A bid by the Investment and Financial Services Association to coordinate the work of mortgage trust managers and come up with a single long-term liquidity solution has failed, with managers taking a number of different approaches to overcoming the asset and liability mismatch in their funds.In the past investors in mortgage trusts had their money at call and would usually get their cash within a week of making a redemption request. The Australian government's decision in October last year to provide a guarantee on deposits held with approved deposit-taking institutions caused a run on mortgage trusts and forced them to suspend or limit redemptions.The industry acknowledged that once it had dealt with the immediate problem created by the financial crisis it would have to put liquidity rules in place that reflected the fact that the assets in which the funds invested - mortgages with three- to five-year terms - were not liquid assets.IFSA put together a mortgage trust working group earlier this year with the aim of coming up with a single liquidity solution, but managers could not agree on a single outcome. For a time the preferred model was a term investment, but some managers objected to the refinance risk involved in having a portfolio of loans maturing every three years to meet redemptions.At least one manager is known to have had a proposed restructure knocked back by ASIC.Australian Unity's retail general manager, Adam Coughlan, said he expected his group's Mortgage Income Trust to be in "supply and demand equilibrium" by the first quarter of next year and for lending to start then.Perpetual group executive for income and multi-sector funds, Richard Brandweiner, said the group's Monthly Income fund has been open to new investment most of this year and new money has been allocated for lending. He said the inflows have been small.That might change as a result of re-rating by investment research groups. In August, Lonsec restored investment grade ratings to several funds, including Balmain Mortgage Trust, Perpetual Monthly Income, Challenger Howard Mortgage Trust, Australian Unity Mortgage Income, Axa Monthly Income and ING Mortgage No 2.The researcher's review says: "While the sector continues to face ongoing issues at the product and macro level, impeding its relative investment attractiveness, there is now sufficient market stability to suggest that the most challenging period for these funds, responding to the large volume of investor outflows, may have passed."