Fitch Confirms Puerto Rico HFA 2008 Portfolio XI Single Family Mtg Revs at 'AAA'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings confirms the 'AAA' rating assigned to Puerto Rico Housing Finance Authority's (PFHFA) $18.9 million outstanding 2008 series single family mortgage revenue bonds, portfolio XI. This confirmation is being made in connection with PFHFA's plan to reduce the amount of funds in the trust accounts.

RATING RATIONALE:

Fitch has reviewed the projected cash flows based on the planned reduction of the interest subsidy account for the bonds and determined that the funds remaining in the trust accounts will be sufficient to pay scheduled principal and interest on the bonds. Causey Demgen & Moore Inc. ('Causey'), a Certified Public Accounting (CPA) and consulting firm, verified the mathematical accuracy of certain computations, based on assumptions provided by Santander Securities, relating to the adequacy of funds in the trust accounts to pay subsidy and related expenses over the life of the outstanding bonds. These computations and assumptions were contained in schedules provided to Causey by Santander Securities Corporation. The scope of Causey's verification did not include an evaluation of the reasonableness or completeness of the assumptions. The terms of Causey's engagement are such that Causey has no obligation to update their report, unless it is subsequently engaged to do so.

CREDIT SUMMARY:

The single family mortgage revenue bonds were issued under a 2008 trust indenture that pledges mortgage revenues, investment earnings, reserves and other trust funds to secure the bonds. Bond proceeds from the portfolio XI bonds are used to continue PFHFA's affordable housing mortgage subsidy program. Funds were used to purchase mortgage-backed certificates guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac and backed by pools of qualified loans under the affordable housing subsidy program. Fitch rates Ginnie Mae, Fannie Mae and Freddie Mac mortgage backed certificates 'AAA'.

The rating reflects the composition of the mortgage portfolio which consists of guaranteed mortgage pass through certificates. The rating also reflects the sufficient level of funds to cover mortgage interest rate subsidies for the 15 year subsidy period and the various servicing expenses related to the administration of the program.

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

In addition to the sources of information identified in the report 'Revenue-Supported Rating Criteria', dated Aug. 13, 2010, this action was additionally informed by information from a third party CPA firm 'Causey, Demgen & Moore Inc.' from materials prepared and submitted by Santander Securities Corporation, the underwriter of the bonds.

Applicable criteria available on Fitch's web site at www.fitchratings.com: 'State Housing Finance Agencies Single Family Mortgage Rating Guidelines', dated Nov. 26, 2008 and 'Investment Provider Guidelines', dated April 25, 2008.

Related Research:

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548606

Investment Provider Guidelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=383978

State Housing Finance Agencies - Single-Family Mortgage Program Rating Guidelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=416066

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KEYWORDS:   United States  North America  Caribbean  Puerto Rico  New York

INDUSTRY KEYWORDS:   Professional Services  Finance

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