Originators of residential mortgage-backed securities (RMBS) need to continue to focus on transparency and the quality of information provided to investors when selling such assets, the Reserve Bank of Australia (RBA) says.

RBA assistant governor for financial markets Guy Debelle said on Wednesday key was good information on asset pool performance, the creditworthiness of the borrowers of the loans underlying RMBS and holding “skin” on the assets that are securitised.

“There has been much discussion about requiring originators/sponsors to retain a long term exposure to assets they securitise - so-called skin in the game requirements,” he said during a speech at the Australian Securitisation Conference in Sydney.

“Even before the financial crisis there was a tendency for many Australian securitisers, or related parties, to hold skin in the game.
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The Australian securitisation market could remain frozen for up another two years, experts say.

According to The Australian, Greg Medcraft, CEO of the Australian Securitisation Forum, said that the underlying issue on the massive decline in RMBS is due to an extreme lack of liquidity.
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