BFCSA Blog

Australian LMI insurer bought for $583m by Calida Smylie | 16 May 2014 Genworth Financial has raised $583 million by selling off a chunk of its Australian lenders mortgage insurance arm.   In what is Australia’s biggest initial public offering of this year, Genworth Australia sold 220 million shares at $2.65 each. It had planned to sell between 195m and 260m shares at between $2.20 and $2.90 each, which is 6.2 to 8.2 times the company’s forecast 2014 net profit. The sale of a 34% stake values the Australian business at around $1.7 billion. However, the proceeds of the sale will not stay in Australia, but will go to Genworth Australia’s US parent Genworth Financial Group to reduce risk and rebalance capital among its three major mortgage insurance platforms in the U.S., Canada and Australia. The parent company will remain the largest shareholder.  According to the company, Genworth Australia holds a 45% market share...

Here are Genworths Underwriting Guidelines that Lenders had to follow regarding Loan Application Forms in 2006. You'll notice they do not mention "Brokers' - just the Lender who was ultimately responsible for ensuring these guidelines were followed for LMI. No doubt LMI was required to be in place in order for the Lender to securitise the Mortgage / Loan Agreement. Genworth Financial LMI Underwriting Guidelines and Product Parameters - 2006http://web.archive.org/web/20060819103233/http://www.genworth.com.au/downloads/Aus_Underwriting_Guidelines.pdf (Love you wayback machine!!) See also www.bfcsa.com.au/index.php/entry/mortgage-insurers-will-not-pay-out-if-fraud-has-been-committed  ...

Here is a link to Genworth's Servicing Calculator - dated 2006. http://web.archive.org/web/20060623095437/http://genworth.com.au/default.aspx?item=calculator You may need to cut and past the whole url above into a browser, as the direct 'link' may not work in this post....

  This is an interesting historical article on perceptions about Australian RMBS. It certainly pays to be informed about risk in the marketplace.   by Hardeep Dhillon     In terms of collateral, the Australian residential mortgage-backed securities market has performed better than its peers for several years, thanks mainly to its blemishless default history. After a post-crisis slump, a revival of domestic issuance is under way; but it could take much longer for cross-border transactions to follow.   The peak came in February 2007 with the A$7 billion ($5.5 billion at time of issue) multi-currency transaction by Commonwealth Bank of Australia, via its Medallion programme. As well as being the largest RMBS by an Aussie borrower, the deal set a new pricing benchmark, with the most senior US dollar-denominated notes offering a pick-up of just 4 basis points over Libor. Around that time, spreads on deals from the three other banks...