...SHFA Loans Outperform Conventional Loans: While state housing finance agency (SHFA) delinquencies as a whole grew from 2008 to a peak in 2010¡2011, mortgages originated from SHFA bond proceeds continue to broadly outperform conventional mortgage loans in their respective states in terms of delinquencies and foreclosures. Fitch Ratings believes this is mainly due to SHFAs' mitigation of loan performance risk through long-standing practices of prudent mortgage underwriting and offering various borrower counseling programs. Equity Levels and Changes in Valuation: SHFAs typically originate loans with high loan-to- value ratios (LTVs), given the characteristics of first-time homebuyers and that principal amounts are limited by tax code. These loans were affected by the mortgage crisis, but to a lesser extent than conventional mortgages, as loans with lower principal amounts typically experience less market volatility, even with the high LTVs. Changes in home price valuations appear to create...
