...7%-9% of Losses Unpaid: Generally, 7%-9% of Australian prime RMBS losses are not paid by the lenders mortgage insurance (LMI), for the reasons set out below. However, this is in line with the 85%-95% LMI credit Fitch gives to lenders that have a quality adjustment (QA) value of 2 or 3 (see Global Criteria for Lenders' Mortgage Insurance in RMBS under Related Criteria). Not 100% Insured: LMI was present in 80.7% of securitised mortgages across all outstanding Australian prime RMBS at end-March 2014. This is because transactions for repo purposes often do not have LMI for all their securitised loans. In addition, a few issuers have started to structure market transactions without full LMI coverage. Not 100% Submitted: At least 2% of realised losses are not submitted by the lender to the mortgage insurer, as they are not covered by the LMI policy. Costs not claimable include excessive recovery costs, ie above AUD25,000, physical damage to the security, penalty interest, break costs on fixed-rate...
