Ratings on unenhanced and unsubsidized multifamily affordable housing projects stabilized in 2010 thanks to the absence of bond insurance policies that previously had a negative impact on ratings, Standard & Poor's said Thursday. Additional signs of a thaw in the multifamily affordable housing segment showed up last year, with S&P issuing ratings on $118 million in new multifamily affordable housing debt, up from $80 million in 2009. S&P said this "shows a sign of increased interest and investor appetite for these securities." This change occurred after several years of downgrades attributed to falling net income at properties, higher expenses, lower revenues, high vacancy rates and high concessions offered to keep multifamily residents in place. The report said in 2010, properties also began to see an increase in overall net operating income as expenses started to decline. "In our view, ratings began to stabilize due to the absence of the various bond insurance policies tied to the bonds, which formerly presented a negative scenario overall as the credit quality relied solely on that of the bond insurers," said Standard & Poor's credit analyst Mikiyon Alexander. S&P expects "continued downward pressure" on project-based Section 8 ratings since fewer rental increases were granted to the properties.  Two years ago, S&P downgraded 41% of the ratings in that segment, compared to 33% last year. "We believe the decline in rental increases is due to financial shortfalls despite the overall funding and support for the program," S&P wrote in its report. "While a number of U.S. project-based Section 8 properties have begun to age, and in many cases will require major rehabilitation, the program may have the political support needed to enhance the aging housing stock." S&P said this segment's success depends on congressional appropriations. The president has proposed a $9.43 billion budget, up almost 1%, for the next fiscal year. Write to Kerri Panchuk.