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CAPSTEAD SECURITIES CORP. IV CMO SERIES 1992-VIII RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --

CAPSTEAD SECURITIES CORP. IV CMO SERIES 1992-VIII RATED 'AAA' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, June 30 /PRNewswire/ -- Capstead Securities Corp. IV's $200 million collateralized mortgage obligations series 1992-VIII are rated 'AAA' by Fitch. The rating reflects the high quality of the underlying collateral, an adequate level of credit support, and the dependability of the administrator, 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 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 "5/25" mortgage loans, which provide for a one- time interest rate adjustment 5 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 potential for payment shock to 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 than 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 (LTV) is approximately 73 percent and at least 91 percent of the properties are located in California. In addition, all of the loans are secured by owner-occupied properties. These characteristics, combined 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 12 percent pool insurance policy issued by General Electric Mortgage Insurance Corp. (GEMICO). In addition, 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. The bonds are special allocation bonds, whereby the Class VIII-G bonds will absorb excess credit losses in the unlikely event that coverage under the mortgage pool insurance policy is depleted. Fitch believes that the pool policy will be able to provide ample protection for the Class VIII-G bonds against credit losses, irrespective of Class VIII-G's loss position.
 -0- 6/30/92
 /CONTACT: Michele J. Loesch, 212-908-0686, or Alexander K. Zabik, 212-908-0634, both of Fitch/ CO: Capstead Securities Corp. IV ST: IN: FIN SU: RTG


LD -- NY092 -- 5377 06/30/92 17:39 EDT
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Publication:PR Newswire
Date:Jun 30, 1992
Words:411
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