Íbúðalánasjóður - Company Announcement

The Housing Financing Fund (HFF) Purchases Mortgages from Keflavik Savings Bank (SpKef)

HFF and SpKef have reached an agreement regarding HFF´s purchase of SpKef´s
mortgage pool book valued at approximately ISK 10 billion, pursuant to Law
no.125/2008, Regulation no.1081/2008 and HFF ´s Rules on the purchase of
mortgages from financial institutions. 

HFF will pay 80% of the mortgage pool´s book value at the time of purchase with
HFF bonds as follows: 

•	Series HFF150434, bonds at nominal value ISK 1.033.936.941
•	Series HFF150644, bonds at nominal value ISK 4.846.955.385

HFF will settle the remaining 20% with SpKef in 8 years.

Until the year 2010, SpKef is not authorized to lend or sell the above stated
HFF bonds in a secondary market and is exclusively authorized to use the bonds
as collateral in transactions with the Central Bank of Iceland (CBI). 

In 2009 HFF is entitled to exchange the above stated HFF bonds for HFF bonds in
a new bond series that will be issued this year so that the market value of the
bonds at the time of exchange will be equal to the market value of the
HFF150434 and HFF150644 bonds at the date of exchange. 

In case SpKef chooses to sell the HFF bonds, it is obligated to spread the sale
over a 3 year period in such a way that the maximum value sold each year,
beginning in 2010, is equal to 1/3 of the nominal value of the bonds. 

Pursuant to this agreement the HFF bonds will be submitted over the next 2 week
period in accordance with SpKef ´s delivery of its sold mortgages to HFF.