WASHINGTON -- Moody's Investors Service said last week it up-graded 85 local housing agency mortgage revenue bond issues and downgraded seven in its first ever comprehensive examination of the agencies' single-family credit ratings.

The 85 upgrades, for local issuers in 24 states, represent nearly one-third of the 259 bond issues Moody's reviewed, according to a statement released by the rating agency. The ratings on another 167 issues did not change.

Moody's overhaul of local agency mortgage bond ratings marks an increase in its surveillance of the area, said William deSante, the agency's vice president and managing director for structured finance. From now on, the comprehensive review will be done on an annual basis, he said.

In general, the 85 issues that were upgraded represent programs that are several years old and have managed to stabilize themselves.

"What goes on with these programs is over time they build up surpluses, and, particularly if they get through the potentially troublesome [first several] years, they tend to be on an upswing," deSante said.

A total of 46 issues among the 259 are now rated Aaa, according to the statement by Moody's.

Bond issues of the following agencies were downgraded: the Phoenix Industrial Development Authority to B from Baa; Pima (Ariz.) Industrial Development Authority to Baa l from A; Bryan County (Okla.) Economic Development Authority, to Baa 1 from A; Austin (Tex.) Housing Finance Corp., to B from Baal; Tarrant County (Tex.) to B from Ba; Houston Housing Finance Corp., to B from Baa; and Duval County (Fla.) Housing Finance Authority, to Baal from A1.

The Houston and Duval County .agencies. both had other mortgage bond issues m the review that were not downgraded, Moody's said.

The downgraded issues in Phoenix, Austin, Houston, and Tarrant County were among eight of the 259 that are below investment grade. The lowest investment-grade rating by Moody's is Ban.

In its statement Moody's said the downgrades generally reflected "weakened financial performance and the general deterioration of assets pledged to specific bond programs."

Overall, the comprehensive review "entailed an in-depth analysis of each program, focusing on important credit factors including financial data, portfolio performance, mortgage insurance, legal provisions, and cash flow projections," Moody's said.

The review did not include bond programs that have third-party credit support as primary bond security.

Moody's also withdrew ratings for seven bond issues sold by the following issuers: Leavenworth County, Kan.; St. Paul Housing and Redevelopment Agency and Minneapolis Community Development Agency; Marion County, W. Va.; Mason County, W. Va.; a group composed of Brooke, Harrison, Marshall, and Wetzel counties in West Virginia; and a group composed of Brooke, Pleasants, Tyler, and Wetzel counties, also in West Virginia.

Moody's withdrew the ratings because of insufficient information provided by the issuer or trustee, the ratings agency said.

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