To Russia with Securitization: Fannie Is Helping Moscow Establish a

Get ready for Natasha Mae.

Fannie Mae is helping to develop a secondary-market agency in Moscow that would help Russia overcome obstacles to mortgage lending such as a 25% interest rate and lack of bank participation.

The effort, which has already yielded the cute nickname, is expected to unfold over the next couple of years. It is seen as a way of raising the profile of mortgage securities as lending tools. The Russian government formally launched the project this month by releasing $40 million-225 million rubles-of the estimated $80 million it will take to establish systems, staffing, and a capital base.

"Russia has a significant housing market, but financing is scarce," said Ray Struyk, senior fellow at the Urban Institute, Washington. The private nonprofit organization, which focuses on social and economic issues, brought Fannie Mae into the project.

Fannie Mae won't have an ownership stake in the operation, but it will be the architect and will be paid as much as $2 million, Mr. Struyk said. The agency will supply "soup-to-nuts" support by setting up the operation and educating Russian bankers about its capabilities, he said.

The new agency will operate along the same lines as Fannie Mae and Freddie Mac-setting lending standards, buying loans, and turning them into securities. The system in the United States has made mortgages more available and affordable by supplying lenders with capital to keep creating loans.

Though Russia faces steep economic problems-the country's annual inflation rate tops 22%-securitization could help chip away at banks' hesitation to lend, Mr. Struyk said.

Institutional investors in Russia, including banks, corporations, and insurers, are targeted as potential purchasers of the securities.

Fannie Mae sees the project as a way of "enhancing the global capital market" by equipping another country to issue mortgage-backed securities, said Pamela Lamoreaux, the agency's director of international housing and finance.

Fannie Mae is also working with Latin American countries and Hong Kong to help their securitization efforts, Ms. Lamoreaux said.

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