<html><base href="http://biz.yahoo.com/"><title>Yahoo - Soviet Union expressed interest in housing finance</title><center><table cellpadding=2 cellspacing=0 width="100%"><tr><td width="1%"><a href="http://quote.yahoo.com/?u"><img src="http://us.yimg.com/i/fi/main4.gif" border=0 width=281 height=31 alt="Yahoo! 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Peek Here." border=0></a><table border=0 cellspacing=0 width="100%"><tr><td colspan=4 width="100%"><table border=0 cellpadding=2 cellspacing=0 width="100%"><tr><td width="100%"><a href="http://quote.yahoo.com/q?s=%5edji+%5eixic+%5espx+%5eiix+%5epse+&d=v1&format=snlcvi"><b><font face=arial>Related Quotes</font></b></a></td><td align=right></td></tr></table></td></tr><tr><td valign=top width="40%"><nobr><small><a href="http://quote.yahoo.com/q?s=^DJI&d=t">^DJI</a><br><a href="http://quote.yahoo.com/q?s=^IXIC&d=t">^IXIC</a><br><a href="http://quote.yahoo.com/q?s=^SPX&d=t">^SPX</a><br><a href="http://quote.yahoo.com/q?s=^IIX&d=t">^IIX</a><br><a href="http://quote.yahoo.com/q?s=^PSE&d=t">^PSE</a><br></small></nobr></td><td align=right valign=top width="30%"><nobr><small>8740.91<br>1873.33<br>1105.46<br>403.50<br>356.17<br></small></nobr></td><td align=right valign=top width="30%"><nobr><small>+26.26<br>+18.21<br>+4.26<br>+7.08<br>+3.30<br></small></nobr></td></tr><tr><td colspan=4><small>delayed 20 mins - <a href="http://my.yahoo.com/fin_disclaimer.html">disclaimer</a></small></td></tr></table></table><b>Wednesday August 19, 8:04 am <small>Eastern Time</small></b><h2>Soviet Union expressed interest in housing finance</h2>  By Aleksandrs Rozens <p>NEW YORK, Aug 19 (Reuters) - Russia's campaign to develop a mortgage banking industry is not the first time that nation has wanted to encourage housing finance, according to a veteran U.S. banker who was quizzed a decade ago by the Soviet Union in the Gorbachev era on the basics of housing finance.<p>Gordon Taylor, who was on Lewis Ranieri's team at Salomon Brothers when that firm laid the groundwork for mortgage securitization in the late 1970's and early 1980's, told Reuters he was running his own consulting business when representatives of the Soviet Union's central bank visited the U.S. to seek advice on housing finance.<p>Taylor, now an independent consultant and a principal at Howard B. Hill & Co, a New York-based global securitization firm, recalled the Soviet Union had neither a mechanism to permit private ownership of residential property nor a network of financial institutions to finance home purchases.<p>The Soviet Union, he said, ``was anxious about trying to figure out how to stimulate home ownership prior to the institution of the then-planned economic reforms known as perestroika.''<p>Unlike other markets where Taylor pioneered mortgage loan securitization, Russia had no history of housing finance.<p>In the Soviet Union, which was dissolved in 1991, ``you could only borrow money to buy land near a cooperative or purchase a cow,'' he said.<p>Taylor, who has been involved with the development of mortgage securitization in the United Kingdom, Spain and Australia as well as Hong Kong, told Reuters that some of the issues faced by the Soviet Union continue to crop up in post-Soviet Russia. These include ironing out property ownership, tax and foreign exchange considerations.<p>For bankers assembling Russian mortgage securitizations now, Taylor advised: ``The attributes of a mortgage dictate what the security looks like and capital market requirements will dictate what attributes the mortgage loan must have.<p>``In an ideal system,'' he said. ``you start from both ends and work towards the middle.''<p>When it comes to foreign exchange issues, Taylor said investors eyeing Russian mortgage-backed securities must consider taking on rouble-related risk for the intermediate- or long-term because mortgages are, by definition, intermediate- to long-term instruments.<p>To attract investors averse to currency risk, mortgage lenders may have to offer dollar-denominated loans, Taylor said. ``That way the currency risk is borne by the borrowers.<p>Taylor recalled that in Argentina, mortgage loans were dollar-denominated after the country linked its peso to the greenback.<p>As to Russia's hopes of spurring mortgage finance, Taylor said that nation's mortgage market will need a local investor base because Russia has an immense population in need of capital for housing finance among other uses.<p>The development of pension funds is seen as a key to addressing the need for a local investor base, according to Howard Hill, managing member of the eponymous firm.<p>Any nation developing a mortgage market ``truly needs a domestic pension fund and life insurance investment community to ensure the viability of the local currency mortgage market or mortgage-backed market,'' said Hill.<p>Foreign investors will only put a fraction of their total portfolio into Russia, Taylor warned.<p>``There are limits to the capital Russia can attract,'' he said. ``So you will have to design a mortgage-backed market for a prospective audience within Russia.''  <p><hr align=left width="33%" noshade><table border=0 cellpadding=0><tr valign=top><td colspan=3><b>Related News Categories:</b> <a href="/n/z/z0006.html">currency</a>, <a href="/n/z/z0010.html">funds</a>, <a href="/n/z/z0002.html">options</a>, <a href="/reports/stocks.html">US Market News</a></td></tr></table><hr align=left width="33%" noshade><center><form method=get action="http://search.news.yahoo.com/search/news"><input size=24 name=p> <input type=submit value="Search News"><input type=hidden name=n value=10> <a href="http://www.yahoo.com/docs/info/news_search_help.html"><small>Help</small></a></form><hr><small>Copyright © 1998 Reuters Limited. 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