Fitch Ratings has given the State of New York Mortgage Agency mortgage insurance fund's insurance accounts a negative outlook while at the same time affirming its ratings.
Among the reasons for the affirmations were continued financial support from the state's mortgage recording tax surcharge receipts, although in a reduced amount; and historically low delinquency rates and loan losses in both the project pool insurance account and single-family pool insurance account.
The negative outlook notes that surcharge receipts have fallen to between $68 million and $70 million from a high of $198 million in 2008. Fitch said this decline is occurring during a period of growth in risk amount for the project account.
The project account is used to insure first mortgages on multifamily housing, elderly housing, special needs facilities, elderly assisted living residences, cooperative housing and retail and community service projects.
A downgrade can be triggered by continued economic pressures on New York's commercial real estate sector, which provides the mortgage surcharge receipts. It can also be triggered by a combination of:
• A reduced commitment from New York State by diverting the receipts;
• Continued required transfers of retained earnings for new commitments; or
• Higher levels of delinquencies.
At the end of the first quarter, the project account of $2 billion in risk covering almost 890 policies in force. It has seen increased volume over the past few years because of low interest rates and low property values, which has increased demand for SONYMA loans, Fitch said.
The single-family account has $484 million in risk in force, with an aggregate stop loss limit of $421 million. There are 35 pool insurance policies with an aggregate mortgage amount of $3.1 billion. The account also provides primary insurance to 1,790 loans with a balance of $253 million.
Both the pool and primary segments have historically performed well, Fitch said, although there has been an increase in delinquencies and total claims paid.
