Fitch Maintains Rating Watch Negative on Florida Housing MF Guarantee Fund-Backed Project Bond

NEW YORK--()--Fitch Ratings maintains the Rating Watch Negative on the following multifamily project bond series supported by Florida Housing Finance Corporation's affordable housing guarantee fund (Guarantee Fund) as follows:

--Florida Housing Finance Corp. (FL) (Woods of Vero Beach Apartments Project) housing revenue bonds series 1999N-1 'A-'.

The above-mentioned bond series was placed on Rating Watch Negative in August 2011 because an initial review of the trust assets demonstrated insufficient asset parity (asset/debt) ratios for the current rating level. Subsequent to that review, the development was approved to receive the second round of funding under the State Apartment Incentive Loan Funding for Extremely Low-Income (SAIL ELI) program. The intent of the program is to provide funds to allow recipients to redeem a portion of the bonds and restructure the respective mortgage note.

SENSITIVITY/RATING DRIVERS

The Rating Watch Negative is being maintained on the Woods of Vero Beach bond series because the SAIL ELI loan closing, originally anticipated for the fourth quarter of 2012, is currently awaiting Florida Housing board approval for an extension at the February board meeting. Therefore, if approved, the loan and bond amounts are expected to be amended over the next several months and Fitch will review the updated cash flows during the process of the loan modification. Once the mortgage notes has been amended and a portion of the bonds redeemed, the asset parity ratio will change and Fitch will review the transaction to determine whether the development, post-restructuring, has an asset parity level commensurate with its rating level. If the extension is not approved, Fitch will review the trust assets to determine whether the current asset parity level for the development is commensurate with its rating level.

Part of Fitch's surveillance review for single asset multifamily bond issuances with a mortgage guarantee involves an asset parity test to confirm that available assets would exceed bond liabilities in the case of a mortgage default. The asset parity is calculated by dividing the dollar amount of total program pledged assets (which includes the guaranteed mortgage and amounts on deposit in reserves) by the total amount of bonds outstanding. A typical single asset multifamily transaction with a mortgage guarantee maintains an asset parity ratio of no less than 101% throughout the term of the bonds. For more information regarding Fitch's rating analysis for single asset multifamily transactions backed by a mortgage guarantee, please see the press release 'Fitch Affirms 51 MF Project Bonds Supported by FL Hsg Guarantee Fund at 'A-'; Outlook Stable' dated July 11, 2012, and available at www.fitchratings.com.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 12, 2012).

Applicable Criteria and Related Research:
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015

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Contacts

Fitch Ratings
Primary Analyst:
Charles Giordano, +1-212-908-0607
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Kasia Reed, +1-212-908-0500
or
Committee Chairperson:
Maura McGuigan, +1-212-908-0591
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst:
Charles Giordano, +1-212-908-0607
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Kasia Reed, +1-212-908-0500
or
Committee Chairperson:
Maura McGuigan, +1-212-908-0591
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com