OREANDA-NEWS. Fitch Ratings has published a sector-specific report for rating and surveilling U. S. state housing finance agency (SHFA)-sponsored mortgage insurance or guarantee fund programs. The report identifies factors considered by Fitch in assigning ratings to and surveilling SHFA-sponsored mortgage insurance or guarantee funds within the scope of the criteria. No changes to the ratings of existing programs are anticipated as a result of the publication of the rating criteria.

Fitch has identified three key rating drivers that affect the credit quality of mortgage insurance or guarantee fund programs:

--Risk-to-Capital Ratio/Financial Profile: Fitch views the primary driver of the rating to be the program's risk-to-capital ratio. This ratio measures the total potential claims risk of an insured loan portfolio to the insurance fund's dedicated reserves and available capital for claim payments. Fitch also reviews the quality of the reserve fund's investments given that these funds are the primary or only source of capital to cover losses from the insured portfolio.

--Operating Cash Flow Sufficiency: The analysis includes an assessment of the mortgage insurance fund's ability to generate cash flow from operations to cover potential claim payments, additional risk from new insured loans, and debt payments (if any).

--Insured Portfolio: Fitch views the level of risk in a mortgage insurance fund's portfolio and the quality of the insured loans/mortgages as another key credit component in the analysis. To assess the level of risk and quality, Fitch reviews the program's loan underwriting standards for insured loans/projects, the size of the loan portfolio, the types of loans being insured, the concentration within the risk portfolio, and the direction of state economic trends.

The criteria report outlines how Fitch evaluates these factors in its rating analysis of mortgage insurance or guarantee fund programs.