Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Update:

MOODY'S AFFIRMS THE Aa1 RATING OF MONTANA BOARD OF HOUSING SINGLE FAMILY SINGLE FAMILY MORTGAGE BONDS, 1977 INDENTURE; OUTLOOK REMAINS STABLE

27 Sep 2010

APPROXIMATELY $460 MILLION IN DEBT AFFECTED

Montana Board of Housing
Housing
MT

Opinion

NEW YORK, Sep 27, 2010 -- Moody's Investors Service has affirmed the Aa1 rating of the approximately $460 million of outstanding Montana Board of Housing ("MBOH") Single Family Mortgage Bonds issued under the 1977 Indenture. The outlook remains stable. The Aa1 rating reflects the strong financial position of the program, the existing and expected loan composition, and the bond structure.

LEGAL SECURITY: The bonds are special obligations of MBOH. The bonds are payable from the revenues and assets pledged under the 1977 Indenture, which consists primarily of interest in first lien mortgages, investments and reserves held with the trustee. The bonds are also a general obligation of the Board (rated A2). Payment is on parity with $459,630,000 million (6/30/2010) in Single Family Mortgage Bonds. There is also a Debt Service Reserve Requirement of 3% of bonds outstanding which has been met.

INTEREST RATE DERIVATIVES: The 1977 Indenture does not have any variable rate debt or hedging instruments.

STRENGTHS

--Solid program asset-to-debt ratio ("PADR") as of June 30, 2009 of 1.11x.

--Debt service reserves in the amount of 3% of bonds outstanding.

--A strong loan portfolio composition that is primarily FHA (50%) and VA (11%) insured.

--Rating Certificate affirming outstanding bond rating required to issue additional bonds.

CHALLENGES

--The portion of loans which are FHA insured has declined.

--The size of the indenture is relatively small. It is typical for the program's PADR to notably decline when bonds are sold, then increase over time after the new mortgages increase profitability.

LOAN PORTFOLIO CHARACTERISTICS AND PERFORMANCE: STRONG PORTFOLIO COMPOSITION DUE TO SUBSTANTIAL GOVERNMENT INSURANCE OF MORTGAGES

The combination of mortgage insurance and over collateralization of program assets to liabilities should protect the bond program from losses arising from potential mortgage delinquencies and defaults. As of June 30, 2010, there were 4,988 loans with a balance of approximately $460 million outstanding under the program. Of that balance, 50% was insured by FHA, 11% by VA, 20% by USDA/RHS, 15% was privately insured [11% by Genworth (Baa2, Negative) and 4% by MGIC (Ba3, Positive)] and 4% uninsured with a loan to value below 80%. The portion of loans which are FHA insured has declined over time with PMI insured loans increasing. PMI insurance provides minimum coverage which declines as the loan to value of the loan decreases, and is, in general, fairly deep, with 100% LTV loans coverage at 40%, 95% LTV at 37% etc. This risk to the program from shift to PMI insurance is mitigated by the deep level of PMI coverage as well as the strong asset to debt ratio of the program.

The mortgage loan portfolio performance has been strong with delinquencies of 60-89 days equal to 0.76% and loans 90+ days delinquent equal to 1.16% as June 30, 2010. Foreclosures are equal to 0.76%. This compares favorably to state and national averages of 0.96%, 1.42% and 2.07%, 4.73% for 60 day and 90 day respectively, as of June 30, 2010 (as reported by the Mortgage Bankers Association). The top three mortgage loan vintages are 2007 (32%), 2006 (27%) and prior to 2005 (21%).

FINANCIAL PERFORMANCE: PROGRAM REMAINS PROFITABLE AND PADR IS RELATIVELY STABLE

The program's financial strength is reflected in its asset to debt ratio of approximately 1.11x as of 6/30/09 audited financial statements. The 2009 PADR is an improvement from a low of 1.09x in 2007 but remains slightly below the 1.13x achieved in 2006. The indenture remains profitable with net revenues being 6.01% of operating revenues. This compares less favorably to last year's level of 14.55%. The decline is due primarily to cash and investments being a larger percentage of total assets, which hurts profitably as they generate less revenue than mortgages especially in a low interest rate environment.

CASH FLOW PROJECTIONS: FULL AND TIMELY PAYMENT DEMONSTRATED UNDER ALL PREPAYMENT SCENARIOS

Cash flows were run on a consolidated basis and included 0%, 100%, 475% PSA prepayment speeds as well as a 100% Super Sinker Stress Test. All investment earnings from money market funds assumed a stressful 0% for the life of the program as per Moody's guidelines. Based on these projections, Moody's believes the 1977 Indenture will continue to generate enough revenue from its loans and investments to fully meet all existing debt obligations in a timely manner under all stressful prepayment scenarios.

Outlook

The stable outlook is based upon continued profitability and a strong portfolio composition.

What could change the rating - UP

Continued PADR growth while maintaining current loan portfolio characteristics or a substantial increase in the size of the indenture (while maintaining loan and financial characteristics).

What could change the rating - DOWN

Significant deterioration in portfolio performance and erosion of the asset to debt ratio.

KEY STATISTICS (as of June 30, 2010 unless otherwise noted):

Program asset to debt ratio (as of June 30, 2009): 1.11x

Fund balance as a % of bonds outstanding (as of June 30, 2009): 10.75%

Net operating revenue as a percent of total operating revenue (as of June 30, 2009): 6.01%

Delinquency statistics: 60 days - 0.76%; 90 days - 1.16%; loans in foreclosure 0.76%

Portfolio composition: FHA - 49.51%; VA - 10.91%; USDA/RHS - 20.11%; privately insured - 14.76%; uninsured - 4.31%; FNMA MBS- 0.40%

Loan vintages: prior to 2005- 21.06%; 2005 - 9.67%; 2006- 26.74%; 2007- 32.70%; 2008- 8.38%; 2009- 0.21%; 2010- 1.24%

Type of obligation: Special obligations

Cash flow structure: Open loop; 1.02x PADR release test

Mortgage loans outstanding: $441 million

Bonds outstanding: $460 million

LAST RATING ACTION & METHODOLOGY

The last rating action with respect to Montana Board of Housing was on December 08, 2009 when a Aa3 rating was assigned to the Single Family Homeownership Bonds. The Single Family Homeownership Bonds were issued pursuant to the New Issue Bond Program ("NIBP") established jointly by Fannie Mae and Freddie Mac (the "GSEs"), the Federal Housing Finance Agency, and the U.S. Department of the Treasury ("Treasury") under which the Treasury provides funding for bond issuance by HFAs.

The principal methodology used in rating the Single Family Mortgage Bonds (1977 Indenture) was "Moody's Approach for Single Family, Whole-Loan Housing Programs," published in May 1999 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Richard Kubanik
Analyst
Public Finance Group
Moody's Investors Service

Toby Cook
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S AFFIRMS THE Aa1 RATING OF MONTANA BOARD OF HOUSING SINGLE FAMILY SINGLE FAMILY MORTGAGE BONDS, 1977 INDENTURE; OUTLOOK REMAINS STABLE
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com