HFA Financial Ratios and Ratings Improving, says Standard & Poor's
An October 9 report by Standard & Poor's Rating Services states that financial ratios and ratings for housing finance agencies are improving for the second straight year. The report states, "HFA ratings are now higher than they were before the economic and financial crisis." Standard & Poor's cites conservative management, traditional loan products and debt structures, and federally guaranteed mortgages as primary causes for the improvement. The report lists challenges that HFAs still face, including the low-interest rate environment, higher unemployment, and high loan delinquency. Some factors, including rate swaps that contain high cancellation fees, will continue to affect HFAs' returns even if the market improves. Standard & Poor's expects these factors to limit the number of new loans that HFAs can finance and acknowledges that many HFAs have adapted to these new challenges with more conservative strategies. These strategies may result in lower originations as the recovery continues. Standard & Poor's concludes that the future is promising for HFAs as more favorable loan conditions emerge, and expects HFAs to remain strong affordable housing contributors. |
