The Utah Housing Corporation's ability to provide financing for its affordable housing program is dependent on its continued financial strength, which results in reducing the cost of capital for its housing programs. UHC's financial stability is reflected in the Corporation's bond rating. UHC continues to maintain an AAA credit rating on its bonds, the highest rating awarded to any housing finance institution in the nation.

The Corporation's overall financial position, as a result of this year's operations, shows a decrease in earnings of $12.6 million or -110.7% over the prior year's operations. The decrease was caused by a low interest rate environment, which reduced interest revenue on investments and higher than expected interest expense on the Corporation's variable rate bonds, caused by the volatile financial markets. These two components combined to decrease the Corporation's earnings. 

However, the Corporation continues to maintain a stellar portfolio of performing mortgage loans, which contributes to its ability to earn a small margin overall.  Single Family mortgage loans decreased $50 million or -4.9% during the fiscal year due to payoffs and shortage of capital for new loan production.  Nevertheless, UHC has been able to recycle new FHA loans for its portfolio at similar low interest rate mortgages by implementing extensive product marketing, simplifying its loan requirements, and educating potential buyer about the benefits of UHC programs.  All this is done while keeping strong underwriting standards to assure the credit worthiness of UHC's borrowers. 

It is hoped that these new quality mortgage loans with low interest rates will remain in the portfolio.  That will enhance the profitability and resources of the Corporation in future years.  Available financial resources at UHC play a key role in the continuation of innovative affordable housing programs for the low and moderate income households of Utah.
 
The Corporation's whole loan program of federally insured mortgage loans along with its large cash equivalent balance represents the foundation of UHC's future financial vitality in these turbulent financial times.

Utah Housing Corporation"s strong financial position is an important factor in raising capital for affordable housing programs.