Bendigo and Adelaide Bank Ltd has announced a new issue of residential mortgage backed securities.

The offer will be made under the bank’s Torrens securitisation program. The securities will be issued in Australian currency, with an expected equivalent value of $650 million.

The final tranche sizes will be determined by market conditions, Bendigo said on Wednesday.
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Bank of Queensland Ltd (BOQ) raised $850 million from an increased residential mortgage-backed securities (RMBS) offering to domestic investors, signalling the local RMBS market is returning to normal.

BOQ increased the size of the deal from $500 million after an initial over-subscription by investors for three tranches of notes from the bank’s 2010-1 REDS Trust series.

Twenty investors, including the Australian Office of Financial Management (AOFM), participated, with the AOFM taking $250 million worth of Class A Notes.

The Class A Notes were priced at 130 basis points over swap, while the Class AB Notes were priced at 175 basis points over swap, and the Class B Notes were privately placed, BOQ said in a statement on Tuesday.
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The federal government has allocated up to $3.4 billion to invest in the residential mortgage-backed securities (RMBS) of five smaller lenders to help support competition in the home loan market.

The allocation is part of the $8 billion set aside by the Australian Office of Financial Management in November to invest in RMBS, a statement from Treasurer Wayne Swan’s office on Thursday said.

The AOFM advised the lenders, including three non-bank lenders, that it would invest in RMBS issuances by them until December 15, 2010.
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Westpac Banking Corporation has launched its first residential mortgage backed securities (RMBS) issue in two years, giving the securitisation market one of it biggest deals since the onset of the global financial crisis.

Westpac on Monday launched $1 billion of series 2009-1 WST Trust RMBS in three tranches.

It is selling $920 million of Class A notes, $55 million of Class B notes and $25 million of Class C Notes backed by prime residential mortgages originated by Westpac’s branch network, the bank’s home finance managers and accredited brokers.

“This will be the first RMBS market issue by Westpac since 2007 and the first RMBS market issue by a major Australian bank since the commencement of the global financial crisis and reflects growing investor demand,” the bank said in a statement.
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Federal Treasurer Wayne Swan has given the government’s bond manager the nod to invest $8 billion in the Australian residential mortgage-backed securities market (RMBS).

Mr Swan on Monday said he had directed the Australian Office of Financial Management (AOFM) to implement this investment, announced last month. It will help put downward pressure on borrowing costs.

It will also allow for the remaining $246 million from a previous $8 billion initiative to be invested.

“This investment is an important part of the government’s commitment to strong and effective competition in Australia’s mortgage market,” Mr Swan said in a statement.

“By supporting smaller lenders and promoting competition in the Australian mortgage market, this investment is helping to put downward pressure on borrowing costs over time.”
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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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A key Senate committee has given support to calls by regional banks and non-bank lenders for a government guarantee over residential mortgage backed securities (RMBS) and a review of the fees they pay for the wholesale funding guarantee.

The Senate economics reference committee said the securitised funding, used by these lenders to fund their balance sheets until late 2008, should be supported through its current difficulties via “some form” of a government guarantee.

It also said a careful design of a RMBS guarantee scheme was needed to avoid unintended consequences,

The committee tabled its report in the Senate on Thursday.
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By Lending Central’s US reporter, Sam Garcia www.mortgagedaily.com

According to a US focused report Moody’s Investors Service maintains its negative outlook for the collateral performances of Australian asset-backed securities (”ABS”), commercial mortgage-backed securities (”CMBS”) and residential mortgage-backed securities (”RMBS”) over the next 12 to 18 months.

These outlooks are unchanged from Moody’s report published in January 2009, though Moody’s expects the collateral performance’s implications on ratings to be limited.

“Specifically, while the performance of Australian ABS transactions continues to be relatively good, the economic deterioration through H1 2009 and uncertainties surrounding the used motor vehicle market, are translating into worsening arrears and losses,” says Richard Lorenzo, a Moody’s VP/Senior Analyst
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Australian owned, mortgage finance lender FirstMac today successfully placed and priced its 1-2009 Residential Mortgage Backed Securities (RMBS) Issue. The transaction has been one in a series initiated by the Australian Office of Financial Management (AOFM) since November 2008 to stimulate the Australian mortgage market.

The FirstMac 1-2009 placement, arranged by Macquarie Bank, includes $499 million from the AOFM as a cornerstone investor, with a further $126 million provided by external investors.

The AOFM’s investment is part of a scheme to foster competition in Australia’s mortgage market through the purchase of RMBS, as announced by Treasurer Swan in September 2008. Up to $8 billion was made available for investment, with $4 billion allocated to issuers / originators that are non-authorised deposit taking institutions.
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Yes Home Loans’ CEO Lee Boueri is not a happy camper. He says the Federal Government’s $8 billion residential mortgage backed securities (RMBS) scheme, which is being implemented by the Australian Office of Financial Management (AOFM), is not targeting the correct group.

“It should be addressing the real basis of the suffering, which is distributors such as us,” Boueri exclaims maintaining that judging from what has been set in place the government didn’t understand the securitisation model properly.
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Fitch Ratings and Standar & Poors (S&P) Ratings services both published their methodology and assumptions for evaluating residential mortgage-backed securities (RMBS) in November. Look for both services to issue updated ratings over the next few weeks.
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Australian owned, mortgage finance lender FirstMac today successfully placed and priced it’s 2-2008 Residential Mortgage Backed Securities (RMBS) Issue.  The transaction was the first in a series planned by the Australian Office of Financial Management (AOFM) to stimulate the Australian mortgage market

The FirstMac 2-2208 placement, arranged by ANZ, includes $500million from the AOFM as a cornerstone investor with a further $100 million by external investors.
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Australian owned, mortgage finance lender FirstMac today successfully refinanced its 2-2007 Residential Mortgage Backed Securities (RMBS) Issue after voluntarily increasing margins and credit enhancement of the original issue.

This is a reflection of both the current credit environment and FirstMac’s willingness to show a long-term commitment to the residential mortgage market and its RMBS investor base.
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Global finance company, GE Money announced on Friday that due to the cost of obtaining funds on the global and local wholesale markets it is ceasing offering home loans through third parties (a book estimated at around $19 billion) and ending its motor vehicle finance and small business finance in Australia and New Zealand.

GE’s corporate affairs manager, Geoff Lynch told Lending Central that GE Money didn’t qualify for the Government’s $8 billion injection of funds into the non-bank sector because it doesn’t use residential mortgage -backed securities (RMBS).

Lynch said GE discussed this matter with the Government during the decision making process.
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Raising funds for home lending through mortgage-backed securities is not a broken business model, federal Treasurer Wayne Swan says.

Mr Swan announced last Friday the use of $4 billion of taxpayers’ money to invest in new residential mortgage-backed securities (RMBS) to reinvigorate the market and provide competition for home lending.

Mr Swan said it was “completely incorrect” to suggest mortgage-backed securities funding for banks was a “broken business model”.
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