Countrywide Credit Industries, the second-largest originator and servicer of mortgage loans in the United States, has set its sights on the rest of the world.
The Calabasas, Calif., lender has established a Countrywide Global Markets division to do business in foreign countries.
Richard S. Lewis, chief administrative officer of Countrywide Credit, is in charge of the division. Lacking expertise in doing business abroad, Countrywide will seek foreign partners, Mr. Lewis said last week at the Mortgage Bankers Association of America's International Real Estate Conference in Vancouver, British Columbia.
"We do not expect to be able to take a system we designed here and automatically make it successful elsewhere," Mr. Lewis said.
Although home loans are typically much smaller in other countries, international lending can yield higher profit margins, Mr. Lewis maintained.
"The key is things have to be kept simple," he said. "You need to keep costs down in order to have reasonable profits on low loan amounts."
Countrywide is following other nonbank mortgage companies across the borders.
WMC Mortgage, formerly Weyerhaeuser Mortgage Co., services about 13,000 loans in Mexico through its WSM Services de Mexico, said the unit's president, L. Cordell McCarrey
WMC Mortgage is eyeing Canada as another market for expansion, said Mr. McCarrey, who is also a partner at the law firm of McCarrey & Asdourian LLP. (He founded the firm last year after 15 years as Weyerhaeuser Mortgage's general counsel.)
Weyerhaeuser Co., the paper and forest products giant, sold its mortgage subsidiary this year to a partnership of Apollo Investors LP and Spring Mountain Escrow, which renamed the company. But Weyerhaeuser still has some mortgage banking operations in Argentina through its financial services division, Mr. McCarrey said.
GE Capital Mortgage Insurance has operations in Canada and is the only private mortgage insurer there. The company also has an operation in the United Kingdom.
But GE's mortgage banking subsidiary, GE Capital Mortgage Services, has no international lending operations and "no desire" to start any, said a GE spokesman.
Some of the larger bank-owned mortgage lenders also do not seem eager to expand their business outside of the United States.
Officials at Norwest Mortgage, Chase Manhattan Mortgage, and First Union Mortgage all said they are concentrating exclusively on the American mortgage market at this time.
But if profit margins continue to sag in the domestic mortgage market, especially on the production side, more lenders may be lured to do business in other countries.
There is little competition in the international markets, Mr. McCarrey said, and because demand is high lenders are receiving higher origination and servicing fees than in the United States.