Fitch Rates Indiana Housing's 2010 Ser 08 A-2 Single Family Mortgage Rev Bonds 'AAA'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a 'AAA' long-term rating to the Indiana Housing and Community Development Authority (the Authority) single-family mortgage revenue bonds, 2010 series 08 A-2 bonds which are being issued to refund the Authority's 2008 series A-2 bonds under the same program. The 2010 series 08 A-2 bonds will be issued on Dec. 13, 2010. On Dec. 15, 2010 the mandatory tender/purchase of the 2008 series A-2 bonds will take place, the refunded bonds will be purchased by the Authority for cancellation and the liquidity facility will be terminated. On the effective date of Dec. 15, 2010, Fitch will also withdraw the 'AAA' long-term rating and the 'F1+' short-term rating assigned to the 2008 series A-2 bonds in conjunction with the mandatory purchase and cancellation of the 2008 series A-2 bonds.

The Rating Outlook is Stable.

RATING RATIONALE:

The rating actions are in connection with the removal of the credit enhancement which had been provided in the form of the Temporary Credit and Liquidity Facility (TCLF) issued by Fannie Mae and The Federal Home Loan Mortgage Corporation (Freddie Mac), each rated 'AAA/F1+' with a Stable Outlook. The TCLF will be removed on Dec. 15, 2010, which is also the mandatory tender date for the 2008 series A-2 bonds.

The assignment of the 'AAA' long-term rating to the 2010 series 08 A-2 bonds is based on the rating that Fitch has assigned to the single family mortgage revenue bonds and reflects the fundamentals of the underlying program which is entirely composed of mortgage-backed certificates that are fully guaranteed for timely payment regardless of the actual performance of the underlying loans.

KEY RATING DRIVERS:

--All mortgage loans pooled into GNMA, FNMA and FHLMC MBS pass through certificates;

--Strong asset to debt ratio of 113% as of Jan. 1, 2010;

--Surplus funds in excess of 103% parity test may be withdrawn from the indenture.

SECURITY:

The bonds are a special obligation of the authority, secured solely by the assets and revenues of the trust indenture.

CREDIT SUMMARY:

As of Oct. 1, 2010, the mortgage portfolio consisted of 74% GNMA, 14% FNMA and 12% FHLMC PCs mortgage-backed certificates. GNMA mortgage backed securities are guaranteed by the U.S. government; Fitch rates FNMA and FHLMC PC mortgage-backed securities 'AAA'. The rating is also supported by the high level of overcollateralization that exists within the indenture and the program's financial performance as evidenced by an asset parity ratio of 113% as of the Dec. 31, 2009 audited financial statements.

Applicable Criteria and Related Research:

--'Revenue-Supported Rating Criteria', Aug. 16, 2010;

--State Housing Finance Agencies - Single Family Mortgage Program Rating Guidelines Nov. 26, 2008.

Applicable Criteria and Related Research:

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564565

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