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Fitch Rates Maryland CDA's Housing Revenue Bonds 2012 Series A & B 'AA+'; Outlook Stable.

NEW YORK -- Fitch Ratings assigns long-term ratings to the following Maryland CDA (MCDA) housing revenue bonds:

--$9.595 million series A of 2012 'AA+';

--$6.735 million series B of 2012 'AA+'.

Additionally, Fitch affirms approximately $163.7 million in housing revenue bonds (see full list below).

The Rating Outlook for the bonds is Stable.

SECURITY

The trust indenture pledges all the mortgages in the loan portfolio consisting of multifamily, single family and group homes as well as the funds pledged under the legal provisions of the resolution.

KEY RATING DRIVERS

PORTFOLIO FEDERALLY INSURED: As of March 31, 2012, 98% of the portfolio is insured by the Federally-backed entities: Ginnie Mae, Fannie Mae, Freddie Mac, and HUD risk-share.

SUFFICIENT OVER-COLLATERALIZATION: The unaudited financial statements, as of March 31, 2012, show an asset parity ratio of 117%, although MCDA has the right to withdraw excess assets. However, by practice, MCDA continues to leave sufficient over-collateralization in the indenture.

CAPABLE MANAGEMENT OVERSIGHT: MCDA has demonstrated strong programmatic oversight capabilities and has had a long successful history of administering multifamily programs.

ALLOWABLE LOANS: The general bond resolution allows various types of loans. The resolution states that loans do not require a mortgage and that the mortgage does not have to be a first lien.

CREDIT PROFILE

The 2012 A/B bonds are the 39th series of bonds to be sold under a general bond resolution adopted on Nov. 1, 1996 and are on parity with all bonds issued previously under the indenture. The 2012 A bonds will be used to finance the rehabilitation of Pikeswood Park Apartments and has a credit enhancement under the FHA risk-share program. The 2012 B bonds will be used to finance the rehabilitation of the Eastern Avenue Apartments and has credit enhancement of cash and permitted investments in the form of GNMA securities.

The portfolio mainly consists of 61 multifamily residential developments which, as of March 31, 2012, had an aggregate outstanding mortgage balance of $397.8 million. Additionally, the portfolio consists of single family residences and group homes which account for $8.7 million in loans. As of March 31, 2012, 98% of the portfolio was insured by a governmental entity such as: Ginnie Mae (84%), Fannie Mae (6%), Freddie Mac (1%), and HUD risk share (7%). All of these entities are backed by the U.S. Government and are therefore reliant upon the U.S. sovereign rating, which is currently 'AAA' with a Negative Outlook. Due to the high presence of governmentally insured loans, a rating action on the U.S. sovereign could potentially affect the rating on MCDA's housing revenue bonds. In addition, Maryland Housing Fund insures 1.6% of the loan portfolio while 0.4% remains uninsured.

More than 37% of the units receive rental assistance payments under Section 8 of the U.S. Housing Act of 1937 or interest-rate subsidies under Section 236 of the National Housing Act. The remaining 63% of the units do not receive rental or interest-rate subsidies. As of March 31, 2012, the unaudited financial statements illustrated sufficient over-collateralization within the program, as the asset parity ratio was over 117%. Furthermore, a cash flow analysis demonstrates assets are sufficient to cover liabilities.

Credit concerns are related to the bond resolution allowing various types of loans including uninsured and second lien mortgages. These concerns are mitigated by the current loan portfolio being 99.6% insured (with 98% being governmental insurance), management demonstrating strong programmatic oversight, and the historically strong performance of the portfolio.

Additionally, Fitch affirms the 'AA+' ratings on the following MCDA housing revenue bonds:

--$54.4 million 2004 series B, C, & D;

--$36.7 million 2005 series A, B, & C;

--$18.6 million 2006 series A, B, C, & D;

--$27.1 million 2007 series A, B, & C;

--$26.8 million 2008 series A, B, C, & D;

--$7.5 million 2009 series A.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Rating Criteria for Pooled Multifamily Housing Bonds' (Dec. 20, 2012);

--'Revenue-Supported Rating Criteria' (June 12, 2012).

Applicable Criteria and Related Research:

Rating Criteria for Pooled Multifamily Housing Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660549

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
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Publication:Business Wire
Geographic Code:1U2NY
Date:Jun 21, 2012
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