The housing sector in emerging markets is set to benefit the recent launch of Societas International Institute for Real Estate Finance, an offshoot of the Mortgage Bankers Association of America (MBA).
The new organization seeks to serve as a central clearinghouse for practical, operational information about international real estate finance, including the use of securitization techniques.
"There are three essential components that must be in place before capital markets can be accessed consistently for mortgage finance: investor demand, quality intermediaries and an adequate supply of loan assets," explained Debra Erb, president of Societas.
"I believe our institution's efforts will help develop all three of these components. We cannot change economic conditions or the legal environment, but we can inform investors about mortgage-related securities and we can show intermediaries how to manage the securitization process effectively."
The organization promotes what they call "cross-fertilization" - the exchange of techniques and ideas between emerging markets and developing nations - through seminars and courses in all aspects of real estate finance theory. The seminars will be conducted within the host country or via distance-learning vehicles such as the Internet.
The initial programs are focused on residential, single family lending and construction lending. Future additions will include multifamily lending, commercial real estate lending and commercial securitization.
In its search toward a wide-ranging, international base, Societas is careful not to brand itself as an organization whose role is that of instructing emerging markets in the wiser ways of their more advanced counterparts.
"Societas respects the diversity of real estate finance systems, as well as the inherent cultural, economic and political differences among countries," Erb said. In addition, Societas recruited board members from around the world that represent both developed and emerging markets.
The idea for an independent foundation for international real estate finance services was conceived five years ago, when the International Committee was formed at the MBA. The idea was further developed in subsequent meetings with member representatives from countries in Latin America and Asia.
The board of MBA decided that in order for these programs to succeed in the long term, a separate non-profit organization was needed. And so, with MBA's blessing and $1 million in start-up funding, Societas was formed.
Mexico and Brazil will be the major focus on Societas' agenda for the next year. The Institute will develop a series of training seminars in the areas of origination, quality control, loan administration, collection and problem loan management that will be targeted to investors and issuers of mortgage-related instruments.
"We also believe that there are useful success stories in Argentina and Chile that can be analyzed and used to develop new models for other markets in Latin America as well as other regions of the world," said Erb.