The 'AAA' rating on Southern California Home Financing Authority's (SCHFA) single-family mortgage bonds reflects: The extremely high credit quality of the GNMA, Fannie Mae, and FHLMC mortgage-backed securities (MBS)--all agencies are considered 'AAA' eligible under Standard&Poor's rating criteria due to direct or implied support from the U.S. government; 'AAA' rated investments; and Cash flow sufficiency. The authority is issuing the bonds under a closed-lien indenture to purchase 30-year, fixed-rate MBS backed by single-family mortgages originated to public school teachers and administrators in Los Angeles and Orange Counties. The bonds are tax-exempt premium (6%) long-term and mature on May 1, 2034. Bond premiums are used first to provide investment principal to generate positive arbitrage during the acquisition period, then
