TEXT - Fitch may still cut Florida Housing Fin Corp
Jan 24 - 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.