2-Appendix 4 - Sample Audit Report.pdf

APPENDIX 4 - SAMPLE AUDIT REPORT

NEW JERSEY HOUSING AND MORTGAGE FINANCE AGENCY

TABLE OF CONTENTS

YEAR ENDED DECEMBER 31, 2024

(WITH SUMMARIZED COMPARATIVE TOTALS FOR DECEMBER 31, 2023)

INDEPENDENT AUDITORS’ REPORT 1

MANAGEMENT’S DISCUSSION AND ANALYSIS 5

FINANCIAL STATEMENTS

STATEMENT OF NET POSITION 15

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET

POSITION 17

STATEMENT OF CASH FLOWS 18

STATEMENT OF FIDUCIARY NET POSITION – OPEB TRUST 20

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION – OPEB TRUST 21

NOTES TO FINANCIAL STATEMENTS 22

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF AGENCY’S PROPORTIONATE SHARE OF NET PENSION

LIABILITY 68

SCHEDULE OF AGENCY’S PENSION CONTRIBUTIONS 69

SCHEDULE OF CHANGES IN AGENCY’S NET OPEB LIABILITY AND

RELATED RATIOS 70

SCHEDULE OF AGENCY’S OPEB CONTRIBUTIONS 71

SUPPLEMENTARY INFORMATION

SCHEDULE OF NET POSITION – SINGLE FAMILY HOUSING PROGRAM 72

SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET

POSITION – SINGLE FAMILY HOUSING PROGRAM 73

SCHEDULE OF NET POSITION – MULTI-FAMILY HOUSING PROGRAM 74

SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET

POSITION – MULTI-FAMILY HOUSING PROGRAM 75

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CliftonLarsonAllen LLP CLAconnect.com

INDEPENDENT AUDITORS’ REPORT

Board of Directors New Jersey Housing and Mortgage Finance Agency Trenton, New Jersey

Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the business-type activities, each major fund, and the fiduciary fund of the New Jersey Housing and Mortgage Finance Agency (the Agency), as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, each major fund, and the fiduciary fund of the Agency, as of December 31, 2024, and the respective changes in financial position and where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Agency and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.

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Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Agency’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

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Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the Schedule of Agency’s Proportionate Share of Net Pension Liability, Schedule of Agency’s Pension Contributions, Schedule of Changes in the Agency’s Net OPEB Liability and Related Ratios, and the Schedule of Agency’s OPEB contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information Our audit was conducted for the purpose of forming an opinion on the Agency’s basic financial statements. The Schedules of Net Position and Revenues, Expenses, and Changes in Fund Net Position for the Single Family and Multi-Family Housing Programs (the Schedules) for the year ended December 31, 2024, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 31, 2024, and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the Schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole for the year ended December 31, 2024.

We also previously audited, in accordance with auditing standards generally accepted in the United States of America, the Agency’s financial statements, as of and for the year ended December 31, 2023 (not presented herein), and have issued our report thereon dated August 7, 2024, which contained unmodified opinions on the respective financial statements of the business-type activities, each major fund, and the fiduciary fund. The 2023 actual amounts in the Schedules for the year ended December 31, 2023, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the 2023 financial statements. The information was subjected to the auditing procedures applied in the audit of the 2023 financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare those financial statements or to those financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the 2023 actual amounts in the Schedules are fairly stated in all material respects in relation to the basic financial statements as a whole for the year ended December 31, 2023.

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Report on Summarized Comparative Information We have previously audited the Agency’s 2023 financial statements, and we expressed unmodified audit opinions on the respective financial statements of the business-type activities, each major fund, and the fiduciary fund in our report dated August 7, 2024. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2023, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 7, 2025, on our consideration of the Agency’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Agency’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency’s internal control over financial reporting

Baltimore, Maryland August 7, 2025 and compliance.

CliftonLarsonAllen LLP

MANAGEMENT’S DISCUSSION AND ANALYSIS

DECEMBER 31, 2024

(IN THOUSANDS)

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Introduction to the Financial Report This financial report consists of five parts: Management’s Discussion and Analysis, Financial Statements, Notes to the Financial Statements, Required Supplementary Information, and Supplementary Information. The accompanying basic financial statements include the proprietary funds of the New Jersey Housing and Mortgage Finance Agency (the Agency) and the fiduciary fund.

Basic Financial Statements The Agency’s proprietary fund engages only in business-type activities and as a result, the Agency’s basic financial statements include the statement of net position, the statement of revenue, expenses, and changes in net position, the statement of cash flows, and the notes to the financial statements. These basic financial statements are designed to provide readers with a broad overview of the Agency’s finances, in a manner similar to a private-sector business.

The statement of net position which provides information about the Agency’s investments in resources (assets), deferred outflows of resources, obligations to Agency creditors (liabilities), deferred inflows of resources and net position. Over time, increases or decreases in the Agency’s net position may serve as an indicator of whether the financial position of the Agency is improving or deteriorating. Other factors, both internal and external to the Agency, should be considered when evaluating the Agency’s financial position.

The statement of revenues, expenses and changes in net position which accounts for all of the current year’s revenue and expenses, measures the success of the Agency’s operations over the past year and can be used to determine how the Agency has funded its costs.

The statement of cash flows which provides information about the Agency’s cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities.

A fiduciary fund is used to account for resources held for the benefit of parties outside the Agency. A fiduciary fund is not reflected with the proprietary fund financial statements because the resources of the fund are not available to support the proprietary fund programs. The Agency’s fiduciary fund is the New Jersey Housing and Mortgage Finance Agency OPEB 115 Trust Fund (the Trust).

The Trust is a separate legal entity created pursuant to a trust agreement initiated by the Agency. The Trust is a private-purpose trust established for the sole purpose of providing health and welfare benefits for retirees and their eligible spouses and dependents as provided by the New Jersey State Health Benefits Program (the Program). All resources of the Trust, including income on investments and other revenues, are held in trust to meet obligations to provide the health and welfare benefit payments to retirees and their eligible spouses and dependents. Resources of the Trust may also be used to pay reasonable expenses of administering the Trust and the Program. Trust receipts consist of contributions made by the Agency. The Trust administers its affairs through its trustee, records its assets in segregated accounts, and maintains financial records separate from the Agency.

Notes to the Financial Statements The notes to the financial statements provide information that is essential to understanding the basic financial statements, such as the Agency’s accounting methods and policies, details of contractual obligations, future commitments and contingencies of the Agency, and information about any other events or developing situations that could materially affect the Agency’s financial position.

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Required Supplementary Information This presents the information regarding the Agency’s progress in funding its obligation to provide pension benefits and postemployment benefits other than pensions to its employees.

Supplementary Information This provides presentations of the Agency’s financial information in accordance with the requirements of the various Bond Resolutions.

Management’s Discussion and Analysis This section of NJHMFA’s financial statements presents the Management’s Discussion and Analysis (MD&A), of the Agency’s financial performance as of December 31, 2024 and 2023, and for the years then ended. It provides an assessment of how the Agency’s position has improved or deteriorated and identifies the factors that, in management’s view, significantly affected the Agency’s overall financial position.

The Agency’s Business The Agency was created to provide a strong unified advocate for housing production, financing, and improvement. The Agency is established under, but is not a part of, the Department of Community Affairs, and is constituted as a body politic and corporate and an instrumentality of the State exercising public and essential governmental functions. Included in the Agency’s powers is the ability, inter alia, to provide to housing sponsors, through eligible loans or otherwise, financing, refinancing or financial assistance for fully completed, as well as partially completed projects; to provide funds to purchase loans made to borrowers throughout the State for single family residences in accordance with the requirements of the State and Federal law and the applicable general resolution; to issue negotiable bonds and to secure the payment thereof; and to make and enter into and enforce all contracts and agreements necessary, convenient or desirable to the performance of its duties and the execution of its powers.

Overview of the Financial Statements The Agency is a self-supporting entity and follows enterprise fund reporting except for the fiduciary fund.

An enterprise fund reports activity that is financed with debt that is secured solely by a pledge of the net revenue from that activity as well as activity that is not supported by taxes or similar revenues. The Agency’s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. The accrual basis of accounting matches revenues and expenses to the time period in which they are earned or attributable, respectively, which may differ from the period in which the associated cash is received or expended.

Enterprise fund statements offer short-term and long-term financial information about the Agency’s activities. While detailed sub-fund information is not presented in the Agency’s financial statements, separate accounts are maintained for each bond issue and component unit, as well as the Agency’s general operating fund, known as the General Fund. These sub-funds permit the Agency to control and manage money for particular purposes and to determine that the Agency is properly using specific resources.

The fiduciary fund is included as the Agency has fiduciary responsibility for it, but it does not follow enterprise fund reporting. The fiduciary fund accounts for resources held for the benefit of parties outside the Agency, and these resources are therefore not available to support the Agency.

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Overall Financial Highlights — Year Ended December 31, 2024 The Agency’s overall net position increased by 11.2% from 2023 to 2024. The multifamily portfolio continued to perform well and the single family portfolio added significant loans resulting from the favorable bond market. The General Fund performed well due to a significant increase in the Single Family Mortgage-Backed Security market.

In May 2024, the Agency issued $245,500 of Single-Family Housing Revenue Bonds 2024 Series K&L.

This bond issue, which was comprised entirely of new money proceeds, was the Agency’s fourth single-family bond issue that was self-designated as Social Bonds. The bond consists of $205,500 of tax-exempt bonds and $40,000 of taxable bonds.

In December 2024, the Agency issued $175,975 tax-exempt and taxable Multi-Family Revenue Bonds 2024 Series A-C. The bond issue is self-designated as Social Bonds.

On December 22, 2023, the Agency issued its $160,000 Multi-Family Revenue Bonds, 2023 Series E (Non-AMT) (the “2023 Direct Purchase Bonds”), which were directly purchased from the Agency by Barclays Capital Inc. The 2023 E Bonds consist of (i) a portion of the original 2023 Direct Purchase Bonds in the aggregate principal amount of $75,655, which were redesignated as the 2023 E-1 Bonds and remarketed as fixed interest rate bonds and (ii) a portion of the original 2023 Direct Purchase Bonds in the aggregate principal amount of $84,345, which were redesignated as the 2023 E-2 Bonds and remarketed as fixed interest rate bonds. The Agency redesignated the 2023 E-1 and E-2 bonds in December 2024 with the bond issuance above.

In December 2024, the Agency issued $200,000 tax-exempt Multi-Family Revenue Bonds 2024 Series D.

In 2024, the State of New Jersey’s Department of Community Affairs made the following cash contributions, purposed for administering the following programs:

• $40,000 for Down Payment Assistance Program (DPA)

• $20,000 for Special Needs Housing Trust Fund (SNTF)

• $800 for Foreclosure Mediation Assistance Program (FMAP)

• $5,000 for Affordable Housing Insurance Program Fund (AHPF)

In addition, the Agency continued to participate in the mortgage-backed securities (MBS) platform as an approved Government National Mortgage Association (Ginnie Mae) issuer of Ginnie Mae I and II single family MBS. In 2024, the Agency securitized 389 loans for $120,410 with Ginnie Mae II and 1,481 loans for $419,389 with Freddie Mac MBS.

Under the American Rescue Plan Act (ARPA) of 2021, the Agency received a total allocation of $325,966 of Homeowner Assistance Fund (HAF) dollars to develop the Emergency Rescue Mortgage Assistance (ERMA) Program and the Housing Counseling Program. Under ERMA, the Agency provides mortgage assistance and repayment of delinquent homeowner expenses to eligible New Jersey homeowners that have experienced a loss of income related to the COVID-19 pandemic. The payments are made directly to the mortgage servicer, or to the appropriate entity in cases where there is no mortgage escrow account. The Housing Counseling Program supplements ERMA by providing outreach to impacted homeowners, housing counseling, as well as ERMA application assistance, in order to improve program coordination.

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Overall Financial Highlights — Year Ended December 31, 2024 (Continued) Under the Coronavirus State Fiscal Recovery Fund program (CSFRF), the Agency received an allocation of $40,000 to administer the Affordable Housing Gap Subsidy Program (AHGS). Additionally, under CSFRF, the Agency received $305,000 to administer the Affordable Housing Production Fund (AHPF) Program. The purpose of these programs is to provide subsidy financing for projects that are 100 percent affordable.

In 2024, the Agency was awarded:

• $80 million to administer the Urban Preservation Program (UPP). The UPP is to provide loans for eligible affordable housing projects.

• $50 million to administer the Workforce Housing Program (WHP). The WHP is for the rehabilitation or construction of residential units within multiple dwellings located within areas with proximity to existing public transportation and job opportunities.

• $25 million to administer the Foreclosure Intervention Fund Program to help provide relief for homeowner’s mitigate risk of foreclosure.

The Agency closed seven conduit bond issues totaling $160,409 in 2024. In addition, the program has a pipeline in excess of $350,000.

The following ratings actions occurred in 2024:

In April 2024, Moody’s Investors Service (Moody’s) affirmed its Aa2 rating (with a stable outlook) on the Agency’s Single Family Housing Revenue Bonds (SFHRB) Resolution.

In April 2024, Standard & Poor’s Global Ratings (S&P) affirmed its AA rating (stable outlook) on the Agency’s Single-Family Housing Revenue Bonds (SFHRB) Resolution.

In December 2024, Standard and Poor’s Global Ratings (S&P) affirmed its AA- rating (with a stable outlook) on the MFRB Resolution.

In June 2024, Standard & Poor’s Global Ratings (S&P) lowered its A+ rating to BBB+ (stable outlook) on the 1991 Series I Presidential Plaza bonds.

Financial Analysis The following sections will discuss the Agency’s financial results for 2024 compared to 2023. Additionally, an examination of major economic factors that have contributed to the Agency’s operations is provided.

It should be noted that for purposes of this MD&A, summaries of the financial statements and the various exhibits presented are in conformity with the Agency’s financial statements, which are presented in accordance with accounting principles generally accepted in the United States of America. All dollar amounts are in thousands.

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Agency’s Condensed Statement of Net Position The Statement of Net Position presents the Agency’s assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position as of December 31, 2024. The following table represents the comparison of net position as of December 31, 2024 and 2023. The change between December 31, 2024, and December 31, 2023, should be read in conjunction with the financial statements. The amounts in the table below and in the explanation of changes in certain financial categories are expressed in thousands to provide easier comparison to the Statement of Net Position as outlined in the table of contents.

Condensed Statement of Net Position

$ Change % Change 2024 2023 2024 / 2023 2024 / 2023

Current and Other Assets

$ 1,954,164

$ 1,694,379

$ 259,785

15.3%

Other Noncurrent Assets 3,215,066 2,966,434 248,632 8.4% Capital Assets 3,906 3,480 426 12.2%

Total Assets 5,173,136 4,664,293 508,843 10.9%

Deferred Outflows of Resources 10,328

14,122

(3,794)

-26.9%

Current Liabilities

361,155

394,577

(33,422)

-8.5% Long-Term Liabilities 3,187,973 2,807,203 380,770 13.6%

Total Liabilities 3,549,128 3,201,780 347,348 10.8%

Deferred Inflows of Resources 18,741

23,323

(4,582)

-19.6%

Net Position:

Net Investment in Capital Assets 3,906 3,480 426 12.2% Restricted 770,928 882,640 (111,712) -12.7% Unrestricted 840,761 567,192 273,569 48.2%

Total Net Position $ 1,615,595 $ 1,453,312 $ 162,283 11.2%

The Agency’s total assets increased by 10.9% between 2023 and 2024 resulting primarily from the following factors:

• Cash, cash equivalents, and investments increased by $226,852 as the Agency placed newly acquired funding from issuance of bonds into money markets, cash management, checking accounts, and investment agreements.

• Mortgage loans receivable, supplemental loans receivable, and accrued mortgage interest receivable increased by $282,471, primarily due to new loans disbursed during the year being greater than prepayments and regular loan amortizations.

• Other assets decreased by $2,552 largely due to a decrease in due from loan servicers.

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Agency’s Condensed Statement of Net Position (Continued) The Agency’s deferred outflows of resources decreased 26.9% mostly resulting from a decrease in derivative instruments valuations.

The Agency’s total liabilities increased 10.8% between 2023 and 2024 resulting from the following factors:

• Unearned revenue decreased by $78,319 due to significant usage of HAF (ERMA) and AHPF funding, which was slightly offset by newly acquired Urban Preservation program funding.

• Pension and OPEB liabilities decreased by $4,737 and $1,929, respectively, due to changes in actuarial assumptions used to determine the liabilities.

• Funds held in trust and mortgagor escrow deposits decreased $2,015 and $7,810, respectively, as the Agency acted and administered upon state and local programs, overall, in excess of acquired monies.

• Bonds payable increased $452,657 as a result of the new 2024 SFHRB and MFRB bond issuances net of scheduled bond retirements.

• The Agency’s paydowns and draws on the line of credit resulted in a net $10,275 drop in the balance, with activity related to administering 2024 Series bond issuances.

• Derivative instruments (hedging derivative value + off market loan balances) had a net decrease of

$2,191, due to varied factors. Individual swaps are affected by changes in LIBOR, SOFR and/or SIFMA rates. In 2024, LIBOR, SOFR and SIFMA saw general decreases. The remaining life of a swap also impacts the value as it must accrete to $-0- by the maturity date. In addition to these factors which affect the directional change in a swap’s value, the magnitude of the change is affected by other factors including the size, remaining life, and the maturity date. Each swap is analyzed individually with any changes in fair value reported.

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Agency’s Condensed Statements of Revenues, Expenses, and Changes in Net Position The Statements of Revenues, Expenses, and Changes in Net Position reports revenues recognized, and expenses incurred for the years ended December 31, 2024 and 2023. The table below summarizes the Agency’s revenues and expenses for the years ended December 31, 2024 and 2023. It should be read in conjunction with the financial statements. The amounts in the two tables below and in the explanation of changes in certain financial categories are expressed in thousands to provide easier comparison to the Statement of Revenues, Expenses and Changes in Net Position.

Condensed Statements of Revenues, Expenses, and Changes in Net Position

Years Ended December 31, 2024 and 2023

$ Change 2024 / 2023

% Change 2024 / 2023

Operating Revenues:

Interest Income on Mortgage Loans $ 116,070 $ 93,676 $ 22,394 23.9% Fees and Charges 60,238 51,591 8,647 16.8% Grant Income 118,474 138,673 (20,199) -14.6% Recovery of Bad Debt and Mortgage Modifications 15,756 11,880 3,876 32.6% Other 28,967 13,988 14,979 107.1%

Total Operating Revenues 339,505 309,808 29,697 9.6%

Operating Expenses 308,604

302,907

5,697

1.9%

Operating Income

30,901

6,901

24,000

347.8%

Nonoperating Revenues 131,382

126,621

4,761

3.8%

Increase in Net Position

162,283

133,522

28,761

21.5%

Net Position - Beginning of Year 1,453,312

1,319,790

10.1%

Net Position - End of Year

$ 1,615,595

$ 1,453,312

$ 162,283

11.2%

The 9.6% increase in operating revenue is due to the following factors:

• Mortgage-associated revenues (interest, fees, and charges) saw a $31,041 net increase, as the

Agency saw an increase in mortgages disbursed and mortgage backed securities securitized.

• Grant income decreased by $20,199 due largely to the decreased activity related to the Homeowner’s Assistance program (ERMA) as the program winds down. This drop was offset by an increase in the Affordable Housing Insurance Program Fund (AHPF).

• Other income increased by $14,979, driven largely by an increase on gains on sale of MBS securities.

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Agency’s Condensed Statements of Revenues, Expenses, and Changes in Net Position (Continued) Nonoperating income increased from the prior year due to interest earnings on newly acquired assets and unrealized holding gains, offset by losses on investment sales, ceasing of investment discount amortization, and a drop in acquired contributions from the State of New Jersey.

Summary of Operating Expenses

Years Ended December 31, 2024 and 2023

Operating Expenses:

Total operating expenses increased by 1.9%. The following significant fluctuations occurred within operating expenses:

• Grant income decreased by $19,481 due largely to the decreased activity related to the Homeowner’s

Assistance program (ERMA) as the program winds down. This drop was offset by an increase in the Affordable Housing Program Fund (AHPF). This is consistent with the decrease in grant income above.

• The provision for loan losses increased by $3,159 as the agency adjusted estimates on delinquent loans balances.

• Professional services and financing costs increased $9,228 mainly due to an increase in mortgage origination fees.

• Interest and amortization expense increased $6,343, as a result of an increase in bonds payable.

• Salaries and related benefits increased $3,787, moving alongside a net increase in employees and cost of living increase in pay.

$ Change 2024 / 2023

% Change 2024 / 2023

Interest and Amortization $ 88,033 $ 81,690 $ 6,343 7.8 % Insurance Costs 1,029 1,023 6 0.6 Servicing Fees and Other 10,129 8,078 2,051 25.4 Salaries and Related Benefits 27,435 23,648 3,787 16.0 Professional Services and Financing Costs 29,577 20,349 9,228 45.3 General and Administrative Expenses 6,319 5,967 352 5.9 Grant Expense 118,018 137,499 (19,481) (14.2) Program Expense 1,185 1,558 (373) (23.9) Pension (Revenue) Expense 433 (657) 1,090 (165.9) Loss on Sale of Real Estate Owned 420 885 (465) (52.5) Provision for Loan Losses 26,026 22,867 3,159 13.8

Total Operating Expenses $ 308,604 $ 302,907 $ 5,697 1.9%

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Debt Administration At December 31, 2024, the Agency had $2,702,503 of bond principal outstanding, net of deferral on refunding, discount, and premium which represents an increase of 20.1% over the prior year. Additionally, the Agency had a $9,500 line of credit outstanding which represents a decrease of 52.0% over the prior year. The following table summarizes the Agency’s bonds payable outstanding at December 31, 2024 and 2023, and the changes in bonds payable. Dollars are expressed in thousands to provide easier comparison to the Statement of Net Position as outlined in the table of contents.

% Change 2024 2023 2024 / 2023 Bonds Payable, Net $ 2,702,503 $ 2,249,846 20.1 % Line of Credit $ 9,500 $ 19,775 (52.0)%

Additional information about the Agency’s debt is presented in the notes to the financial statements.

Single Family Programs The Agency provides a variety of residential mortgage financing programs that primarily serve low to moderate and middle-income first-time homebuyers and homebuyers purchasing in certain designated urban areas. Traditionally, the programs were funded with Mortgage Revenue Bond proceeds. In 2024, the Agency continued funding loans via the mortgage-backed securities platform (MBS) in addition to the issuance of the $245,500 Series K&L bonds. This bond issue involves no refunding component. See footnote 7 for more information.

Multi-Family Programs The Agency provides bond proceeds as loans to finance the construction and acquisition of multi-family housing projects designed to serve low-to-moderate income individuals and families. In December 2024, the Agency issued $175,975 tax-exempt and taxable Multi-Family Revenue 2024 Series A-C bonds. In December 2023, NJHMFA issued $160,000 convertible option bonds (COB), Series 2023-E. In December 2024, the Agency converted and remarketed those bonds into $160,000 tax-exempt Multi- Family Revenue fixed interest rate bonds 2023 Series E1 and E2. In December 2024, the Agency issued $200,000 tax exempt Multi-Family Revenue Bonds 2024 Series D.

Economic Factors The Agency is a self-supporting entity and is not funded by the general taxing authority of the State of New Jersey. As the State’s leader in affordable housing, certain market/economic factors can have an impact on the Agency’s operations.

• Trends in single family mortgage and bond rates — Over the last seven years, the interest rate environment has allowed the Agency to stay relevant in the mortgage revenue bond (MRB) market, its traditional loan financing mechanism, which has increased the Agency’s ability to lend profitably at competitive loan interest rates. The Agency has expanded its mortgage- backed security (MBS) funding program, which allows the Agency to sell FHA, VA, and USDA whole loans for securitization into Ginnie Mae mortgage-backed securities and conventional whole loans to Freddie Mac.

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Economic Factors (Continued)

• Trends in foreclosure processing — New Jersey is a judicial state and as such all foreclosures must be processed through the court system. Prior to the COVID-19 pandemic, the foreclosure process took between 18-24 months to complete. During COVID in 2020 and 2021, foreclosure filings dropped due to State and Federal moratoria, and then increased after the moratoria ended in 2022 and 2023. This led to longer foreclosure processing timelines during those years, as courts dealt with the backlog of cases. For 2024, national and New Jersey foreclosure filings dropped year over year per ATTOM Data Solutions. National trends showed an increase in the average foreclosure processing timeline that peaked in mid-2023 and has since decreased in 2024.

• Trends in home prices — New Jersey has seen the number of home sales increase in 2024 by

12.5% versus 2023 volumes. The Agency increased overall loan production by 26% over the same time, due to increased lender participation, launch of innovative programs, and competitive pricing versus the general mortgage market.

• Trends in the Agency’s credit ratings — The cost of capital available to the Agency changes as credit ratings change. In 2024, all ratings actions by Moody’s and S&P on the Agency and its bond resolutions were either affirmations or maintained ratings, with the exception of Presidential Plaza.

Contacting the Agency’s Financial Management This financial report is designed to provide a general overview of the Agency’s business, financial position, and fiscal accountability for the funds it generates and receives. If you have questions about any information in this report, contact the Finance Division of the New Jersey Housing and Mortgage Finance Agency.

See accompanying Notes to Financial Statements.

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STATEMENT OF NET POSITION

(WITH PARTIAL SUMMARIZED TOTALS FOR DECEMBER 31, 2023)

Bonds and Obligation Funds Single Family Multi-Family

Primary Government

Business-Type Activities

Mortgage Housing General Interfund Component Component Fund Subtotal Eliminations 2024 2023

ASSETS

CURRENT ASSETS

Cash and Cash Equivalents $ - $ - $ 95,601 $ 95,601 $ - $ 95,601 $ 69,727 Restricted Cash and Cash Equivalents 240,746 647,715 733,753 1,622,214 - 1,622,214 1,438,923 Investments - - 14,938 14,938 - 14,938 15,398 Restricted Investments - - 605 605 - 605 565 Accrued Interest Receivable on Investments 80 206 2,622 2,908 - 2,908 3,374 Mortgage Loans Receivable, Net 35,099 74,295 68,779 178,173 - 178,173 125,298 Supplemental Mortgages and Other Loans, Net - - 9,296 9,296 - 9,296 6,479 Fees and Other Charges Receivable - - 4,075 4,075 - 4,075 3,637 Accrued Interest Receivable on Mortgages 6,781 7,156 4,036 17,973 - 17,973 14,218 Due from Loan Servicers, Net - - 2,925 2,925 - 2,925 13,165 Due from Other Funds - - 2,142 2,142 (2,142) - - Other Current Assets 780 358 4,318 5,456 - 5,456 3,595

Total Current Assets 283,486 729,730 943,090 1,956,306 (2,142) 1,954,164 1,694,379

NONCURRENT ASSETS

Investments - - 278,540 278,540 - 278,540 301,592 Restricted Investments 2,844 234,562 - 237,406 - 237,406 196,247 Mortgage Loans Receivable, Net 1,384,542 714,436 172,002 2,270,980 - 2,270,980 2,076,320 Supplemental Mortgages and Other Loans, Net 87 - 409,776 409,863 - 409,863 377,744 Real Estate Owned 1,401 - - 1,401 - 1,401 1,631 Capital Assets, Net - - 3,906 3,906 - 3,906 3,480 Other Noncurrent Assets (Mortgage Servicing Rights) - - 16,310 16,310 - 16,310 10,483 Derivative Instrument - - 566 566 - 566 2,417

Total Noncurrent Assets 1,388,874 948,998 881,100 3,218,972 - 3,218,972 2,969,914

Total Assets

1,672,360

1,678,728

1,824,190

5,175,278

(2,142)

5,173,136

4,664,293

DEFERRED OUTFLOWS OF RESOURCES

Pension - - 1,190 1,190 - 1,190 1,346

OPEB - - 6,638 6,638 - 6,638 6,234

Accumulated Decrease in Fair Value of Hedging

Derivatives - 2,500 - 2,500 - 2,500 6,542 Total Deferred Outflows of Resources - 2,500 7,828 10,328 - 10,328 14,122

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STATEMENT OF NET POSITION (CONTINUED)

LIABILITIES

Mortgage Housing General Interfund Component Component Fund Subtotal Eliminations 2024 2023

CURRENT LIABILITIES

Bonds and Obligations, Net $ 47,395 $ 47,700 $ - $ 95,095 $ - $ 95,095 $ 111,500 Line of Credit - - 9,500 9,500 - 9,500 19,775 Accrued Interest Payable on Bonds and Obligations 13,622 5,767 - 19,389 - 19,389 18,855 Subsidy Payments Received in Advance - - 238 238 - 238 473 Advances from State of NJ for Bond/Housing Assistance - - 5,168 5,168 - 5,168 5,268 Due to Loan Servicers, Net 239 - - 239 - 239 - Other Current Liabilities 82 - 12,040 12,122 - 12,122 11,492 Due to Other Funds - 2,142 - 2,142 (2,142) - - Mortgagor Escrow Deposits - - 219,404 219,404 - 219,404 227,214

Total Current Liabilities 61,338 55,609 246,350 363,297 (2,142) 361,155 394,577

NONCURRENT LIABILITIES

Bonds and Obligations, Net

1,372,844

1,234,564

2,607,408

2,607,408

2,138,346 Minimum Escrow Requirement - 5,828 573 6,401 - 6,401 6,243 Funds Held in Trust for Mortgagors - 3,091 295,682 298,773 - 298,773 300,788 Other Noncurrent Liabilities 1,495 2,622 4,150 8,267 - 8,267 5,675 OPEB Liability - - 4,729 4,729 - 4,729 6,658 Net Pension Liability - - 35,295 35,295 - 35,295 40,032 Derivative Instruments - 2,500 - 2,500 - 2,500 6,542 Unearned Revenue - - 224,600 224,600 - 224,600 302,919

Total Noncurrent Liabilities 1,374,339 1,248,605 565,029 3,187,973 - 3,187,973 2,807,203

Total Liabilities

1,435,677

1,304,214

811,379

3,551,270

(2,142)

3,549,128

3,201,780

DEFERRED INFLOWS OF RESOURCES

Pension - - 4,261 4,261 - 4,261 3,085

OPEB

Accumulated Increase in Fair Value of Hedging

Derivatives

13,914

17,821

2,417 Total Deferred Inflows of Resources - - 18,741 18,741 - 18,741 23,323

NET POSITION

Net Investment in Capital Assets - - 3,906 3,906 - 3,906 3,480 Restricted Under Bond and Obligation Resolutions 236,683 384,174 - 620,857 - 620,857 565,144 Restricted for General Fund Programs - - 150,071 150,071 - 150,071 317,496 Unrestricted - (7,160) 847,921 840,761 - 840,761 567,192

Total Net Position $ 236,683 $ 377,014 $ 1,001,898 $ 1,615,595 $ - $ 1,615,595 $ 1,453,312

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STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

Mortgage

Component Housing

Component General

Fund

OPERATING REVENUES

Interest Income on Mortgage Loans

$ 63,681

$ 39,615

$ 12,774

$ 116,070

$ 93,676 Fees and Charges - 1,111 59,127 60,238 51,591 Grant Income - - 118,474 118,474 138,673 Recovery of Bad Debt 3,184 1,649 10,923 15,756 11,880 Other Income, Net - 83 28,884 28,967 13,988

Total Operating Revenues 66,865 42,458 230,182 339,505 309,808

OPERATING EXPENSES

Interest and Amortization of Bond Premium and Discounts 49,368 38,047 618 88,033 81,690 Insurance Costs - - 1,029 1,029 1,023 Servicing Fees and Other 4,931 270 4,928 10,129 8,078 Salaries and Related Benefits - - 27,435 27,435 23,648 Professional Services and Financing Costs 8,817 2,101 18,659 29,577 20,349 General and Administrative Expenses - 3 6,316 6,319 5,967 Grant Expense - - 118,018 118,018 137,499 Program Expense - - 1,185 1,185 1,558 Pension (Revenue) Expense - - 433 433 (657) Loss on Sale of Real Estate Owned 417 - 3 420 885 Provision for Loan Losses 1,098 3,281 21,647 26,026 22,867

Total Operating Expenses 64,631 43,702 200,271 308,604 302,907

OPERATING INCOME (LOSS)

2,234

(1,244)

29,911

30,901

6,901

NONOPERATING REVENUES (EXPENSES)

Contributed Cash from State

65,800

65,800

67,200 Interest on Investments 11,600 27,286 27,858 66,744 46,845 Investment Premium - - - - 2,040 Unrealized and Realized Gain/(Loss) on Investments (131) - (1,031) (1,162) 10,536

Total Nonoperating Revenues (Expenses) 11,469 27,286 92,627 131,382 126,621

INCOME BEFORE TRANSFERS

13,703

26,042

122,538

TRANSFERS 9,500

6,037 (15,537) - -

INCREASE IN NET POSITION

23,203

32,079

107,001

Net Position - Beginning of Year 213,480 344,935 894,897 1,453,312 1,319,790

NET POSITION - END OF YEAR

$ 236,683

$ 377,014

$ 1,001,898

$ 1,615,595

$ 1,453,312

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STATEMENT OF CASH FLOWS

Single Family Multi-Family Business-Ty pe Activities

Mortgage Housing General

Component Component Fund 2024 2023

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from Interest on Mortgages and Loans $ 61,842 $ 38,432 $ 12,774 $ 113,048 $ 90,947 Receipts from Fees, Charges, and Other - 1,442 88,843 90,285 72,062 Receipts from Grants - - 40,155 40,155 110,837 Receipts from Principal Payments on Mortgage Receivables 90,837 74,558 868,275 1,033,670 694,615 Receipts (Payments) for Funds Held in Trust - - (9,915) (9,915) (31,395) Payments to Employees - - (43,506) (43,506) (37,921) Payments to Vendors (12,947) (2,863) (155,383) (171,193) (177,570) Payments to Mortgage Purchases and Advances (274,615) (94,740) (934,156) (1,303,511) (1,036,958) Payments for Interest and Amortization (50,430) (37,888) (2,469) (90,787) (81,249) Receipts (Payments) for Other (1,098) - (7,042) (8,140) 314

Net Cash Provided (Used) by Operating Activities (186,411) (21,059) (142,424) (349,894) (396,318)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Bond Premium 4,218 - - 4,218 7,065 Receipts from Proceeds of Sale of Bonds and Obligations 245,500 535,975 - 781,475 478,215 Payments for Retirement of Bonds (100,465) (229,200) - (329,665) (339,630) Contributed Cash from the State - - 65,800 65,800 67,200 Receipts (Payments) from (on) Notes Payable (19,775) - 9,500 (10,275) 19,775 Transfers and Other 9,500 6,037 (15,537) - -

Net Cash Provided (Used) by Noncapital Financing Activities 138,978 312,812 59,763 511,553 232,625

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES

Acquisition of Capital Assets - - (857) (857) - Net Cash Used by Capital Financing Activities - - (857) (857) -

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of Investments - (41,309) (51,287) (92,596) (240,989) Sales/Maturities of Investments - 19 74,760 74,779 306,897 Earnings on Investments 11,600 27,750 26,830 66,180 58,596

Net Cash Provided (Used) by Investing Activities 11,600 (13,540) 50,303 48,363 124,504

CHANGE IN CASH AND CASH EQUIVALENTS (35,833) 278,213 (33,215) 209,165 (39,189)

Cash and Cash Equivalents - Beginning of Year 276,579 369,502 862,569 1,508,650 1,547,839

CASH AND CASH EQUIVALENTS - END OF YEAR $ 240,746 $ 647,715 $ 829,354 $ 1,717,815 $ 1,508,650

STATEMENT OF CASH FLOWS (CONTINUED)

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Mortgage

Component Housing

Component General

Fund

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Operating Income (Loss) $ 2,234 $ (1,244) $ 29,911 $ 30,901 $ 6,901 Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided (Used) by Operating Activities:

Depreciation Expense - - 431 431 387 Gain/Loss on Real Estate Owned 417 - 3 420 885 Provision for Loan Losses 1,098 3,281 21,647 26,026 22,867 Amortization of Premium and Discounts (3,198) (173) - (3,371) (3,157) Effects of Changes in Operating Assets and Liabilities:

Mortgage and Other Loans Receivable, Net (195,149) (21,831) (93,559) (310,539) (347,292) Fees and Other Charges Receivable - - (438) (438) (711) Mortgage Interest Receivable (1,839) (1,181) - (3,020) (2,730) Due from Loan Servicers and Insurers 7,004 - 3,475 10,479 (7,961) Other Assets 272 (3) (6,651) (6,382) (863) Real Estate Owned (187) - - (187) (458) Interest Rate Swaps - - 1,851 1,851 (540) Due to / from Bank - - - - - Due to/from Other Funds - (623) 623 - - Deferred Outflows - Pension - - 156 156 1,896 Deferred Outflows - OPEB - - (404) (404) 1,611 Accrued Interest Payable on Bonds 2,136 (1,602) - 534 2,972 Advance from the State of New Jersey - - (100) (100) (265) Funds Held in Trust for Mortgagor - - (2,015) (2,015) (20,827) Minimum Escrow Requirement - 248 (90) 158 159 Mortgagor Escrow Deposits - - (7,810) (7,810) (10,741) Subsidy Payments Received in Advance - - (235) (235) 4 Unearned Revenue - - (78,319) (78,319) (27,836) Interest Rate Swaps - - (1,851) (1,851) 540 Pension Liability - - (4,737) (4,737) (1,302) OPEB Liability - - (1,929) (1,929) (2,443) Deferred Inflows - Pension - - 1,176 1,176 (4,563) Deferred Inflows - OPEB - - (3,907) (3,907) (3,038) Other Liabilities 801 2,069 348 3,218 187

Net Cash Provided (Used) by Operating Activities

$ (186,411)

$ (21,059)

$ (142,424)

$ (349,894)

$ (396,318)

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STATEMENT OF FIDUCIARY NET POSITION

OPEB TRUST

ASSETS

Cash and Cash Equivalents

$ 1,282

Investment Income Receivable 5 Investments (Mutual Funds) 43,898

Total Assets $ 45,185

LIABILITIES

Accrued Expenses and Benefits Payable $ 100

NET POSITION - RESTRICTED FOR OPEB 45,085

Total Liabilities and Net Position $ 45,185

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STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

OPEB TRUST

ADDITIONS:

Employer Trust Contributions $ 4,670

Investment Income (Loss):

Interest

1,256

Gain on Sale of Investments 1,707 Net Increase in Fair Value of Investments 523 Less: Direct Investment Expenses (128)

Net Investment Income (Loss) 3,358

Total Additions 8,028

DEDUCTIONS:

Benefit Payments 2,024

NET INCREASE IN NET POSITION 6,004

Net Position Restricted for OPEB - Beginning of Year 39,081

NET POSITION RESTRICTED FOR OPEB - END OF YEAR $ 45,085

NOTES TO FINANCIAL STATEMENTS

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Agency Authorizing Legislation and Organization – The New Jersey Housing and Mortgage Finance Agency (the Agency), which is established in, but not part of, the Department of Community Affairs, is a body, corporate and politic, created by the New Jersey Housing and Mortgage Finance Agency Law of 1983, constituting Chapter 530, Laws of New Jersey, 1983 (the Act), which combined the New Jersey Housing Finance Agency and the New Jersey Mortgage Finance Agency into a single agency.

The initial legislation and subsequent amendment grant the Agency the power to issue debt to finance the construction and rehabilitation of housing projects for families of low and moderate income by providing mortgage loans to qualified housing sponsors or to increase the funds available for residential mortgage and rehabilitation or improvement loans. In addition, the Agency is authorized to make loans to boarding home operators for life safety improvements.

The Agency is governed by nine members: the Commissioner of the Department of Community Affairs who serves as Chair, the State Treasurer, the Attorney General, the Commissioner of Banking and Insurance, and the Commissioner of the Department of Human Services who are members of the New Jersey Housing and Mortgage Finance Agency ex officio, and four persons appointed by the governor with the advice and consent of the State Senate for terms of three years.

Certain bonds and other obligations issued under the provisions of the Act are general obligations of the Agency to which its full faith and credit are pledged. Certain mortgages issued from the proceeds of Multi-Family Housing Revenue Bonds are insured by the Federal Housing Administration.