Uruguay's Banco Hipotecario (BHU) appears at first glance to have the major ingredients of an MBS in the domestic market. A new trust law has been in place since December; Moody's Investors Service assigned first-time ratings to the bank on April 30; and the International Monetary Fund (IMF), according to one source, is pressing the bank to yank loans from its balance sheet as part of a restructuring.

The will, however, may not be there. "I question their commitment to securitize, even with the IMF behind this," said a source familiar with the bank. The fund is said to be pushing for a securitization of up to US$700 million in dollar- and local currency- denominated mortgages. One of the main problems, say skeptics, is the lax approach to enforcement. Loans that are delinquent for more than 60 days make up slightly over 60% of the bank's total pool. The bank has a history of turning a blind eye, a source said.

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