GFI Group provides a hybrid brokerage model for trading tax liens through their Distressed Asset Receivables Trading (DART) platform and experienced brokers. This creates liquidity and matches buyers and sellers in the otherwise fragmented tax lien market. Buyers benefit from unique investment opportunities and access to data, while sellers benefit from liquidity, transparency, and product analysis. GFI works with over 150 clients globally, including financial institutions, real estate firms, and tax authorities.

1. Tax Liens:
Trading Liens to Get to the Asset
September 22nd , 2011
Presented by: Thomas McOsker, Head of GFI Tax Receivables Desk

2. Primary Market Overview
1

3. How Tax Liens Work
1. Municipalities sell tax liens at public auction when
property taxes become delinquent.
Proceeds from tax lien sales are used to fund
2. municipal services such as construction, schools,
and police.
3. Investors earn interest on their investment in the
form of a penalty rate paid by the property owner.
If the property owner fails to pay the penalty
4. within the requisite period, the lien holder has the
right to foreclose on the property
For more information on the tax lien industry visit the National Tax Lien
Association website. 2

4. Tax Lien Benefits
For Municipalities: For Responsible Taxpayers:
• Ensures predictable cash flow • Lowers realized taxes
• Decreases cost of borrowing • Funds public projects
• Reduces future tax • Decreases risk of future tax
delinquencies increases
Predictable cash flow and increased
transparency mean higher credit ratings and a
decreased cost of capital for municipalities.
3

5. Why Invest In Tax Liens?
• $30 Billion in tax liens issued annually.
• Increase of 30% in 2008, and 15% in 2009*.
• Earnings rate ranges from 8% to 50%.
• Senior creditor position and low lien to value ratio.
• Low correlation to traditional and alternative asset classes.
• Enhanced return through foreclosure opportunities.
• Quick redemptions may create high annualized returns.
4
*Based on a Distressed Real Estate Consulting Services, LLC industry survey of counties in Florida.

6. Tax Lien Methodology
Interest Bid Down
Sale
Rotational Sale
Premium/Overbid Tax Lien Certificate
Sale Penalty Rate
Bulk Sale
Secondary Market
Sale
5

7. Tax Receivables by Auction Type
6

8. Tax Receivables by Bidding Type
7

9. Select State Interest Rates
& Redemption Periods
Max Redemption Max Redemption
State State
% (yrs) % (yrs)
Arizona 16% 3 Mississippi 18% 2
Colorado 14% 3 Missouri 10% 2
Florida 18% 2 Nebraska 14% 3
Georgia 20% 1 New Jersey 18% 2
Illinois 36% 2.5 Ohio 18% 2
Indiana 20% 1 Rhode Island 18% 1
Iowa 24% 1.75 South Carolina 12% 1
Louisiana 18% 3 Texas 25% 2
Maryland 24% 0.5 West Virginia 12% 1
8

10. Associated Risks & Mitigation
Maturity Risk Long Term Focus
Liquidity Risk Creation of Secondary
Markets
Bankruptcy Risk Due Diligence and Legal
Support
Redemption Risk Settlement and
Reconciliation Process
Litigation Risk Seasoned Legal Team
Environmental Risk Pre-Purchase
Environmental Screens
Property Improvement Due Diligence and Zoning
Risk Analysis
9

11. Common Investment Tenants
Invest in the right place:
• Relative yields
• Competitive bidding environment
• Trends and valuations for specific geographical locations
Invest at the right time:
•Stagger lien maturation dates to facilitate serial realizations of profits
•Time window for tax lien maturities
•Perform foreclosure analysis
Invest at the right price:
• Lien bids based on proprietary algorithms
• Purchase liens within buying parameters and price bands
10

12. Sample Investment Process
• Acquire tax sale list from appropriate municipalities
Phase I • Narrow the universe of investment ideas through
Data Collection & Screening quantitative and qualitative screens
• Conduct Quantitative and Fundamental research
Phase II to identify alpha generating investment ideas
Research & Analysis • Perform thorough on-site inspections
• Purchase tax liens in accordance with yield
Phase III parameters and price bands
• Balance lien weightings to maximize risk/reward
Portfolio Construction trade off and maintain reasonable risk parameters
• Consistently monitor risk and validate holdings
Phase IV • Balance cash flows and leverage
Portfolio Monitoring & Quality Control
• Collect investment principal and statutory interest
Phase V from municipality
Settlement & Reconciliation • File for deed/work-out if lien does not redeem
during redemption period
11

13. Overview of Florida TLC Market
• Florida is a bid down state; bidding starts at an 18% rate and investors bidding the
lowest interest rate are awarded the TLCs
• Florida also imposes a penalty on delinquent property taxes; investors bidding on liens
either get the interest rate they bid down or a 5% penalty, whichever is greater
• Since 2008, major players significantly reduced participation in Florida due to the
credit crunch
• Several new and old institutional investors are still participating in Florida tax sales for
multiple reasons, such as low redemption period (two years) and attractive penalty
rates, among others
– Merrill Lynch, a dominant investor in Florida, scaled down tax lien activities but was
replaced by JP Morgan Chase; several new funds have also started investing in Florida tax
certificates
– In 2008, BankAtlantic stopped buying tax certificates in all its major investment states; in
2009, the company resumed acquiring TLCs exclusively in Florida
• High unemployment rate in the state is translating into more delinquent property taxes
and are driving tax certificate sales; TLC sales in Florida1 grew from $902.6 million in
2007 to $1.3 billion in 2009, a growth of 45.6%
• With easing credit situation, expected growth in TLC interest rates, and opportune
economic conditions, institutional investors are expected to further continue
acquisitions in Florida
12

14. Drivers of Florida TLC Market
Support from “Fast Five”:
Procedural Advantages County Tax Attractive
Collectors Office Penalty
Mature
Predominant Online Market Driven
Residential
Sales Returns
Property Market
13

15. Florida Tax Lien Sales Growth (2007-2009)
CAGR Value of TLCs (2007- CAGR Number of TLCs (2007-
2009): 20.6% 2009): 13.3%
1.80
1.29 1.30
304.1
0.90 300.0
240.2
2007 2008 2009 2010
Value of TLCs ($ billion) No. of TLCs ('000s)
14

16. Value of TLC’s Sold in Key Florida Counties
County Name Year of Sale 2007 2008 2009 CAGR (2007-09)
Miami - Dade 258,482,749 397,656,617 373,385,519 20.2%
Broward 162,064,588 248,309,507 223,400,611 17.4%
Palm Beach 124,776,025 167,619,939 147,955,751 8.9%
Orange 62,232,986 87,353,658 110,999,321 33.6%
Hillsborough 73,175,277 97,310,356 109,011,042 22.1%
Pinellas 62,203,116 76,373,806 87,686,041 18.7%
Duval 34,253,234 47,191,624 58,147,824 30.3%
Sarasota 23,849,618 36,474,133 38,042,018 26.3%
Brevard 21,554,539 25,667,899 27,909,211 13.8%
Volusia 32,078,508 40,118,980 48,121,443 22.5%
Polk 22,091,191 29,633,729 33,560,140 23.3%
Seminole 14,018,275 20,164,805 23,117,955 28.4%
Manatee 11,835,177 21,204,368 23,187,145 40.0%
Total 902,615,284 1,295,079,422 1,304,524,021 20.2%
15

17. Secondary Market Overview
16

18. Agenda
• GFI Company Snapshot
• GFI Tax Receivables Brokerage Overview
• Power of the Hybrid Brokerage Model
• Market Participant Breakdown and Motivations
• Current Product Available
• How it Works
• GFI Distressed Asset Receivables Trading (DART) Platform Demo
17

19. Overview: Leading Inter-Dealer Broker
Intermediary
Company GFI Group Inc.
Founded 1987
Listing GFIG (NYSE)
Market Capitalization Approximately $800 Million (09/30/2009)
Headquarters New York
Offices New York, London, Paris, Dublin, Hong Kong, Seoul, Tokyo,
Singapore, Sydney, Cape Town, Santiago, Dubai, Tel Aviv,
Calgary, Englewood (NJ) and Sugar Land (TX)
Employees 1,700+, including over 1,000 brokerage personnel
Markets Credit, Financial, Equity and Commodity Instruments
Clients >2,100 Clients Globally
18

20. GFI Tax Receivables Overview
• Provides tax lien investors with crucial liquidity enhancement through:
– In-depth market knowledge
– Access to range of potential counterparties
– Singular focus on efficient execution
GFI Tax Receivables Brokerage Department
GFI Distressed Asset Receivables Experienced GFI
Trading Platform (DART) Brokerage Team
19

21. Power of the Hybrid Brokerage Model
Old Fragmented Marketplace New Competitive GFI Marketplace
• Pricing Discrepancies • Centralized
• Inefficient • Transparent
• Local • Efficient
• Off-line • Global
20

22. Market Participants
• 150+ current clients
• 98% of institutional market participants are both buyers and sellers
Real Estate Players Yield Players
• Global Financial Institutions
• REO Funds
• Hedge Funds
• REITS
• Private Equity Funds
• Regional Real Estate Pools
• Regional Lien Pools
• Venture Capital Investors
• Corporations
• Corporations
• Family Offices
• Family Offices
• Local and State Taxing Authorities
21

23. Benefits
Buyers: Sellers:
• Unique investment • Liquidity
opportunities
• Transparency
• Access to objective data
• Product analysis
• Immediate availability
Matches counterparties with reciprocal interests while preserving
pre-trade anonymity and transaction confidentiality
22

24. Sellers Maintain Complete Control
Sellers control all aspects of listing including:
• Liens listed
• Pool size
• Pool composition
• Timing
• Initial offer price
• Minimum execution price
23

25. Product Available
24

26. How it Works
Online Registration
Fill out company profile
Sign GFI Brokerage Agreement
Buyer Seller
Due Diligence Lien Valuation
Filter online inventory for suitable pools
Work with GFI Broker to value pools for initial listing
Download lien pool details
Bidding Process Product Listing
Enter lien portfolio information into Standard Lien Template
Contact GFI Broker to place bids on desired pools
Work with Broker to divide portfolio into mini-pools
Negotiation
GFI discloses bids to sellers; seller has opportunity to improve offers
GFI continues to narrow bid/offer spread
Execution
Buyer and Seller agree on price
GFI Trade confirmations are sent to both parties
Commission paid upon successful completion
Transfer*
GFI releases counterparty information to buyer and seller
Data Recording
GFI documents and archives trade data
25

27. 1. Online Registration
• Fill out company profile
• Sign GFI Standard Brokerage Agreement
26

28. BUYER
2. Due Diligence
– Filter online inventory for suitable pools
– Download lien pool details
3. Bidding Process
– Contact GFI Broker to place bids on desired pools
27

29. SELLER
2. Lien Valuation
– Work with GFI Broker to value pools for initial listing
3. Product Listing
– Enter lien portfolio information into Standard Lien Template
– Work with GFI Broker to divide into mini-pools
28

30. 4. Negotiation
• GFI discloses bid to sellers; seller has an opportunity to improve offers
• GFI continues to narrow the bid/offer spread
29

31. 5. Execution
• Buyer and seller agree on
price
• GFI Trade Confirmations are
sent to both parties
• Commission paid upon
successful completion
30

32. 6. Transfer
• GFI releases counterparty information to the buyer and seller
• Trade is completed directly between counterparties or through a third
party agent
31

33. 7. Data Recording
• GFI documents and archives trade data
• All client information is kept confidential
32

34. GFI DART – The Technology Behind the Brokers
• Distressed Asset Receivables Trading (DART) is the secure technology platform supporting
GFI’s voice brokered tax receivables business.
• This hybrid approach matches investors in an otherwise fragmented and geographically
diverse network.
• GFI DART assists in providing crucial liquidity in the tax receivables asset class.
• GFI DART is the only competitive, transparent and independent marketplace for buyers
and sellers of tax receivables.
http://dart.gfigroup.com
33

35. Summary
• Provides tax lien investors with crucial liquidity enhancement through:
– In-depth market knowledge
– Access to range of potential counterparties
– Singular focus on efficient execution
• Matches counterparties with reciprocal interests while preserving
pre -trade anonymity and transaction confidentiality
• Buyers:
– Unique investment opportunities
– Access to objective data
– Immediate availability
• Sellers:
– Liquidity
– Transparency
– Product analysis
• Hybrid brokerage model combines powerful DART technology with
experienced voice brokers to match reciprocal interests
34

36. Contact Information
Europe and North America
Tom McOsker
New York
+1 212 968 2776
Tom.McOsker@GFIgroup.com
www.GFIgroup.com/taxreceivables
GFI DART Platform
http://dart.gfigroup.com
35