Standard & Poor's Ratings Services revised its rating on Colorado Housing and Finance Authority (CHFA)'s adjustable-rate multifamily housing insured mortgage revenue bonds, series 2002AA, to 'AAA/A-1+' from 'AA+/NR' reflecting the substitution of a standby letter of credit from Fannie Mae and Freddie Mac on Dec. 16, 2009. Standard & Poor's also affirmed its 'AA+' underlying rating (SPUR) on the resolution. The outlook on the long-term component of the ratings is stable.
"The SPUR reflects the strength of the Federal Housing Administration-insured and Federal Housing Administration risk-share mortgage loans under the parity resolution, as evidenced by the strong performance of the consolidated cash flows; consolidated cash flows demonstrating sufficient revenues to cover all debt service payments and expenses; sufficient reserve levels to cover credit and liquidity shortfalls; high credit quality of investments; and strong oversight of the resolution by CHFA," said Standard & Poor's credit analyst Lawrence Witte.
The subject resolution is currently backed by 31 multifamily mortgages insured under various FHA programs 221(d)4 and 542(c). The bond debt service reserve fund represents 15.4% of bonds outstanding. Consolidated cash flows show asset-to-liability parity remaining greater than 108%. The resolution has approximately $17 million in reserves, contributing to about $16 million in excess assets over liabilities.
The majority of mortgages under the indenture continue to perform well. As of Oct. 1, 2009, only two properties were delinquent, and both for less than 30 days. The par amount of the loans represent just 1.4% of outstanding balances.
RELATED RESEARCH
USPF Criteria: "FHA Insured Mortgages," June 18, 2007
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Karen Fitzgerald, San Francisco (1) 415-371-5023
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