Fitch Rates Indiana Housing & Community Development Auth's 2016A Single Family Mortgage Revs 'AAA'

NEW YORK--()--Fitch Ratings has assigned a 'AAA' rating to the Indiana Housing and Community Development Authority's (the authority) single family mortgage revenue bonds, $30 million 2016 series A-1 and $49.51 million 2016 series A-2.

Fitch has also affirmed the following outstanding 1980 master indenture Single Family Mortgage Bond Program debt at 'AAA':

--$19.2 million single family mortgage bonds, 2006B-1, B-2& B-3;

--$18.5 million single family mortgage bonds, 2006C-1;

--$22.7 million single family mortgage bonds, 2006D-1 & D-2;

--$18.4 million single family mortgage bonds, 2007A-1 & A-2;

--$8.4 million single family mortgage bonds, 2008A-2 & A-3;

--$45.8 million single family mortgage bonds, 2010 08A-2.

The Rating Outlook is Stable.

SECURITY

The bonds are special obligations of the authority secured solely by the revenues and assets pledged under the amended and restated master indenture that primarily consist of mortgage backed securities (MBS) guaranteed by the Government National Mortgage Association (GNMA or Ginnie Mae), mortgage pass-through certificates guaranteed by the Federal National Mortgage Association (FNMA or Fannie Mae) and MBS guaranteed by the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) and cash reserves.

KEY RATING DRIVERS

LOAN PORTFOLIO: The loan portfolio consists of MBS guaranteed by Ginnie Mae and Freddie Mac and the Fannie Mae mortgage pass through certificates (MBS).

ASSET QUALITY: Ginnie Mae, Freddie Mac and Fannie Mae guarantee the full and timely payment of principal and interest on the respective MBS regardless of actual performance of the underlying loans.

ASSET TO DEBT RATIO: The program asset-to-debt ratio is 212.5% as of April 1, 2016.

PROGRAM OVERSIGHT: Indenture allows surplus funds in excess of 103% to be withdrawn from the indenture. However, the history of the authority and its single family mortgage program strongly suggests that management is unlikely to withdraw the indenture's surplus funds.

RATING SENSITIVITIES

U.S. SOVERIGN LINK: As the ratings of Fannie Mae, Ginnie Mae and Freddie Mac, as government sponsored entities (GSEs) are currently linked to the U.S. sovereign rating, any rating action on the U.S. Sovereign rating may directly impact the rating on the bonds.

CHANGE IN FNMA or FHLMC LINKAGE: Should Fitch's view of the U.S. government's direct level of financial support for Fannie Mae or Freddie Mac change, the rating of the two GSEs may be delinked from the U.S. sovereign rating and may result in negative pressure on the bonds.

BANKRUPTCY REMOTE: Fitch considers the authority to be bankruptcy remote based on its public purposes, predominantly limited recourse debt and its inability under current law to commence a voluntary proceeding under Chapter 9 without legislative or executive approval. A change in this status could lead to a rating change and limit the rating on the single family program to that of the authority's general obligation debt.

CREDIT PROFILE

The authority was established in 1978 as a public body and corporate of the State of Indiana. It is empowered to purchase loans from lenders to provide permanent financing for the rehabilitation, acquisition or construction of single-family residential housing made to persons of low and moderate income.

The 1980 Indenture's assets are of sound quality as MBS payments are guaranteed by the GSE and do not rely on the performance of the underlying mortgages. Mortgages permitted to be placed into MBS must be fully documented and follow strict underwriting requirements to qualify. All loans packaged into the MBS are for first time homebuyers in the state.

In conjunction with the issuance of the 2016A bonds the master trust indenture will be amended and restated to incorporate all of the amendments and restatements of the original 1980 master indenture in a single document. The amended and restated master indenture removes provisions that applied only when whole mortgage loans were held under the indenture rather than GNMA, FNMA and FHLMC MBS.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Revenue-Supported Rating Criteria (pub. 16 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012

State Housing Financing Agencies: Single Family Housing Criteria (pub. 01 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867779

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005688

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005688

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Ronald P. McGovern
Senior Director
+1-212-908-0513
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Kasia Reed
Analytical Consultant
+1-646-582-4864
or
Committee Chairperson
Maura McGuigan
Senior Director
+1-212-908-0591
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Ronald P. McGovern
Senior Director
+1-212-908-0513
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Kasia Reed
Analytical Consultant
+1-646-582-4864
or
Committee Chairperson
Maura McGuigan
Senior Director
+1-212-908-0591
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com