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Fitch Rates J.P. Morgan Taxable HFA Trust, Series 2014-1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following rating to one class of certificates issued by J.P. Morgan Taxable HFA Trust, series 2014-1:

--$28,666,756 class A certificates 'AAAsf', Outlook Stable.

KEY RATING DRIVERS

The transaction represents a pass-through of all proceeds received in respect of the underlying mortgage revenue bond (MRB) owned by the trust. The rating is based on the credit quality of the MRB.

Proceeds from the certificate issuance were used to purchase the MRB issued by the Indiana Housing and Community Development Authority (IHCDA). The MRB is collateralized by Ginnie Mae (GNMA) and Fannie Mae (FNMA) securities. The MRB is rated 'AAA' by Fitch based on the GNMA and FNMA guarantee of full and timely payment of principal and interest on its securities. The GNMA guarantee is backed by the rating of the U.S. treasury, which carries the sovereign rating of the United States of America (rated 'AAA/F1+' by Fitch). The FNMA guaranty is not backed by the U.S. treasury, however, the FNMA rating is linked is currently linked to the U.S. sovereign rating.

Payments on the certificates will be made monthly and will consist of interest and principal payments received from the underlying MRB. The underlying MRB pays a coupon of 4.050%. The certificates will receive interest equal to 4.00% per annum. The transaction is structured to pass-through all interest and principal proceeds after paying a 0.050% (p.a.) trustee fee and any extraordinary expenses that are incurred. Extraordinary expenses incurred by the trustee are capped at $150,000 per year, and any excess extraordinary expense amount incurred by the trustee is to be paid the following year.

The transaction relies, to a lesser extent, on a series of counterparties to perform particular roles, including the trustee (U.S. Bank National Association; rated 'AA-/F1+', Outlook Stable by Fitch) and the bank at which the certificate account is established (also U.S. Bank National Association). All distributions from the underlying MRB are deposited into the certificate account where they are held un-invested and are subsequently withdrawn by the trustee prior to each payment date. The certificate account is a segregated account held in trust for the benefit of the certificate holders. In its role as both issuer account bank and trustee, U.S. Bank National Association satisfies the eligibility criteria described in Fitch's 'Counterparty Criteria for Structured Finance and Covered Bonds'.

The transaction is established as a grantor trust for federal income tax purposes. Each beneficial owner of the certificates will be treated for federal income tax purposes as owning an undivided interest in each asset held in the trust. To the extent interest on the underlying MRBs is subject to federal income taxation, the portion thereof received by each beneficial owner of a certificate will also be subject to federal income taxation. Fitch has received and reviewed legal opinions addressing the true sale of the underlying MRBs to the trust, the classification of the trust as a grantor trust for federal income tax purposes, and the enforceability of the transaction documents.

RATING SENSITIVITIES

Any rating action on the underlying MRB will directly affect the rating of the certificates. The MRB rating is currently linked to the U.S. sovereign rating, any rating action on the U.S. sovereign rating will directly affect the rating of the certificates. Further, should Fitch's view of the strength of government support for FNMA be reduced or downgraded, the rating of FNMA may be delinked from the U.S. sovereign rating.

The CUSIP for the underlying IHCDA MRB is 454807AE8. For additional details, see 'Fitch Rates Indiana Housing & Community Development Authority's $29.8MM 2014 Ser 1 HRBs 'AAA'', which is available at 'www.fitchratings.com'.

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

The sources of information used to assess this rating were the transaction documents provided by the arranger, J.P. Morgan Securities LLC, and the public domain.

Applicable Criteria & Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 13, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=836566

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Contacts

Fitch Ratings
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Helen Anagnostos
Director
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Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
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Brian Perry
Associate Director
+1-212-908-9808
or
Committee Chairperson
Kevin Corrigan
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