MIAMI - Mortgage bankers say Latin America is their next frontier. And a small but growing group is already making preparations to cross the border.
Weyerhaeuser Mortgage Co., Woodland Hills, Calif., and Inland Mortgage Corp., Columbus, Ind., are poised to break ground by making mortgages on Mexican homes. Industry executives say it is only a matter of time before other U.S. mortgage lenders follow.
"Any bank that wants to be ahead of the curve should be pouring resources into hiring people who know how to work with foreign lawmakers and regulators," said Warren Lasko, executive vice president of the Mortgage Bankers Association of America.
Strides that Mexico and other Latin American countries are taking to improve their economies, their infrastructures, and their lending laws are setting the stage, Mr. Lasko said.
"We have advanced from a yellow light to a green light in accelerating toward a viable mortgage market," he said. Mr. Lasko's comments came between sessions at the MBA's second annual international real estate finance seminar.
While some banks, like BankAmerica and Citibank, headed to South America years ago, the outlets are primarily used for wholesale banking, not residential mortgage business, industry observers said.
Bank of Boston does make home loans in Latin America, but only through its Latin American subsidiaries.
Even small mortgage banks appear to see that situation changing, with more banks in this country making direct loans. "The mortgage market in this country is mature," said Donald Bourland, executive vice president at Corinthian Mortgage Corp., Overland Park, Kan. "It seems to me that growth - if not in this decade, then the next - will be international."
Other bankers at the conference agreed. They said that even though attendance dropped to 130 from 190 last year at the session in Guadalajara, Mexico, interest in cross-border lending is up this year.
U.S. and foreign regulators, as well as the mortgage bankers, spent as much time at the three-day MBA conference speaking with each other in hallways about practical applications as they did attending sessions.
A number of the bankers said their interests was higher this year because of serious steps the countries appear to be taking, especially toward creating secondary markets for mortgage loans.
Mexico is especially eager to create such a market, said Aida Alvarez, director of the Office of Federal Housing Enterprise Oversight.
Ms. Alvarez, whose agency oversees Fannie Mae and Freddie Mac, has been working with Mexican officials to help them establish a secondary market. So far, matters are in the discussion stage.
Mexican officials are committed, she said.
"A secondary market cannot develop overnight. I think they recognize that. Until a clearer picture develops, most mortgage bankers are confining their efforts to making contacts with foreign peers and educating themselves about the countries."
But a few lenders are already stepping over the border. Lacking a secondary market to sell into, Weyerhaeuser Mortgage Co. has lined up private investors to purchase loans it plans to make to Mexican homeowners, said L. Cordell McCarrey, senior vice president.
Mr. McCarrey declined to identify the investors, but he did say that his company expects to close its first deal this fall. This negotiation is only the beginning for Weyerhauser, which set up a mortgage unit in Mexico in April and plans to strike mortgage servicing deals with Mexican banks.
"We are in it for the long haul," Mr. McCarrey said.
Inland Mortgage also plans to step into Mexico by making mortgages to the U.S. and Canadian citizens who want vacation homes south of the border.
The subsidiary of Irwin Financial Corp. hopes to sell its loans on Wall Street through a conduit. The company is currently speaking with investment banks to make such arrangements.