Guys - Think the reason for today's fall seem to be guilt by...

Guys - Think the reason for today's fall seem to be guilt by association and nothing specific about RAMS


SYDNEY, Sept 12 (Reuters) - Australia's Members Equity Bank is unlikely to revive a A$500 million ($417 million) mortgage securitisation transaction soon because of global credit market volatility, leaving investors guessing over when the Australian
market will get going again.
Members Equity, a mortgage lender and Australia's
sixth-largest residential mortgage-backed securities (RMBS) issuer, postponed the offer on Aug. 3 as the U.S. subprime problems rattled markets worldwide and brought Australia's $42 billion RMBS market to a virtual standstill.
"We are struggling with our funding," Members Equity's chief
financial officer, Nick Vamvakas, told Reuters in an interview.
"Every time we need to roll over our paper, it's difficult
and there hasn't been any real improvement even with the RBA's announcement," Vamvakas said.
He was referring to an unusual move by Australia's central bank, the Reserve Bank of Australia (RBA), last week to widen the types of assets it would accept in repurchase agreements to promote liquidity in financial markets.
Members Equity, whose A$16 billion in outstanding RMBS securities will soon be eligible for central bank repos, has yet to see more liquidity, however, Vamvakas said.
"It has not flowed through at this stage to asset pricing."
That means more uncertainty for RMBS issuers, particularly non-bank mortgage lenders with the riskiest mortgages such as low- or no-documentation loans and non-conforming loans, he added.
Such lenders, which include Resimac, RAMS , FirstMac, Bluestone Group and Liberty Financial, have a pressing need to securitise their loans as soon as possible because they don't have a balance sheet to underwrite the mortgages, like major banks have.
They heavily rely on the capital markets for their funding, "and if you can't borrow in the capital markets, you can't
on-lend to borrowers," said Vamvakas.
"They will either have to stop writing loans because they
have no funds or to severely restrict their lending criteria," he said.
Non-conforming loans usually cater to people unable to borrow money from traditional banks because they fall outside lending criteria. They usually include the self-employed, recent immigrants, part-time or casual workers and those with credit impairment.
In general however, business is good for Australian mortgage lenders. Vamvakas said that although the current credit market troubles are the worst he has seen in his 24-year career, business volumes haven't dropped.
According to ratings agency Fitch, the number of prime mortgage delinquencies in the second quarter has fallen to 1.48
percent or outstanding borrowing from 1.54 percent, and low-doc loan delinquencies rose only marginally to 4.54 percent from 4.45 in the previous quarter.
($1=A$1.20)