Fitch Rates Indiana HFA's $45MM Mtge Revs 2003 Series C 'AAA'

NEW YORK--(BUSINESS WIRE)--Sept. 4, 2003--Fitch Ratings assigns an 'AAA' rating to the Indiana Housing Finance Authority's (the authority) $45 million single-family mortgage revenue bonds, 2003 series C. Additionally, Fitch affirms the 'AAA' rating on the outstanding $767 million of 1998 series A-D bonds; 1999 series A, X, Y, Z bonds; 2000 series A-D bonds; 2001 series A-C bonds; 2002 series A-D, 2003 series A-B bonds; as well as the 'AAA/F1+' rating on the 2002 series E bonds. The new bonds are expected to be sold through negotiation the week of Sept. 8, 2003 by a syndicate led by Goldman, Sachs & Co.

The bonds are being issued to provide approximately $45 million to continue the authority's single-family homebuyer program through the purchase of Government National Mortgage Association (Ginnie Mae) and Federal National Mortgage Association (Fannie Mae) guaranteed mortgage-backed certificates.

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The rating reflects:

-- Current and projected composition of the single-family mortgage

portfolio, which consists primarily of Ginnie Mae and Fannie

Mae guaranteed mortgage certificates;

-- Deep levels of mortgage insurance protection on the whole loan

portion of the portfolio;

-- High level of overcollateralization that exists within the

indenture; and,

-- The program's financial performance.

As of Jan. 1, 2003, more than 98% of the mortgage portfolio consisted of Ginnie Mae and Fannie Mae mortgage-backed certificates, which are fully guaranteed for timely payment regardless of the actual performance of underlying loans. Ginnie Mae securities are guaranteed by the U.S. government; Fitch rates Fannie Mae's mortgage-backed securities 'AAA'. The mortgage loans not guaranteed by certificates (whole loans) are generally covered by primary mortgage insurance companies (1.3% of the portfolio) or Federal Housing Administration/Veterans Administration insurance/guarantees (0.3%) or are uninsured (0.4%).

Additionally, the whole loans are insured by mortgage pool insurance policies which currently provide deep coverage on the outstanding principal balance of the whole loans. Portfolio performance for the whole loan portion has been satisfactory.

The combination of timely payment performance from mortgage certificates and deep levels of mortgage insurance on the whole loans provides a strong cushion against portfolio deterioration or cash flow interruption. Additionally, the program remains well over-collateralized, providing an additional layer of security and liquidity.