DALLAS — The Texas State Affordable Housing Corp. today is pricing $23.5 million of single-family mortgage revenue bonds to help finance its firefighter and law enforcement lending program.
RBC Capital Markets is lead manager, and Morgan Keegan & Co. is co-manager. First Southwest Co. is the financial adviser and Fulbright & Jaworski LLP is bond counsel.
The Series 2007C bonds are subject to the alternative minimum tax and structured as a single term bond maturing in 2039.
The deal was originally scheduled to come to market in late February or early March, but the TSAHC had sufficient cash available to meet its lending requests.
“There were some loanable funds remaining in the program from last year and we waited for those funds to be allocated before issuing the new bonds,” said First Southwest managing director Robin Miller.
The housing agency issues debt as a conduit for numerous programs that provide mortgage loans to qualified buyers. Proceeds from single-family revenue bonds are used to finance mortgage loans, usually for first-time homebuyers, either directly or through a third-party lender.
According to the agency’s Web site, the 30-year, fixed-rate mortgages come with an interest rate of 6.25% along with a 5% grant for down-payment assistance for what the issuer calls the “Homes for Texas Heroes” loan program.
Eligible buyers must work in Texas as paid firefighters, peace officers, corrections officers, county jailers, or public safety officers.
The TSAHC sold $35 million of Series 2007-A1 variable-rate, single-family mortgage bonds in late January and another $39.6 million of Series 2007-A2 single-family mortgage bonds in mid-February for its professional educators home loan program.
The 2007-A1 bonds yielded 4.895% on a 5% coupon maturing 2039, while the yield on the 2007-A2 bonds was 3.75% with a 3.75% coupon maturing in 2039.
“There’s a pretty good investor base for these types of mortgage-backed bonds,” Miller said. “I certainly have to give Freddie Mac a lot of credit, as they’ve been a big supporter of TSAHC programs.”
Due to the structured finance aspect of the bond sale, Moody’s Investors Service analyst Gregory Lipitz said the rating won’t be issued until after the deal has priced.
Moody’s rated the Series 2007-A1 and 2007-A2 bonds Aaa due to the program’s partnership with Freddie Mac, which will purchase the mortgages to help promote affordable housing in the Lone Star State. According to Freddie Mac’s Web site, it has invested more than $157.4 billion in single-family mortgages in Texas over the past decade.
Last May, Standard & Poor’s lowered its ratings on uninsured bonds issued by the housing corporation in 2002 due to the trustee’s decision to dip into the debt service reserve funds to make the March 1, 2006, payments on the bonds.
The agency lowered its rating to BB from BB-plus on $53.7 million of Series 2002A multifamily housing revenue bonds issued on behalf on of the South Texas Apartment Portfolio.
Also lowered was $6.7 million of Series 2002B multifamily mortgage revenue bonds, to B from BB-minus, and $2.9 million of Series 2002C multifamily mortgage revenue bonds, to CCC from B-minus.
Earlier this month, Standard & Poor’s revised its outlook to stable from negative on two of the TSAHC debt portfolios.
The agency changed the outlook on the American Opportunity for Housing portfolio and the American Housing Foundation portfolio, citing the “expectation that the debt service reserve fund will be available to continue to subsidize the debt service payments on the Series 2002A bonds.”
