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CAPSTEAD SECURITIES CORP. IV $125 MILLION SERIES 1992-III 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --

CAPSTEAD SECURITIES CORP. IV $125 MILLION SERIES 1992-III 'AAA' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, March 30 /PRNewswire/ Capstead Securities Corp. IV's $125 million collateralized mortgage obligations series 1992-III are rated 'AAA' by Fitch.
 The rating takes into account the characteristics of the underlying collateral, as well as the level of credit support. 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 enhances the credit quality of the pool further.
 The pool consists of "5/25" mortgage loans, which provide for a one- time interest rate adjustment five years from the date of origination. The index used on the adjustment date will be the FNMA posted annual yield for 30-year fixed rate mortgages for 30 days delivery. Because of the payment shock to the borrowers, Fitch assumed a higher default rate to determine an adequate level of credit enhancement. However, the 5/25 loans may not experience as high a default rate as those loans that have a more frequent adjustment because there is a better chance of an improvement in the borrower's financial status. The pool's weighted average loan-to-value ratio is approximately 73 percent and at least 89 percent of the properties are located in California. In addition, all of the loans are secured by owner-occupied properties. These characteristics, in conjunction with CMC's conservative underwriting policies, should mitigate the potential for defaults and losses in the mortgage pool.
 Credit enhancement will be provided by a 13 percent pool insurance policy issued by General Electric Mortgage Insurance Corp. (GEMICO). In addition, special hazard losses will be covered by a special hazard insurance policy issued by Aetna Casualty and Surety Co., and a bankruptcy account will be established by the trustee, with funds deposited by CMC, to cover losses due to bankruptcies. Fitch believes the loss coverage provided by all three sources is more than sufficient and supports the 'AAA' rating.
 The bonds are special allocation bonds, whereby the Class III-C bonds will absorb any losses if, in the unlikely event, credit losses exceed the amount of the pool policy. Fitch believes that the pool policy will be able to provide ample protection for the Class III-C bonds against credit losses, irrespective of Class III-C's loss position.
 -0- 3/30/92
 /CONTACT: Alexander K. Zabik or Michele J. Loesch of Fitch, 212-908-0500/
 (CMO) CO: Capstead Securities Corp. IV ST: IN: FIN SU: RTG


AH -- NY098 -- 3116 03/30/92 17:53 EST
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Publication:PR Newswire
Date:Mar 30, 1992
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