CAPSTEAD SECURITIES CORP. III SERIES 1991-VI RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
CAPSTEAD SECURITIES CORP. III SERIES 1991-VI RATED 'AAA' BY FITCH
-- FITCH FINANCIAL WIRE --
NEW YORK, Nov. 26 /PRNewswire/ -- Capstead Securities Corp. III's $225 million Collateralized Mortgage Obligations Series 1991-VI are rated 'AAA' by Fitch. The rating takes into consideration the high quality of the underlying collateral, the adequate level of credit support, and the dependability of the administrator/servicer, Lomas Mortgage USA, Inc. Fitch also believes that cash flow from the loans will be sufficient to cover principal and interest on the bonds and that the bondholders are legally insulated from bankruptcy concerns. The prudent underwriting standards developed by Capstead Mortgage Corp. (CMC) for acquiring mortgage loans further enhances the credit quality of the pool.
The pool consists of 766 conventional, fixed rate, 15- and 30-year mortgage loans secured by first liens on one- to four-family residential properties. The weighted average loan-to-value ratio (LTV) of approximately 73 percent, in conjunction with at least 98 percent of the loans being secured by owner-occupied properties, mitigates the potential for defaults. Additionally, approximately 81 percent of the pool is located in California. Therefore, losses arising from loan defaults should be lower compared to other regions due to California's economic strength and diversity. These factors are reflected in the level of credit enhancement.
The bonds are special allocation bonds, whereby the class VI-G bonds will absorb any losses in the unlikely event that credit losses exceed the amount of the pool policy. Fitch believes that the pool policy will be able to provide protection for the class VI-G bonds against credit losses, irrespective of the class VI-G's loss position.
Credit enhancement will be provided by a 9.5 percent pool insurance policy issued by General Electric Mortgage Insurance Corp. Additionally, special hazard and bankruptcy losses will be covered by a special hazard insurance policy and a bankruptcy bond issued by Commerce and Industry Insurance Co. Fitch believes the loss coverage provided by all three sources is more than sufficient and supports the 'AAA' rating.
CMC's underwriting standards generally conform to FHLMC and FNMA guidelines with the exception of initial principal balances. CMC's guidelines were developed based on anticipated requirements of insurers and management's analysis of rating agency criteria. Fitch believes that CMC's underwriting standards contribute to the pool's overall credit quality and will have a positive impact on its perform.?
/CONTACT: Alexander K. Zabik, 212-908-0500, or Suzanne Mistretta, 212-908-0500, both of Fitch/ CO: Capstead Securities Corp. III ST: IN: FIN SU: RTG KD -- NY090 -- 7520 11/26/91 17:15 EST