives and welcome your comments.


Mark Lindenlaub

                                      MESSAGE FROM THE PRESIDENT

    The need for funds for affordable housing and community economic development
    is great, especially in Indiana and Michigan where delinquencies, foreclosures, and
    job losses were particularly high in 2008. The FHLBI’s community investment staff,
    the Affordable Housing Advisory Council, and Affordable Housing Committee
    of our board of directors work together each year to decide how our programs
    can best be used to address specific housing and community development needs.

    Their collaborative efforts resulted in the awarding of $9.6 million in Affordable
    Housing Program grants that created 566 homes, including apartments for senior
    citizens, transitional housing for the homeless, and a shelter for young boys. An
    additional $5.7 million was disbursed through our set-aside programs, helping
    first-time homebuyers more easily afford downpayments and closing costs, and
                                                                                              Milton J. Miller
    assisting homeowners with repairs.                                                       President & CEO

    Under our Community Investment Program, members requested $160.5 million in low-cost advances.
    These dollars were used for rental housing and economic development projects such as health care and
    water utility facilities that create jobs in communities hit hard by layoffs and downsizings. The wellness
    center at Swiss Village featured on page 11 of this report is a great example of how the CIP can benefit
    communities. Residents of Swiss Village and surrounding areas now have a place to swim and exercise in
    addition to more job opportunities. The tax-exempt bonds issued to fund this project were supported by
    an FHLBI letter of credit, which can be used for municipal projects such as the wellness center. I would
    encourage our members to explore the use of letters of credit and how they can help improve their

    My staff and I are frequently invited to ribbon-cutting ceremonies and open houses for projects that our
    programs have helped to develop. During the ceremony, residents express their gratitude for a nice, afford-
    able place to live and the positive impact it has had on their lives. After hearing them speak, we return to
    the bank with a renewed feeling of pride and satisfaction about the good work that we do – work that
    couldn’t be accomplished without our members and their partnerships with local organizations. We look
    forward to working with you in 2009.


    Milton J. Miller
    President & CEO

                                     SUMMARY OF PROGRAMS

The need for affordable housing in our communities grew as the economic climate and the effects of
several natural disasters impacted Indiana and Michigan residents. The FHLBI responded during 2008
with member-focused informational meetings that were held in both states resulting in 102 different mem-
bers participating in one or more of the FHLBI’s housing and community development programs. Several
members participated for the first time. On behalf of the Affordable Housing Advisory Council, we would
like to thank members and sponsors for their support throughout the year.

Affordable Housing Program
$9.6 million in AHP subsidy was awarded through two competitive offerings to create or preserve nearly
566 units of affordable owner-occupied and rental housing. Twenty-five members submitted a total of 53
                                                                       2008 percentages
                                                                                   2008 Allocation of
Homeownership Initiatives
                                                                                 Community Investment
In the 2008 program year, from March 2008 through February 2009,
$5.7 million was disbursed as downpayment and closing cost assistance
and homeowner rehabilitation grants through HOP Reserve and HOP
and NIP Express. These funds were disbursed through 63 members to
help individuals and families become homeowners or maintain their                    Competitive
existing homes.                                                                      AHP - 65% or
                                                                                      $9.3 million
Community Investment Program                                                                         Homeownership
The Community Investment Program (CIP) encourages members                                            Initiatives - 35%
                                                                                                         $5 million
to increase their involvement in housing and community-based
economic development. In 2008, $160.5 million was disbursed
through 21 member institutions. In addition, the FHLBI issued
over $34 million in letters of credit to provide credit enhancement
for low- to moderate-income rental projects. A community-wide
wellness center was also supported under new regulatory authority.

                             FHLBI AHP/HOMEOWNERSHIP INITIATIVES
                               SUMMARY 2004-2008 ($ in millions)

                 YEAR                 2004      2005      2006        2007       2008

                 AHP SUBSIDY          $10.9      $8.4     $9.3        $9.1        $9.6

                 AHP UNITS            1,072      954      973         871          566

                 HOP/NIP SUBSIDY       $5.0      $5.6     $5.0        $4.3        $5.7

                 HOP/NIP UNITS        1,150     1,250     1,168       1,549      2,384

                                    FHLBI CIP INITIATIVES
                                SUMMARY 2004-2008 ($ in millions)

                 YEAR                 2004      2005      2006        2007       2008

                 CIP                 $141.6    $112.1    $154.9   $133.3        $160.5

                        AFFORDABLE HOUSING PROGRAM

    In 2008, the Affordable Housing Program (AHP) granted over $9.6
    million to fund 24 projects, creating 566 units of affordable housing.
    Of these projects, 15 are located in Indiana and 9 are in Michigan.

    Nonprofit organizations, for-profit developers, and public entities
    partner with an FHLBI member institution to apply for the competitive
    AHP grants.

    Each application is competitively scored based on a 100 point scale.
    The average score in 2008 was approximately 62 points. A majority of
    the awarded projects were submitted by a member in partnership with a
    nonprofit sponsor, included member financial involvement, were small
    projects with some units reserved for residents with special needs, and
    incorporated some level of green building development characteristics.

    The community investment department is committed to helping applicants
    determine application readiness. Through consultations, several web-based
    training sessions, and telephone helplines, applicants are counseled on
    the most appropriate time to apply based on the status of the development

    Grants awarded during 2008 included:
    • Affordable rental housing for families
    • Habitat for Humanity homes
    • Permanent supportive housing for homeless families, homeless youth,
      and chronically homeless individuals                                              Butterfly Gardens in LaPorte, IN, consists of
    • Rehabilitation or new construction of housing for seniors                         four duplex homes that provide safe and afford-
                                                                                        able housing so that adults with disabilities can
    • Transitional housing to serve victims of domestic violence and their children     live independently. Parents and Friends, Inc.
                                                                                        partnered with Horizon Bank to obtain an AHP
    • Creation of a shelter for male youth ages 6 to 18                                 grant of $360,650.
    • Renovation of a former factory in Michigan into housing for low-income families
    • Transformation of a former orphanage in Indiana into a group home to provide
      around-the-clock residential care to developmentally disabled children

    Since the inception of the AHP in 1990, the FHLBI has awarded
    over $160 million to 856 projects, creating over 22,500 units of
    affordable housing.

                                                                                                              Partners in Affordable Housing teamed up
                                                                                                              with Irwin Union Bank and Trust to renovate
                                                                                                              Georgetown Apartments with the support of
                                                                                                              an AHP grant of $500,000.The apartments
                                                                                                              feature 90 one-, two-, and three-bedroom
                                                                                                              units with one or two bathrooms, kitchen, liv-
                                                                                                              ing room, laundry room, and patio.The reno-
                                                                                                              vation of the apartments will help continue
                                                                                                              the revitalization of an area on the northeast
                                                                                                              side of downtown Indianapolis known as The
                                                                                                              Meadows, the same area where Indianapolis
                                                                                                              Mayor Greg Ballard grew up.

                                                           The former Hekman Biscuit Company in Grand
                                                           Rapids, MI, was renovated into Roosevelt Park
                                                           Lofts. The building offers 21 affordable studio,
                                                           two- and three-bedroom apartments with loft-
                                                           style features such as an open floor plan and
                                                           exposed brick, ductwork and timbers. It also
                                                           offers 2,400 square feet of commercial space.
                                                           Lighthouse Community Development received
                                                           an AHP grant of $147,000 through Fifth Third
                                                           Bank to assist with the renovations.

Muncie Mission Ministries built a new dormitory-
style emergency shelter for homeless men, which
also contains the mission’s administrative operations.
The facility contains 84 beds with room for expansion
in the future. Mutual FSB was awarded an AHP
grant of $500,000. Standing left to right: Dave Bahlman,
Ball State University Foundation, Muncie, IN; Pat Botts,
President & COO Mutual Bank, Muncie, IN; and Charles            Heritage Homes in Holland, MI, developed 45 units of supportive housing in Zeeland and
Hetrick, Maxon Corp., Muncie, IN.                               Holland in Ottawa County. Fifth Third Bank was awarded an AHP grant of $295,461 to
                                                                help develop the homes.

“I’m optimistic about the opportunities in the current economic environment and am embracing the changes necessary
 to allocate and use more tax credits than ever before.” – J. Jacob Sipe, Multi-family Manager for the Indiana Housing and
 Community Development Authority (IHCDA), Indianapolis, IN
                                         2008 AFFORDABLE HOUSING PROGRAM AwARDS

    INDIANA                                                                      INDIANAPOLIS
                                                                                 Seeds of Hope Addition and Renovation-$721,600
                                                                                 Irwin Union Bank and Trust Co.
    Autumn Ridge II-$500,000
                                                                                 Sponsor: Seeds of Hope, Inc.
    Greensfork Township State Bank
                                                                                 12 rental units
    Sponsor: Blue River Services, Inc.
                                                                                 Transitional housing for chemically dependent women. Renovations
    20 rental units
                                                                                 will include improved handicapped accessibility, plumbing, electrical
    Two-, three-, and four-bedroom apartments with one
                                                                                 systems, and windows.
    fully furnished unit for the homeless. A community room,
    homework/computer center, basketball court, and bike
    and walking paths will be available.
                                                                                 Park Place-$500,000
                                                                                 New Washington State Bank
    Wyandotte House-$254,000
                                                                                 Sponsor: New Hope Services, Inc.
    First Harrison Bank
                                                                                 10 rental units
    Sponsor: Blue River Services, Inc.
                                                                                 Former orphanage converted into a group home to provide care for
    10 rental units
                                                                                 10 developmentally disabled children. Educational services will be
    Construction of a 10-bed youth shelter for boys 6 to 18 years
                                                                                 provided by the local school corporation.
    of age. A separate study room and office space for staff and
    counselors will be provided.
                                                                                 Noblesville Senior Housing-$405,000
                                                                                 Star Financial Bank
    Faith Mission Women and Children’s Building-$500,000
                                                                                 Sponsor: Hamilton County Area Neighborhood Development
    1st Source Bank
                                                                                 6 rental units
    Sponsor: Faith Mission of Elkhart, Inc.
                                                                                 Senior housing community of six apartments in three duplexes.
    30 rental units
                                                                                 Each two-bedroom apartment will offer senior-living features
    Transformation of a former funeral home into transitional
                                                                                 such as emergency call systems and grab bars in the showers.
    housing for single women or women and their children.
                                                                                 Lost River Place II-$585,000
    River Cove Villas-$350,000
                                                                                 Old National Bank
    Star Financial Bank
                                                                                 Sponsor: Hoosier Uplands Economic Development Corp.
    Sponsor: Housing Opportunities Program
                                                                                 15 rental units
    14 rental units
                                                                                 Final phase of Lost River Place community. It will offer affordable
    Assisted-living housing for senior citizens with onsite supportive
                                                                                 housing for large families with its three- and four-bedroom units.
    services. The one- and two-bedroom units will contain features
    such as low-step showers and individual patios.
                                                                                 Jill’s House Transitional Housing-$580,000
                                                                                 First Harrison Bank
    Building Dreams-$16,000
                                                                                 Sponsor: Blue River Services, Inc.
    1st Source Bank
                                                                                 4 rental units
    Sponsor: Habitat for Humanity of Elkhart County, Inc.
                                                                                 Transitional housing to serve victims of domestic violence and
    2 homeownership units
                                                                                 their children. The program will help residents achieve skills to
    Construction of two single-family homes complete with range,
                                                                                 become self-sufficient.
    refrigerator, and storage shed.
                                                                                 Spicewood Garden Apartments-$500,000
    Stonehurst Pointe-$500,000
                                                                                 Greensfork Township State Bank
    Greensfork Township State Bank
                                                                                 Sponsor: Hamilton County Area Neighborhood Development
    Sponsor: Milestone Ventures, Inc.
                                                                                 23 rental units
    28 rental units
                                                                                 Construction of two-bedroom units for senior citizens with an
    Construction of two-bedroom units for senior citizens. Three units
                                                                                 office, community center, computer center, and exercise room.
    will be reserved for those with disabilities and two for the homeless.
                                                                                 SOUTH BEND
    Stonehurst Pointe II-$430,000
                                                                                 St. Joseph County Scattered Site Project-$82,760
    First Merchants Bank of Central Indiana, N.A.
                                                                                 1st Source Bank
    Sponsor: Milestone Ventures, Inc.
                                                                                 Sponsor: Habitat for Humanity of St. Joseph County
    7 rental units
                                                                                 8 homeownership units
    New two-bedroom apartments for senior citizens. Apartments are
                                                                                 Construction of eight homes throughout St. Joseph County to
    conveniently located to shopping, medical facilities, and senior services.
                                                                                 be completed by mid-2009.
    Tree City Estates-$400,000
    Ameriana Bank, SB
    Sponsor: Developmental Services, Inc.
    60 rental units
    Construction of 8 two-story buildings in addition to a
    community building with a computer room, full kitchen,
    and offices for social service agencies.

MICHIGAN                                                              OTISVILLE
                                                                      Centerpark Apartments-$122,000
                                                                      Fifth Third Bank
Pear Street Apartments-$200,000
                                                                      Sponsor: Venture, Inc.
Bank of Ann Arbor
                                                                      24 rental units
Sponsor: Avalon Housing
                                                                      Rehab of one- and two-bedroom apartments to reduce
20 rental units
                                                                      maintenance, increase energy efficiency, and improve
Six of the one-bedroom units will be reserved for homeless
                                                                      marketability. The apartments serve very low- and low-
persons. The project is part of MSHDA’s Campaign to
                                                                      income families.
End Homelessness.
                                                                      TRAVERSE CITY
                                                                      Keystone Village-$250,500
Crystal Estates-$315,000
                                                                      Fifth Third Bank
Horizon Bank NA
                                                                      Sponsor: HomeStretch
Sponsor: Harbor Habitat for Humanity
                                                                      24 rental units
21 homeownership units
                                                                      New development will serve homeless families, homeless youth
Construction of 21 single-family homes to help revitalize
                                                                      (ages 18-24) survivors of domestic violence, and the chronically
the community.
                                                                      homeless. Three 2-story buildings will each contain eight units.
CCSS Apartments-$500,000
Fifth Third Bank
Sponsor: Cass Community Social Services
35 rental units
Affordable housing for the homeless, mentally ill, and
physically handicapped. Cass Community Social Services
will provide social services.

Bridge Street Place-$320,000
United Bank of Michigan
Sponsor: Heartside Nonprofit Housing Corp.
16 rental units
One-bedroom units for the homeless who are survivors of
domestic violence. Units are in a residential neighborhood
that offers a bus route, grocery store, bank, library, and
other conveniences within a two-block radius.

Roosevelt Park Lofts-$147,000
Fifth Third Bank
Sponsor: Lighthouse Community Development
21 rental units
Renovation of the former Hekman Biscuit Company. Each
apartment will feature custom cabinets, laundry facilities, and
walk-in closets.                                                      Betty Gossom is a resident of Fulton Place, an affordable community of
                                                                      10 two-bedroom apartments in Rising Sun, IN. An AHP grant of $180,000
HOLLAND                                                               awarded to Rising Sun and Ohio County Senior Citizens through Friendship
Resthaven Maple Woods-$660,000                                        State Bank helped build the facility.
Fifth Third Bank
Sponsor: Resthaven Patrons, Inc.
96 rental units
Supportive housing for senior citizens. Improvements include
new windows and HVAC units in each apartment. Project also
includes the construction of a common area for resident activities.

MRM Men’s Center-$750,000
Fifth Third Bank
Sponsor: Muskegon Rescue Mission
60 rental units
Renovation of this men’s facility to increase residential recovery
program capacity from 38 to 60 men. The renovation involves
gutting and rebuilding the entire facility.

“Good progress is being made with Continuum of Care efforts, which are encompassing broader areas and resulting
 in better collaboration.” – Michelle LaJoie, Housing Assets Director for the Chippewa-Luce-Mackinac Community Action Agency, Sault Ste.
 Marie, MI
                                                                      Swiss Village, a retirement community in Berne,
                                                                      IN, built a wellness center for use by residents of
                                                                      both the village and the community. The center,
                                                                      which opened in January 2009, features a
                                                                      pool, game room, exercise rooms, kitchen, and
                                                                      daycare. First Bank of Berne and nearby Bank
                                                                      of Geneva secured a letter of credit from the
                                                                      FHLBI to support the tax-exempt bonds issued
                                                                      for construction. Standing by the future pool are
                                                                      Kent Liechty, Executive Vice President at First
                                                                      Bank of Berne, Daryl Martin, Executive Director
                                                                      of Swiss Village, and Andrew Briggs, President
                                                                      of Bank of Geneva.

                                                                  With the help of a low-cost advance through the Community
                                                                  Investment Program, Accident Fund Insurance Company of America
                                                                  in Lansing, MI, is transforming a former power plant into its national
                                                                  headquarters. The office complex will feature a four-story atrium that
                                                                  will connect the power plant to a new addition, a large meeting room,
                                                                  cutting-edge technology, a café and gathering space, and a wellness
                                                                  center. Construction of the new headquarters begins in 2009 with
                                                                  completion expected by mid-2011.

    “Unfortunately, foreclosures show no signs of abating.We are currently working with over 100 new homeowners who
     need affordable loans.” – Timothy Lemanski, CEO of Kalamazoo Neighborhood Housing Services, Inc., Kalamazoo, MI.

                                                                      COMMUNITY INVESTMENT PROGRAMS

                                                      In 2008, 21 members used the Community Investment Program (CIP) to
                                                      generate approximately $160.5 million in advances. Also in 2008, CIP
                                                      letters of credit totaling over $34 million were issued.

                                                      CIP provides below market-rate loans that enable financial institutions to
                                                      extend long-term financing for housing and economic development that
                                                      benefits low- and moderate-income families and neighborhoods. The
                                                      program is a catalyst for economic development because it supports proj-
                                                      ects that create and preserve jobs and helps build infrastructure to sup-
                                                      port growth. In 2008, lenders used CIP funds to finance owner-occupied
                                                      and rental housing, a community golf course, construction financing for a
                                                      church with low-income work study programs, small business lending, a
                                                      health care facility, a public facilities water utility, and housing for mentally
                                                      challenged adults.

                                                      HomeRetain is a $100 million special CIP offering to help qualified home-
                                                      owners in members’ local communities who are at risk of defaulting on their
                                                      mortgages. The first HomeRetain offer began late 2007 and expired June 30,
                                                      2008, generating $55.25 million in funding requests. Given the importance
                                                      of developing realistic approaches to help families avoid foreclosure dur-
Mapleton Park Apartments in Indianapolis provide
25 units of affordable housing and supportive         ing this critical time, the FHLBI announced a second $100 million round
services for homeless and very low-income             of HomeRetain to expire June 30, 2009. Overall, during 2008 the FHLBI
individuals and families with 15 units reserved for
homeless veterans. It is an excellent example of      disbursed about $20 million in HomeRetain funding to assist over 260
how AHP and CIP can work together to develop          households.
rental housing. Greensfork Township State Bank
partnered with Partners in Housing Development
Corp. to obtain an AHP grant of $297,500 and          Letters of Credit
the bank also obtained an advance under CIP           The majority of the letters of credit issued under CIP supported tax-exempt
                                                      bonds financing low- to moderate-income rental housing. However, the pas-
                                                      sage of the Housing and Economic Recovery Act in July amended the IRS
                                                      tax code temporarily to allow letters of credit to be used to support the tax-
                                                      exempt bond issuances for municipal projects. Swiss Village, a senior citizen
                                                      community in Berne, IN, built a wellness center for residents of the Village
                                                      and the community. The center is the first project to be completed under this
                                                      new purpose. The financing will also provide money for necessary updates
                                                      and improvements for existing senior living facilities.

                                                      Job Creation
                                                      In 2008, 5 CIP advances were disbursed to projects that were approved on
                                                      the basis of job creation. For example, Accident Fund Insurance Company
LaToya Lee, a resident of Mapleton Park, stands       of America borrowed CIP funds to finance the construction of its new
beside Sharon Stark, Executive Director of the
Homeless Initiative Program to help cut the ribbon    national headquarters in Lansing. Accident Fund estimates it will add up
during a ceremony that officially opened the apart-   to 500 new jobs within 10 to 15 years.
ment building. Lee, a former homeless veteran,
received assistance to enroll in college where she
became a licensed practical nurse.                    CIP Partnering with AHP
                                                      When an AHP project is able to support long-term debt, members can use
                                                      CIP advances to lock in below market-rate funding for the project. In 2008,
                                                      Mapleton Park Apartments in Indianapolis benefited from a $200,000 CIP
                                                      advance disbursed to Greensfork Township State Bank. Mapleton Park is a
                                                      25 unit apartment project with 18 one-bedroom units and 7 two-bedroom
                                                      units. Some units will be occupied by homeless veterans.

                        HOMEOwNERSHIP INITITATIVES

     FHLBI’s Homeownership Initiatives Programs were well received and utilized
     in 2008. Over $5.7 million was provided to approximately 2,384 households
     for assistance with downpayment and closing costs or rehabilitation.

     The Homeownership Opportunities Program (HOP) Reserve and Express
     programs provide downpayment and closing cost assistance to first-time
     homebuyers. NIP provides funds to help homeowners repair their homes.
     Both HOP and NIPExpress are available on a first-come, first-served basis
     whereas the HOPReserve program requires a competitive application, and
     the funds are reserved for the member institution for one year.

     First Federal Savings Bank in Evansville, IN, partnered with the local Habitat
     for Humanity affiliate to provide necessary funds for rebuilding a commu-
     nity. In November 2005 a tornado struck Warrick and Vanderburgh coun-
     ties leaving in its path hundreds of homeless households. To help rebuild,
     the Evansville Habitat for Humanity initiated Operation Home Again to
     construct nearly 40 homes to re-house displaced tornado victims. Operation
     Home Again involved the City of Evansville, which provided grant funds for
     infrastructure, an anonymous donation to purchase property, and hundreds
     of volunteer hours.

     When First Federal’s application for an AHP grant to accompany these
     efforts was unsuccessful, Monica Stinchfield, First Federal Senior Vice
     President and HFH Board member, spearheaded an effort to instead fill the
     funding gap with HOP monies, using $133,700 over 2 years. Up to $5,000
     per household assisted with downpayment and closing costs.

     NIP helped homeowners make repairs to their homes, particularly flood vic-
     tims in southern Indiana. Flood waters ran deep, initiating federally declared
     disaster areas in northern and southern Indiana, some central and western
     Indiana counties, as well as southern Michigan counties.

     Witnessing the magnitude of the damage caused by the flood waters in
     Bartholomew County, Indiana Bank & Trust Company in Columbus, IN,                Habitat for Humanity in partnership with First Federal
     created a groundbreaking effort to provide assistance to flood victims quickly   Savings Bank in Evansville, IN, used HOP funds to
                                                                                      rebuild communities destroyed by a tornado. Up to
     following the recession of flood waters. Once able to navigate county roads,     $5,000 per homebuyer could be used for downpay-
     Senior Vice President Andy Applewhite went door to door, meeting with            ment and closing cost assistance.
     homeowners who might require assistance above and beyond what insur-
     ance and FEMA monies would cover. As a result of these efforts, Indiana
     Bank & Trust used approximately $220,000 in NIP funds for replacement
     of drywall, flooring and other damages.

     Program requirements and grant amounts vary. Grants are typically $3,000
     to $10,000 per household. Although funds from FHLBI may be used only
     once per household, the funds may be paired with other grant programs such
     as HOME or CDBG or, as in the case of NIP funds this year, FEMA or insur-
     ance monies. Households must be at or below 80% of the area median in-
     come to qualify and working either directly with an FHLBI member financial
     institution or a non-profit housing agency that is working with a member.

                                                                             These homeowners celebrate closing on their new homes
                                                                             built with the help of Habitat for Humanity of Evansville,
                                                                             First Federal Savings Bank, and $133,700 in funds from
                                                                             the Homeownership Opportunities Program.

                  (3/27/2008 - 2/27/2009)

                     Households             Total Granted

HOPExpress                 634               $1,616,709

HOPReserve                 836               $1,841,706
                                                                               Flood waters in both Indiana and Michigan damaged
NIPExpress                 914               $2,255,380                        or destroyed hundreds of homes and businesses.
                                                                               In Bartholomew County in Indiana, Indiana Bank
Total                     2,384              $5,713,795                        & Trust in Columbus put NIP funds to use to help
                                                                               homeowners repair their homes.

“At this agency, we have adopted a broader strategic focus on neighborhood development, in addition to affordable
 housing.” – Mark Lindenlaub, President of Housing Partnerships, Inc., Columbus, IN

                                                                                         2008 YEAR IN REVIEW
                          COMMUNITY SPIRIT AwARDS
                                                                                         February 1 – Implementation Plan released. The Afford-
       The FHLBI and its Affordable Housing Advisory Council                             able Housing Advisory Council IPlan subcommittee
       present a Community Spirit Award to individuals from                              spent much time and many conference calls making
       one of its Indiana and Michigan member institutions who                           recommendations to the Board for the 2008 plan.
       have shown outstanding dedication to affordable housing
       and community economic development. The 2008 Com-                                 March 6 – HOPReserve awards announced. Awards
       munity Spirit Awards were presented to Robert Burgess                             totaling $2,935,670 were granted to 35 members.
       and Daryl Crockett.
                                                                                         March 12 – HOPExpress & NIPExpress spring funds
                                   Burgess is Vice President and CRA                     released. Approximately $881,000 in HOPExpress
                                   Officer at Chemical Bank in Mid-                      funds and $1.2 million in NIPExpress funds were made
                                                                                         available on a first-come, first-served basis.
                                   land, MI. As a 30 year employee,
                                   he has been in charge of Commu-
                                                                                         May 30 – Michigan Community Spirit Award presented
                                   nity Reinvestment Act requirements                    to Bob Burgess, Chemical Bank.
                                   for 10 years. Burgess actively sup-
                                   ports his community by serving                        June 8 – Emergency declaration issued by FEMA for 39
                                   on several boards, including the                      counties in Indiana for severe flooding.
                                   Midland County Habitat for
                                   Humanity and the local Continuum                      June 27 – AHP 2008A Awards announced. Fourteen
         Robert Burgess
     Vice President, CRA Officer   of Care which promotes awareness                      projects were awarded $4,764,760.
           Chemical Bank
         Midland, Michigan
                                   of homelessness issues.
                                                                                         July 2 – Second offering of $100 million of HomeRetain
                                   Crockett, Vice President, Commu-                      announced.
                                   nity Development Officer at
                                                                                         July 14 – Emergency declaration issued by FEMA for
                                   Horizon Bank in Michigan City,
                                                                                         12 counties in Michigan for severe storms, tornadoes
                                   IN, has over 37 years of bank-                        and flooding.
                                   ing and not-for-profit experience.
                                   He has helped to develop nine                         July 30 – Housing & Economic Recovery Act (HERA)
                                   low- to moderate-income housing                       enacted. It created the Federal Housing Finance Agency
                                   projects in conjunction with the                      (FHFA) to be the regulator for FHLBanks, Fannie Mae
                                   FHLBI. Additionally, his involve-                     and Freddie Mac. HERA also created HUD’s Neigh-
                                   ment in the community includes the                    borhood Stabilization Program and FHA’s HOPE for
         Daryl Crockett                                                                  Homeowners.
          Vice President           Martin Luther King Center of
     Community Development,        Michigan City, Michigan City
          Horizon Bank
       Michigan City, Indiana      Housing Development, and                              August 15 – HOPExpress and NIPExpress fall funds
                                                                                         released. Approximately $377,000 in HOPExpress funds
                                   the Michigan City Chamber of
                                                                                         and $529,000 in NIPExpress funds were made available.
                                                                                         August 28 – Indiana Community Spirit Award presented
                                                                                         to Daryl Crockett, Horizon Bank.

                                                                                         September 16 – Remnants of Hurricane Ike hit Indiana
                                                                                         dumping 6-8 inches of rain in some areas causing power
                                                                                         outages and flooding.

                                                                                         October 17 – FHFA publishes interim final rule allow-
                                                                                         ing the use of AHP set-aside funds to refinance low- or
                                                                                         moderate-income households’ mortgage loans.

                                                                                         December 4 – AHP 2008B Awards announced.
                                                                                         Ten projects were awarded $4,824,100.

          “Affordable housing is an economic development activity that results in jobs. Our region is stressed by lack of equity,
           but we’re aggressively pursuing other lines of business and moving the search for investors to the local level.” –
           Jack Brummett, Regional President for the Great Lakes Capital Fund, Indianapolis, IN


Seated left to right: stepheny tays – Administrative Assistant; Rosemarie Roberts –
Compliance Analyst.
Row 2 left to right: Debora conley – Compliance Manager; Robert graves – Database
Administrator; maryBeth Wott – VP, Community Investment Officer; trish lewis –
Compliance Manager; milton miller – FHLBI President & CEO.
Row 3 left to right: greg teare – SVP, Chief Banking Officer; Kathy crumpton – Information
& Operations Coordinator; marjorie green – AVP, Relationship Manager; Ronna edwards
– Compliance Analyst.

Community Investment
Contact Information
MaryBeth Wott
VP, Community Investment Officer

Marjorie Green
AVP, Relationship Manager

toll-free: 1.800.688.6697
e-mail: housing@fhlbi.com
                                                                                                         FHLBI COMMUNITY INVES
	                        	Purpose	                                          Funding	Type/Use	                                   2009	Funding	Amou
    Acquire, develop and/or rehabilitate affordable rental or   Grant may be used for:                                      $14.2 million
    owner-occupied housing for households earning up to         • Gap financing                                             $750,000 grant limit per project p
    80% of area median income (AMI)                             • Reducing mortgage principal
                                                                • Funding rehabilitation and new construction
                                                                • Downpayment and closing costs
                                                                • Preserving affordable housing
                                                                • Some soft costs
                                                                • Acquisition

    Assist first-time homebuyers with household incomes         Provide members with case-by-case grant funding for         No specific allocation
    of 80% of AMI or below with downpayment and/or              downpayment and closing cost assistance for first-time
                                                                homebuyers                                                  Up to $5,000 per household
    closing costs
                                                                HOP member limit – $300,000

    Assist existing homeowners with incomes of 80% of           Provide members with case-by-case grant funding for         No specific allocation
    AMI or below with rehabilitation needs                      rehabilitation for owner-occupied housing
                                                                                                                            Up to $10,000 per household
                                                                NIP member limit - $300,000

    Downpayment and closing cost assistance for                 Provide members with case-by-case grant funding             No specific allocation
    homebuyers with household incomes of 80% of AMI             for downpayment and closing cost assistance for
                                                                NSP-assisted houses                                         Up to $10,000 per household
    or below to purchase NSP-assisted property for their
    principal residence
                                                                NSA member limit - $300,000

    Refinance assistance for homeowners with household          Provide members with case-by-case grant funding             No specific allocation
    incomes of 80% of AMI or below using FHA’s HOPE for         for reasonable principal reduction and closing costs
    Homeowners or other FHLBI-approved refinance                to assist in refinance of primary residence of eligible     Up to $5,000 per household
    programs                                                    homeowners

    Assist low- and moderate-income households impacted         Upon authorization by FHLBI Board, related to a             To be determined depending on
    by federal or state-declared disasters                      specific disaster, provide members with homeowner           designation and FHLBI Board app
                                                                assistance as needed
    Finance community economic development activities           Discounted loans: Reduced rate, intermediate and            $100 million
    benefiting households up to 115% of area median             long-term advances that may be used for:
                                                                • Owner-occupied or rental housing                          No limit per member but minimu
    income, including housing, small business loans
                                                                • Economic development in targeted area
                                                                • Small business loans
                                                                • Job creation

    Refinance or modify mortgages of homeowners with            Discounted loans: Reduced rate, intermediate and long-      $100 million with minimum $100,00
    incomes up to 115% of area median income                    term advances for refinancing or modification of existing   $15 million per member
                                                                mortgages to fixed rate loans
                                                                                                                            Authorized through June 30, 2009
ount	&	Limits	         2009	Application/Funding	Process	                                   Key	Requirements	

                      Competitive funding rounds twice per year             Members must underwrite projects. Projects must meet
per round             2009A due April 8                                     eligibility, feasibility, retention, monitoring and compli-
                                                                            ance requirements. At least 20% of rental units must be
                      2009B due September 9                                 affordable to households at or below 50% of area median
                                                                            Funds are eligible match for Home, CDBG and are
                                                                            non-federal funding

                      First-come, first-served basis                        3:1 Match
                      • 70% of funds available in March                     $500 minimum homebuyer contribution
                      • 30% remaining released in August                    Homebuyer counseling required
                      Member must complete registration process and         Funds may be used to pay up to $150 for
                      participate in web-based training                     homebuyer counseling

                      First-come, first-served basis                        4:1 Match
                      • 70% of funds available in March
                      • 30% remaining released in August
                      Member must complete registration process and
                      participate in web-based training

                      First-come, first-served basis                        3:1 Match of local NSP assistance
                      • 70% of funds available in March                     $500 minimum homebuyer contribution
                      • 30% remaining released in August                    Homebuyer counseling required
                      Member must complete registration process and         Funds may be used to pay up to $150 for
                      participate in web-based training                     homebuyer counseling

                      First-come, first-served basis                        No match required
                      • 70% of funds available in March                     Currently limited to HOPE for Homeowners program
                      • 30% remaining released in August
                      Member must complete registration process and
                      participate in web-based training

 disaster             Disaster-specific guidelines to be adopted based on   To be determined based on disaster-specific needs
proval                local need

                      Open window                                           Income and other eligibility requirements based on type
                      Member institutions may apply at any time             of development activity.
um $100,000 advance
                                                                            Advances are subject to FHLBI credit and
                                                                            collateral requirements
                                                                            Prepayment penalties may apply

000 advance           Non-competitive application process                   Homeowner counseling required
                                                                            Advances are subject to FHLBI credit and
09                                                                          collateral requirements
                                                                            Prepayment penalties may apply

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