Fitch IBCA has put HomeSide Lending on review for a possible downgrading as the Asian crisis continues to hurt the mortgage industry.

The rating agency cited worries about the economic environment in Australia, where HomeSide's parent bank is based.

Competing agencies said they had no plan to follow suit, however, and HomeSide rebutted Fitch's action.

"Our sovereign group made a decision to put the ratings of Australia on 'rating alert-negative' due to the Asian contagion," said Roger Merritt, a mortgage-company analyst at Fitch IBCA.

Specifically, Fitch's sovereign analysts cited "the deteriorating regional economic environment," "high external debt levels," and "concerns about liquidity."

"That obviously had a cascading affect on National Australia Bank and, consequently, HomeSide," Mr. Merritt said.

National Australia Bank's acquisition of HomeSide has been seen as strengthening the Jacksonville, Fla., mortgage bank, which ranks among the country's top originators and servicers.

After the deal closed in February, Fitch upgraded HomeSide to AA-minus from A-minus; Standard & Poor's raised its rating to A-plus from BB-plus; and Moody's promoted HomeSide senior unsecured debt to A1 from Baa2.

"We have not taken any downward action on the rating, and whatever the outcome, HomeSide will remain a very strong credit," Mr. Merritt said. "I would expect National Australia Bank would as well, but it does reflect the circumstances surrounding Australia."

The problems in Asia have had other indirect effects on the mortgage business. Two weeks ago, regional tumult prompted a rally in the Treasury market. That pushed interest rates lower, leading to a rash of phone calls to the nation's mortgage banks from their increasingly savvy customers.

HomeSide officials were not available to comment by press time. A spokeswoman referred American Banker to a written statement from National Australia Bank.

"The National contends that its international diversification, with 50% of its assets outside of Australia, ... places it in a strong position and accordingly does not feel any adjustment to its rating is justified," the statement read.

The bank said the majority of its offshore assets are in AAA-rated countries.

Both S&P and Moody's said they would not change their ratings for HomeSide, National Australia Bank, or Australia.

"Currently we have a stable outlook on the company, which reflects our expectation that the ratings will remain the same over the next three years," said Robert Swanton, an analyst at S&P.

S&P has a positive outlook on Australia's AA foreign currency rating.

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