RFC, the mortgage arm of General Motors Acceptance Corp., has big plans overseas.
The Minneapolis company, which is the largest securitizer of nonconventional mortgage loans in the United States, hopes to establish secondary markets in countries from the United Kingdom to Japan, said Keenan W. Dammen, its managing director and head of global strategic alliances and acquisitions.
In mid-March the company announced two international acquisitions: Birmingham Midshares Mortgage Services Ltd., a U.K. subprime mortgage lender, and Auritec SA, a Mexico City special asset servicer. GMAC-RFC will approach the two countries very differently, Mr. Dammen said.
"In Mexico we bought the special servicer to get workout and collection expertise" there, he said at last week's National Home Equity Mortgage Association Conference in Miami. He said the residential mortgage market in Mexico is too underdeveloped for RFC to buy a lender or offer its services as a conduit.
The British acquisition, though, is a definite step into the subprime business. GMAC-RFC will operate there under the name RFC Mortgage Services Ltd., and it will try to set up a secondary market. Several other subprime lenders have U.K. operations, including Southern Pacific Mortgage Co. of Lake Oswego, Ore., and First Alliance Corp. of Irvine, Calif., but none has ventured farther into Europe. That's all going to change, Mr. Dammen said.
The European Union "is going to be here in full force, and that's going to make it a lot easier to cross borders," he said. Opportunities abound there, he said. "Eastern Europe has 300 million people-that's larger than" the United States.
The largest lending opportunity out there, though, is in Japan, Mr. Dammen said. "If U.S. and international banks have their way with Japan, we'll be able to securitize next year," he said.
Associates First Capital Corp., Dallas, a home equity lender, already has a significant consumer finance presence in Japan through a branch network.
RFC is moving now because it has the capital and its U.S. operations are "robust," Mr. Dammen said. Last year it securitized $18 billion of nonconforming mortgage loans.
Being a subsidiary of General Motors will also help RFC expand its international presence in other ways, he said. "If General Motors builds plants overseas, they'll have to get employees and have housing for these people."
Mr. Dammen is encouraging others to join him. "We have the capital to go international, but we need other companies to come with us" to build viable mortgage markets, he said. "We want to build the markets collectively, rather than saying, 'Hey, we got in before you did.'"
Mr. Dammen added, however, that lenders should not overemphasize the fact that the United States has a mature secondary mortgage market. "The biggest challenge is to not storm in as Americans. If we can figure out how to go in and say, 'Here's how the securitization market works,' and then say, "How can we help you?' we'll be successful."
RFC is also looking beyond first mortgages to home equity lending, he said. Mr. Dammen co-founded an international committee at the National Home Equity Mortgage Association's annual conference.