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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has assigned an 'AAA' rating to the $65.9 million Mass Housing Agency's (Mass Housing) residential mortgage revenue bonds (mortgage backed securities; MBS) 2012 series A (Non AMT).

The bonds have a Negative Outlook reflecting Fitch's current Rating Outlook for the U.S. Government.

Proceeds of the bonds will provide funds to finance the acquisition of MBS and to pay the cost of issuance.

SECURITY

The bonds are limited obligations of the issuer secured by the revenue and assets pledged under the indenture which primarily consist of payments on participation interests in Federal National Mortgage Association (FNMA) MBS acquired with bond proceeds.

KEY RATING DRIVERS

FNMA Guarantee: The 'AAA' rating on the bonds is based on the guarantee of full and timely payment of principal and interest on the MBS which will pass through to the bonds regardless of the performance of the underlying loans that back the MBS. Fitch rates FNMA 'AAA' with a Negative Outlook.

Pass-Through Structure: The rating also reflects the pass-through structure of the MBS transaction, as payments of principal and interest on the MBS are directly passed through to the bondholders each month as the MBS are paid.

WHAT COULD TRIGGER A RATING ACTION

If the U.S. Government's rating is downgraded, this would result in a downgrade of these bonds to reflect the U.S. rating.

CREDIT PROFILE

The $65,909,126 of 2012 series A bonds will be sold on or about Sept. 27, 2012. With this issuance, existing MBS in the amount of $65,909,126 will be purchased and pledged to this trust estate upon closing. The MBS are comprised of 100% FNMA MBS. Throughout the life of the bonds, the MBS pledged to the indenture will equal the principal amount of the bonds as all prepayments will be passed through directly to bondholders on a monthly basis.

As part of its analysis, Fitch reviews cash flows for the timing of both the MBS payments that are passed through and the bond principal and interest payments. The cash flows include various prepayment speeds and all fees and expenses to the transaction. Under all scenarios, the cash flows demonstrate asset parity at 100% or greater throughout the life of the bonds and there is no reliance on interest earnings to maintain that asset parity level.

Fitch also reviews bond legal documents as part of the rating analysis. In this transaction, the bond trust indenture clearly instructs the trustee to give notice to FNMA no later than the business day immediately following the non-receipt of any amount due under the 2012 MBS and directs them to make deposits to the revenue fund on a timely basis.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Revenue-Supported Rating Criteria', June 12, 2012.

Applicable Criteria and Related Research:

Revenue-Supported Rating Criteria

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015 ]

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