As of July 31, 2005, the corpus of the guarantee fund totaled $304 million, derived from the following: $257 million net proceeds from FHFC's issuance of $300 million in capitalization bonds, net investment and program earnings after payment of capitalization bond debt service, and transfers from the SHTF
2 million derived from $257 million net proceeds from FHFC's issuance of $300 million in capitalization bonds, net investment and program earnings after payment of capitalization bond debt service, and transfers from the SHTF.
The guarantee fund benefits from ongoing state support through its ability to replenish reserves by drawing on a portion of future documentary stamp taxes allocated to the SHTF to maintain the insurer financial strength rating of the fund at the third highest rating category.
Up to 100% of the previous year SHTF
allocation is available to replenish the DSRF, the requirement for which is presently $39.
Notable risks include the fund's subordinate position in drawing on the SHTF to its pledge to replenish the guarantee fund's capitalization bonds' debt service reserve fund (DSRF) to its required level; the program's limited profitability relative to outstanding guarantees due, in part, to its highly leveraged capital base; management's ongoing challenge to oversee the program during the continued period of rapid growth and its potential need to manage claim payments if the portfolio experiences significant and simultaneous claim requests; as well as the multifamily portfolio's construction risk and developer and geographic concentration.
The availability of a portion of future allocations to the SHTF to back up the guarantee fund's corpus provides an important element of security.
The fund's claim on an ensuing year's allocation to the SHTF
is subordinate only to the program's requirement to restore the debt service reserve fund, securing the capitalization bonds, to its required level (which will total $26.
The comptroller is then required to transfer to the reserve fund the first available documentary stamp tax revenues credited to the SHTF
in the ensuing fiscal year.