The currency and economic crises of the past year have done little to cool the mortgage industry's interest in international expansion.

Attendance at the Mortgage Bankers Association of America's fifth annual international real estate conference was down only slightly from last year's 190, and representation of U.S. companies with international aspirations was strong, said Donald K. Lange, president-elect of the association. He also is president of Weyerhaeuser Financial Investment Inc. in Torrance, Calif.

"We have a lot of adversity now. We are trying to find stability," he said. The creation of a "secondary market infrastructure in a high interest rate environment is a challenge, but it is one we are going to continue to push on."

Though sensitized to currency and political risk by events in Asia and Russia, mortgage bankers said the opportunity in emerging markets is too great to pass up, especially when they face a mature market for their product at home.

The keynote speaker, Mildred O. Callear, vice president and treasurer of Overseas Private Investment Corp., compared the opportunities in housing finance in emerging markets to those in the power sector a few years ago.

Previously, utilities were "totally domestic" and state-owned in many emerging markets, she said. Today, she said, power-related investments make up 31% of the portfolio for her agency, which grew out of the Marshall Plan and provides political and currency risk insurance to companies investing abroad.

Still, speakers emphasized that many countries remain risky for mortgage lenders.

Jeanine Corvetto, director of Mortgage Guaranty Insurance Corp., said a country's macroeconomic policies are the most essential building blocks for a safe mortgage environment.

"Unstable rates cause uncertainty," making mortgage loans less affordable, she said.

Other building blocks are a supportive government housing policy, a competitive banking sector, and an educated consumer base. "We've seen borrowers who view loans as grants," Ms. Corvetto said.

Lenders who have entered foreign markets said cultural differences should not be underestimated and that U.S. executives would be disappointed if they expect to complete transactions as quickly in other markets as at home.

Speakers also said they take the prospect of currency devaluations very seriously. It is difficult to hedge a long-term asset like a mortgage against the risk of a currency collapse or to price mortgages high enough to offset the uncertainty.

In emerging markets, "one is required to be very flexible," said L. Cordell McCarrey, a lawyer at Carl Smith Ball, Los Angeles, who is involved in a Weyerhaeuser venture in Mexico called WSM Services.

Initially, the unit had hoped to import U.S. mortgage banking practices- serving builders and Mexican banks and servicing new loans.

After the devaluation of the peso, the unit is still in business but emphasizes servicing and data processing on existing Mexican mortgages, collections, telemarketing, due diligence on distressed assets, and merchant and investment banking services, he said.

A number of speakers said they were focusing on markets with strong currencies-typically not emerging markets. Some said the advent of the euro could foster standardization that could speed growth of a secondary market for mortgages in Europe.

But the trouble in Asia could create opportunity, some said.

Paul Freudenthaler, director of international lending for Irwin Financial, Indianapolis, which lends to U.S. and Canadian homebuyers in Mexico, said a country's business cycle could be a factor in deciding whether to build a business from scratch there or buy an existing one.

Given the trouble in Asia, he said, one could conclude that "now is a good time to buy."

"You need to have a little bravery," Mr. Freudenthaler said, but "the prices are good."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.