TEXT-S&P Report: HFAs' High Equity Helps Counter Low Profitability

(The following was released by the rating agency)

SAN FRANCISCO (Standard & Poor's) Oct. 9, 2012--AlthoughU.S. housing finance agency (HFA) profitability and loanperformance have declined since 2008 because of low interestrates, equity is stable and high because of intact reserves,providing more security for these issuers' general obligationdebt and some other obligations, according to a report publishedtoday on RatingsDirect on the Global Credit Portal.

"We believe that equity could continue growing as apercentage of assets if the HFA loan pool shrinks and HFAs userefinanced loan proceeds to pay down debt," said Standard &Poor's credit analyst Lawrence Witte.

The report does also state that low profitability anddeteriorating loan performance will likely continue and possiblylead to negative rating actions in the absence of alternaterevenue sources.

RELATED CRITERIA AND RESEARCH USPF Criteria: Housing FinanceAgencies, June 14, 2007