Numerous foreign firms, including banks, law firms and credit enhancers, are ramping up their efforts to tap the huge potential for mortgage-backed securitization in China. The main focus is on helping second- and third-tier regional and city banks raise funds through MBS, with calls for regulatory support to facilitate the process. That, however, may be easier said than done.

When China Construction Bank completed People's Republic's first MBS at the end of 2005 (ASR, 1/9/06), it was tempting to think the pathway had been cleared for an immediate surge of issuance.

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