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I am pleased to present Utah Housing Corporation's annual report to our investors and business partners. Our mission is to provide mortgages and rental financing that make housing affordable for Utahns. This year, the national recession created unprecedented challenges. Nevertheless, Utah Housing Corporation has maintained strong leadership and financial stability.
Economists have wisely observed that housing led our country into a recession and housing will lead us out. Utah Housing Corporation is clearly doing its part to lead, from the CEO organizing a statewide housing stimulus initiative to maintaining a strong balance sheet through the market's travails.
And all of this happened during the most major leadership transition in Utah Housing Corporation's 32-year history. In January, our long-time CEO William H. Erickson retired, and 30 year veteran senior vice president Grant S. Whitaker became president and chief executive officer. We are grateful for the strong leadership that brought Utah Housing Corporation to this point, and especially to Grant, for his smooth transition into the
role of CEO.
Grant has named a first rate seasoned senior management team, with the knowledge and longevity to see a clear path to better times. Cleon P. Butterfield continues as Senior Vice President and Chief Financial Officer. Jonathan A. Hanks fills the newly created role of Senior Vice President and Chief Operating Officer. Together, Grant and his team are taking Utah Housing Corporation to the next level of management and innovation.
With strength in our leadership team and our balance sheet, Utah Housing Corporation has reason to be optimistic about the future. We thank our business partners and investors for their confidence, and we affirm our ongoing commitment to creating affordable housing solutions for Utahns.
Debbie Andersen
Chair
Letter from President Grant Whitaker
Crisis; Crunch; Failure--we all know the bad financial headlines of the last year. But read the fine print in our annual report, and you will see a story of a well-managed public corporation in a well managed state.
Despite some financial setbacks in the last year, Utah Housing Corporation remains financially strong. We are providing solid opportunities for investors and administering innovative house buying incentives that will help lead Utah out of the recession. Consider the following 2009 rare good news headlines and the details to support them.
"UTAH'S RECESSION MORE MODERATE THAN NATION" Utah's real estate bubble was smaller and shorter than much of the nation, with two years of double-digit home price, compared to four years or more in other states. Also, Utah’s unemployment is 6 percent, compared to a national rate of 10 percent. This has set the stage for a reasonably short recovery, and modest impacts to Utah Housing Corporation as summarized below.
"UTAH HOUSING DELINQUENCIES AND FORECLOSURES REMAIN LOW" Utah Housing's core assets and primary source of revenue, its mortgage loans, have performed remarkably well through this difficult time. As of June 30, our delinquencies were half that of comparable national portfolios and 2.4 percent lower than comparable Utah portfolios.
"OUR MORTGAGES ARE FEDERALLY INSURED AGAINST LOSS" Virtually the entire Utah Housing first mortgage portfolio is FHA insured or guaranteed by the VA. Our bond owners have no exposure to loans insured by private mortgage insurance. Additionally, Utah Housing services all its mortgage loans, which translates into low default rates. We work hard to help homebuyers get into their first homes, and we work just as hard keeping them there.
"UTAH HOUSING MAINTAINS HIGH LIQUIDITY AND HIGH NATIONAL RATINGS" Through this period, we have maintained a strong liquidity position and adequate revenues, enabling us to make all bond payments in a timely manner. Our General Obligation ratings from all three rating services have remained constant at AA-or equivalent.
"UTAH HOUSING FINDS A RAPID FIX TO EXTERNAL FINANCIAL PROBLEMS" Utah Housing Corporation moved quickly to minimize the impact of external financial problems. Interest rate swap contracts with a bankrupt Lehman Brothers were terminated in November and replaced with financially strong counterparties. New contracts, with the same favorable terms were entered into with Barclay's Bank PLC and Deutsche Bank.
"UTAH HOME RUN GRANTS STIMULATES ECONOMY" Utah's governor directed Utah Housing Corporation to develop and administer a housing grant program to stimulate the economy. Home Run $6,000 grants incentivized Utahns to buy a home, helping to clear a glut of newly constructed housing, stabilize home prices, and conserve or create residential construction jobs. The program quickly cleared more than half the new home inventory in less than 90 days. A second round of $4,000 grants announced in the third quarter is expected to be equally successful.
"UTAH HOUSING CORPORATION'S FORSEES BRIGHT FUTURE" Thanks to the diligence of our hardworking and loyal staff, and the confidence and support of the Board of Trustees, the future looks bright for Utah Housing Corporation. We remain grateful to our business partners and investors who help us offer products and services to the citizens of Utah.
Grant S. Whitaker
President & CEO
