Fitch Rates Puerto Rico HFA $200MM Single Family Mtge Rev Bonds Portfolio XI 'AAA'

Business Wire, May 23, 2008

NEW YORK -- Fitch Ratings assigns an 'AAA' rating to Puerto Rico Housing Finance Authority's (HFA) $200 million single family mortgage revenue bonds, portfolio XI. The bonds are being sold the last week of May through negotiation.

The single family mortgage revenue bonds are being issued under a new trust indenture that pledges mortgage revenues, investment earnings, reserves and other trust funds to secure the bonds. Bond proceeds from the portfolio XI bonds will be used to continue the authority's affordable housing mortgage subsidy program. All funds are expected to be used to purchase mortgage-backed certificates guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac and backed by pools of qualified loans under the affordable housing subsidy program. Fitch rates Fannie Mae and Freddie Mac mortgage backed certificates 'AAA'. Ginnie Mae is a U.S. Government agency.

As of Dec. 31, 2007, the authority had issued $1.1 billion of lendable proceeds under various stand alone indentures under its affordable housing mortgage subsidy program. Of those proceeds, the amount of mortgage certificates purchased totaled approximately $575 million or approximately 52%.

The rating reflects the projected composition of the mortgage portfolio which will consist of the guaranteed mortgage pass through certificates. The rating also reflects the sufficient level of authority contribution to cover costs of issuance and mortgage interest rate subsidies for the 15 year subsidy period. Prior to purchase of the mortgage certificates, bond proceeds and the authority's contribution will be invested in guaranteed investment contracts rated 'AA/F1 ' or higher by Fitch.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.