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Rating Action:

Moody's Assigns Ratings to Hipotecaria Credito y Casa's First Issuance Under the BOHRIS Fungibles Program

 The document has been translated in other languages

18 Dec 2006
Moody's Assigns Ratings to Hipotecaria Credito y Casa's First Issuance Under the BOHRIS Fungibles Program

New York, December 18, 2006 -- Moody's de Mexico S.A. de C.V. ("Moody's") has assigned a rating of Aaa.mx (Mexican National Scale) and Baa1 (Global Scale, Local Currency) to the Series A certificates CREYCB 06U and a rating of A1.mx (Mexican National Scale) and Ba2 (Global Scale, Local Currency) to the Series B certificates CREYCB 06-2U from Hipotecaria Credito y Casa, S.A. de C.V., Sociedad Financiera de Objeto Limitado (CyC). The certificates were issued by Banco Invex S.A., acting solely in its capacity as trustee.

The certificates represent CyC's first issuance under the BORHIS Fungibles program sponsored by Sociedad Hipotecaria Federal (SHF). Contrasting to other Mexican MBS transactions rated by Moody's, this transaction under the BORHIS Fungibles program allows for pre-funding of receivables, of up to 40% of the issuance amount. In addition, during the first year the transaction is subject to subsequent re-openings to issue additional certificates, which are fungible with those already issued.

Interest and principal to certificate holders will be primarily payable with cash flow from low-income housing mortgage loans originated by CyC and assigned to the trust, which will be established under the laws of Mexico.

The ratings assigned to the Series A and Series B certificates are primarily based on the following:

- The credit quality of the underlying mortgage pool, which is comprised of UDI-denominated, fixed-rate, first-lien mortgage loans secured by low-income houses located in Mexico. The mortgage pool is comprised of 3,395 mortgage loans for approximately UDI 327 million. The pool's weighted average current LTV is 82.7%.

- The eligibility criteria for the mortgage loans to be transferred to the trust during the pre-funding period and in future re-openings of the transaction. The eligibility criteria are expected to help maintain the credit profile of the mortgage pool consistent with that of the original pool. Among other requirements, loans to be transferred to the trust must have a minimum excess spread of 3.2% and be current, with the exception of 10% that can be less than 30 days past due.

- An initial credit enhancement of 1% of the original pool balance, in the form of overcollateralization (OC). The Series A certificates will be supported by additional credit enhancement provided by the subordination of the Series B certificates, which represent 10% of the pool balance.

- The excess spread, which is expected to be available to cover losses and amortize the certificates until a target OC of 4.7% is reached. Typically, in other Mexican MBS transactions rated by Moody's, the OC is calculated over an asset base that includes mortgage loans up 90 days past due. In this transaction, the OC level will be calculated including loans up to 180 days past due. On a relative basis, in a scenario of deteriorating pool quality, this feature could delay the structure's ability to capture excess spread in anticipation of pipeline losses.

- A negative carry reserve account, which is expected to mitigate the negative carry generated by cash in the pre-funding account. The negative carry reserve account will be initially funded by CyC.

- The first-loss mortgage insurance provided by Sociedad Hipotecaria Federal (SHF), rated Aaa.mx (Mexican National Scale) by Moody's.

- The UDI - minimum wage swap provided by SHF.

- The origination standards of CyC, which are in line with Mexican market standards, and its role as servicer of the mortgage pool.

- The well-established laws and regulations governing mortgage securitization in Mexico.

With a market share of approximately 13%, CyC is currently the third largest mortgage Sofol in Mexico in terms of total mortgage portfolio. The company focuses on extending mortgages to low-income individuals under the auspices of SHF's financing programs, and providing construction financing to developers of low-income housing. CyC is headquartered in Culiacan, Sinaloa, and had a serviced portfolio (on and off-balance sheet) of approximately $22 billion Mexican pesos as of September 30th, 2006.

RATING ACTION

The complete rating action is as follows:

Issuer: Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero, acting solely as trustee.

Series A certificates CREYCB 06U for UDIs 430,350,000, rated Aaa.mx (Mexican National Scale) and Baa1 (Global Scale, Local Currency)

Series B certificates CREYCB 06-2U for UDIs 48,350,000, rated A1.mx (Mexican National Scale) and Ba2 (Global Scale, Local Currency)

More details about the transaction will be published in Moody's upcoming report on this transaction which will be available on Moody's website, www.moodys.com.

New York
Susan Knapp
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Carlos Benavides
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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