Despite economic hardships and ongoing guerrilla warfare, Colombia is attempting to step up the secondary mortgage market with the birth of a first-ever government-sponsored home mortgage agency that will be up and running by the end of the month. Local MBS transactions are expected to follow by summer.

The new institution, similar to Fannie Mae in the U.S., will quite simply buy mortgages from banks, build up a portfolio and securitize it on the on the other end. "This could be an interesting type of security for future international investors," said a source at the International Finance Corp. (IFC).

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