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.
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.