The Federal National Mortgage Association has been assisting foreign countries, including several in Eastern Europe. to set up housing financing systems modeled, for the most part, along the lines of programs of the 1950s and 1960s in the United States.
That was a period when Fannie Mae still was part of the federal government, and the thrifts, with funds supplied by the Federal Home Loan banks, were the main sources of liquidity. The countries of Eastern Europe, most of which did not permit any private home ownership, are using the model of the earlier U.S. housing finance system, said Gary L. Perlin, senior vice president for finance and treasurer of Fannie Mae.
"We're just getting out of the starting gate in most of the countries we are assisting." he added.
The company started its foreign work early in 1990. when an American developer found that potential Polish purchasers of his prefabricated homes couldn't get financing. The developer, whose project never did meet with success, asked Fannie Mae to help the Polish government design a housing financing program.
Fannie Mae's efforts led eventually to a major conference on housing finance held near Warsaw in October 1990. One of the most important outcomes was that persons from different ministries within the government talked with each other about the problems and began cooperating for the first time. In Poland, it led to the formation of the Housing Finance Project Office, staffed mainly by professionals from the Ministry of Finance and the Ministry of Housing and Construction, Perlin explained.
"Probably our greatest achievement was getting those people to talk to each other." Perlin said. one thing led to another, and now Fannie Mae is assisting Poland, Czechoslovakia, Hungary, Turkey, Portugal, France, Taiwan, Israel and Argentina.
The operation is run out of the five-person International Finance Department. headed by Vice President Richard C. Eisenberg.
In some cases, Fannie Mae has grant money from the U.S. Agency for International Development, which also makes funds available to foreign governments to use for housing grants so citizens can purchase housing. In the former Eastern Bloc countries, most housing was owned on a cooperative basis, with individual ownership virtually unknown.
Perlin said the International Finance Department operates on a break-even basis, but, he added, the benefits to the company go beyond fees for service. We have contacts at the highest levels with central banks," he said. The international presence of Fannie Mae has increased the interest of foreigners in the company's products, Perlin said.
Eisenberg said 10% to 15% of the $140 billion in debt securities outstanding is owned by foreigners.
"We've been providing less of the visionary stuff and more of the basic, technical assistance." Perlin said.
The steps involved in underwriting a loan, appraising a property and what information should be contained in the mortgage document itself are examples of what Fannie Mae currently is teaching the officials in the host countries.
"We have prepared a substantial amount of technical material to be used abroad," he added.
He said a secondary market that looks anything like the one here is many years away, though there is a modest secondary market in France.
"Our whole approach is to identify those areas of the world where our expertise will be most productive," he said.