The lender had to act after a shortfall became apparent in its portfolio RMAC 2006-NS3 and the ratings agency has warned that further draws on reserve funds may be necessary.
Fitch said: “The reserve funds of all RMAC transactions issued in 2006 are at risk of experiencing reserve fund draws. This warning is due to the lack of hedging of the potential mismatch between fixed rate loans and the appropriate reference rate, which has placed extra pressure on the transaction structure. Should there be any further interest rises, this will increase the amount of potential reserve fund draws.”
Fitch claimed the amount of the portfolio represented by fixed rate loans – 83 per cent – meant that the lack of hedging was more acute and would not dissipate until the end of the fixed period in 2008.
Despite the warning, Fitch said there were no plans to downgrade GMAC’s rating, meaning its ability to securitise loans would be unaffected.
Stephen Hynes, capital markets director at GMAC-RFC, said: “You need to put this into context as the reserve fund is there for that reason. But in the current environment, due to the pressures on LIBOR, it’s not surprising that this has happened on a deal with so little margin and with the rate where it is, it does raise issues going forward. But this will improve as fixed rates come to an end.”
Mark Sismey-Durrant, chief executive of Heritable Bank, said: “It’s not the end of the world and the fund is there to deal with such scenarios.”
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