Fitch Rates Alaska HFC $137MM Mortgage Revenue Bonds 'AAA'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 17, 2001

Fitch assigns a rating of `AAA' to Alaska Housing Finance Corp.'s (AHFC) $137.2 million mortgage revenue bonds, 2001 series A and B. Fitch also affirms the `AAA' rating on the $524 million outstanding mortgage revenue bonds and the `AAA' underlying rating on the $89.6 million outstanding mortgage revenue bonds, 1996 series A, insured by MBIA Insurance Corp. (MBIA) and $14.5 million outstanding mortgage revenue bonds, 2000 series A due on 2038, insured by Ambac Assurance Corp. (Ambac). Fitch rates the respective insurer financial strength of MBIA and Ambac `AAA'. The bonds are expected to sell during the week of Sept. 17, 2001, through negotiation by a George K. Baum & Company-led syndication.

The rating assigned to the bonds reflects the indenture's security provisions, the credit quality of the existing and expected underlying collateral and related credit enhancements, the adequacy of projected revenues and investment earnings to meet debt service requirements, the availability of a special reserve fund, and AHFC's strong management capabilities and financial strength. Credit concerns include the portfolio's geographic concentration and the vulnerability of the state's real estate market to the limited, oil-dependent economy. Although the bonds are also general obligations of the corporation, which Fitch rates `AA+', primary support for the bonds' `AAA' rating centers on the indenture's security provisions, existing and expected collateral, debt service reserve account, and the availability of funds in a special reserve fund. Both the debt service reserve account and special reserve fund are expected to be funded by a corporation contribution.

The current offering is the sixth sale of bonds to be issued under a master trust indenture created in 1996. A small portion of the bond proceeds are expected to be used to transfer loans originated under a separate program to this indenture. The remaining proceeds will be used to fund mortgages through the corporation's first-time homebuyer program. The general indenture requires each loan to be a first lien mortgage on a single-family residence, bear a fixed rate of interest, and have a term of 15 to 30 years. Additionally, loans with original loan-to-value ratios (LTVs) of 80% or higher are required to be insured by the Federal Housing Administration (FHA), guaranteed by the U.S. Department of Veterans Affairs (VA) or the U.S. Department of Agriculture through its Rural Development program (RD), or insured by private mortgage insurers. Loans may also be in the form of mortgage-backed securities or other loan types provided the bonds' rating is maintained.

As of August 1, 2001, there were approximately 7,600 mortgages outstanding under the program with an aggregate principal balance of $618.5 million. Bond proceeds will be used to acquire $125.5 million of first-time homebuyer loans already warehoused by the corporation (warehoused loans) as well as transfer $11.5 million of seasoned loans originated under a separate program (transferred loans) to this indenture. The combined portfolio (including existing loans as well as the warehoused and transferred loans) will consist of approximately 9,130 loans aggregating nearly $760 million. More than one-half (55%) of the combined loan balance is FHA insured, 18% is VA guaranteed, 14% is uninsured, and 7% are each RD guaranteed and insured by private mortgage companies. More than one-half (57%) of the combined portfolio is concentrated in Anchorage and approximately three-quarters of the loans are secured by single family detached homes.

Program financial results for the years ended June 30, 2000 and 1999 were favorable. Net interest spread increased somewhat to 30.5% in fiscal 2000 from 28.5% in 1999 and 24.2% in 1998. The program's debt to equity ratio on a Fitch-adjusted basis remained at 4.8 times (x) in 2000, the same as in 1999 and a significant decline from 9.3x the prior year. Unaudited financial statements for the nine months ended March 31, 2001 show continued favorable results.

The existing mortgage revenue bond loan portfolio is performing well. As of March 31, 2001, 4.0% of the loan balance was 30 days or more delinquent. Likewise, the corporation's overall loan portfolio of 27,800 loans (excluding mobile homes) aggregating $2.7 billion had a delinquency rate of 3.1% (excluding a minimal number of REO loans). By comparison, 3.9% of all loans and 5.1% of all fixed-rate FHA loans in the state are 30 days or more delinquent.