On the sidelines of the SiLAS 2010, ASR's Felipe Ossa had a conversation with Ignacio Farias, CEO of Patrimonio, a housing finance company in Mexico. Belonging to the group of recently beleaguredbeleaguered nonbank entities known as Sofols, Patrimonio has seen its mortgage originations fall by half so far this year, and that was from an already dismal 2009.

The crisis has not been kind to Patrimonio. Farias held forth on its impact, the efforts to by regulators to jump-start the sector and what future securitization holds for his company.

ASR: Could you describe the issuance climate right now for an originator like Patrimonio?

Farias: The market's been very difficult over the last two years due to the subprime crisis and the defaults of some specialized finance companies in Mexico such as Metrofinanciera and Credito y Casa. [This] has affected Patrimonio and the general securitization market quite strongly. The reality today is that we can't go to market with a securitization.

ASR: How might investors return to an RMBS from Patrimonio?

Farias: We feel that investors need to come back at first through partial or total guarantees. [Investors need to see] that well-managed and originated pools can be an interesting investment, [and then] in time these guarantees will be wound down. The first year, we'd probably need a full wrap from [government agency] Sociedad Hipotecaria Federal or another agency of the federal government.

ASR: What about multilaterals? There was a time when they were providers of partial guarantees in Mexico.

Farias: We've spoken to the IFC (International Finance Corp.), and we're looking at various alternatives with them. They're right now looking for mechanisms to get non-performing assets off our balance sheets. As for guarantees, they're not so open [to that]. At least that's how we perceive it. [It's probably because] they themselves have been damaged by defaults in investments that they realized in the sector.

ASR: There's been some talk that sSofols should have been more tightly regulated. What's your opinion?

Farias: There were institutions that took advantage of de-regulation to extract competitive advantages that were incorrect, not to say illegal. Regulation or de-regulation shouldn't be a reason for differentiated competition. We remain a regulated entity and we've always remained pro-regulation. The market of [housing finance] entities was not mature enough for the process of de-regulation that was attempted by the Finance Ministry in 2006 and created non-regulated entities known as Sofoms.

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