June 16, 2010

On June 14, Standard and Poor’s released a report stating that loan delinquencies among S&P-rated HFA single-family programs have increased through the end of 2009.  The report also states that HFA delinquency rates still remain lower than those of the states in which the HFAs operate.

The report says HFA delinquency rates “could change should the market improve, and preliminary indications suggest to us that loan delinquencies declined for HFA bond programs in the first quarter of 2010.”  According to S&P Chief Economist David Wyss the “U.S. housing market appears to be recovering.”  Home sales have increased and home prices “showed their first year-on-year gain in three years” this February.  But the report cautions that due to the homebuyer tax credit expiring and the large number of unsold and foreclosed properties, prices may once again enter a period of decline in the coming months.

S&P concludes that although HFA delinquency rates have increased in the last several quarters, they do not believe “that factor alone will adversely affect their ratings in near future.”  The report states that the current delinquency rates are well below loan default rates incorporated in S&P’s loan loss calculations and well below the levels that would lead to a downgrade.

S&P will release a full report when it has secured complete information regarding the HFAs’ loan programs for the first quarter of 2010.