Moody’s Investors Service has extended the review period for a possible downgrade of $871 million of outstanding bonds sold by the Idaho Housing and Finance Association while the issuer works on a plan to shore up its balance sheet.

The Moody’s report said IFHA is assessing the cost and benefit of calling some of its variable-rate debt and the merits of making a capital contribution from its general fund to trust indentures.

“We are looking at a number of different options, running cash flows and looking at various financial plans regarding variable debt, but we have not decided on a plan,” said John Sagar, the housing agency’s chief financial officer. “It is too early in the process to describe in any detail what options are being considered.”

Though the agency plans to meet with Moody’s analysts in two weeks, they do not expect to have a plan finalized before a board meeting on Dec. 9, Sagar said. However, the plan will be approved and in place by the next debt service payment in January, he said.

Even though the details of the plan have not been fleshed out, according to the Moody’s report, analysts believe that if implemented, the plan could change the housing agency’s risk profile.

“We didn’t feel it was right to take action until we know more about their plans and the details,” said Omar Ouzidane, an assistant vice president with Moody’s public finance group.

Moody’s in June downgraded the agency’s general obligation bonds, Series 1991I bonds, and 2006 indenture bonds. The ratings dropped to Aa1, Aa2 and A1 from Aaa, Aa and Aa3, respectively. Analysts kept the bonds on review for a possible downgrade, Ouzidane said.

The increase in the unemployment rate and the decline in house prices in Idaho have contributed to increased losses on loans that go to foreclosure, according to the rating report.

Idaho’s unemployment rate in September was 9%, down by 0.2% from a year earlier, and just slightly lower than the 9.1% national average, according to the U.S. Labor Department statistics.

Idaho housing prices didn’t experience the kind of declines seen nationally until last year, Ouzidane said, though he didn’t know if the state’s lagging house prices reflect a positive or negative event.

RealtyTrac, a company that tracks foreclosures nationwide, reported in late October that the number of foreclosures in Idaho dropped from 1,860 in August to 1,654 in September. The state had the seventh highest foreclosure rate in the nation in September, with one out of every 391 housing units receiving a foreclosure filing, according to the data.

The state’s housing prices have declined in line with the national average, but the delinquency rates are higher than the Federal Housing Administration’s fixed-rate loan delinquencies, and the delinquency levels of most state housing finance agencies, Ouzidane said.

The ISHA’s portfolio of 9,202 mortgage loans, with an outstanding principal balance of $1.37 billion as of Dec. 31, 2010, is a key source of security for the bonds, according to the Moody’s report.

For this reason, potential losses related to mortgage loans are a key concern because of the relatively high level of mortgage delinquencies and foreclosures, the report stated.

Serious delinquencies, which include loans delinquent 90 days or more and loans in foreclosure, rose from 6.31% on Dec. 31, 2009, to 8.32% as of Dec. 21, 2010. The delinquencies had dropped to 7.9% by the spring, but the levels still remain high compared to national FHA figures on fixed-rate loan delinquencies and most state housing agencies, Moody’s said.

Moody’s analysts said they were also concerned about the cushion the housing agency might have because the housing agency’s insurer experienced downgrades in its own ratings, said senior credit officer William Fitzpatrick.

Only 27% of the IFHA’s bonds are insured by Genworth Mortgage Insurance Corp., with the remainder being insured by a federal government insurer. Moody’s downgraded Genworth to Ba1 from Baa2 in May.

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