The Idaho Housing and Finance Association is one of the few housing agencies in the country that has not used a non-origination call on its bonds in more than 10 years.
A non-origination call occurs when the issuer sells more bonds than actually needed to finance loans, and is forced to risk investors' ire by calling the unused portion much sooner than the buyers expected. The association structures all of its bond deals in the $25 million to $30 million range, as a way to avoid overselling and having to call the unused portion.
"That's an investor's worst nightmare," says IHFA treasurer John Sager. "We do our bonds in small denominations to avoid non-origination calls."
The association, which is independent of the state, but receives part of its private-activity volume cap, was created in 1972. Like most housing agencies across the county, the association issues two types of bonds: single-family mortgage-backed bonds and multifamily housing debt. In 1998, the office underwrote 3,204 housing loans worth an estimated $244 million.
Since its inception, the association has financed 2,978 new units in multifamily projects for both elderly and very low-income residents in 65 separate developments. Combined, the association has sold more than $100.7 million of multifamily housing bonds.
IHFA manages the entire bond-issuing process, including overseeing the sale, purchasing mortgage loans, collecting the loan payments, and repaying bondholders.
The association selects its financing teams through an RFP process and sells all of its debt through negotiation. It currently has two teams of underwriters with 13 firms combined. The teams are swapped every other deal, with Goldman, Sachs & Co. serving as book-runner for both teams.
"They are the one string of continuity throughout the whole process," Sager says.
Underwriters serve an open-ended term, but their performance is compared annually to their peer companies, he adds.
The association has two bond counsel firms - national powerhouse Orrick Herrington & Sutcliffe and Skinner Fawcett of Boise. Skinner has been co- bond counsel since the agency began selling debt in 1978.
"It's open as long as they do their job," Sager says. "It depends on how they perform compared to their peers."
