News Column

Fitch: SHFA Mortgages Continue to Outperform Market

July 22, 2014



NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: What Drives Mortgage Performance? (Why State Housing Finance Agency Loans Outperform the General Market)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751785

Mortgages originated from state housing financing agency (SHFA) bond proceeds continue to broadly outperform conventional mortgage loans in delinquencies and foreclosures, according to a Fitch Ratings report.

"SHFAs mitigate loan performance risk through their long-standing practices of prudent underwriting, full documentation and verification policies, homebuyer education for mortgage readiness, credit counseling and, in some cases, offering job loss protection insurance," said Maura McGuigan, Senior Director.

"SHFAs use counseling to advance their goal of creating sustainable homeownership situations that contribute to better SHFA loan performance. In some cases, the counseling may prevent potential homebuyers from entering into a homeownership situation that they cannot financially handle."

Some SHFAs offer loan modifications for troubled borrowers. Loan performance for these loans post-modification is a 25%-50% redefault rate, which is consistent with the conventional market.

Fitch believes that employment, and underemployment, should be considered as an indicator for projecting future mortgage loan performance. The inverse correlation between employment changes and mortgage delinquencies within a state is higher than the positive correlation between unemployment and mortgage delinquencies.

SHFA loan improvements lag the market because the agencies try to work out distressed loans in accordance with their primary mission to maintain homeownership, which results in portfolios with accumulated delinquent loans.

For more information, a special report titled "What Drives Mortgage Performance?" is available on the Fitch Ratings web site at www.fitchratings.com or by clicking on the link.

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Maura McGuigan, +1 212-908-0591

Senior Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Ryan J. Pami, +1 212-908-0803

Analyst

or

Charles Giordano, +1 212-908-0607

Senior Director

or

Media Relations:

Elizabeth Fogerty, +1 212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Business Wire


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters