Magazine article Mortgage Banking

Opportunities in Today's International Marketplace

Magazine article Mortgage Banking

Opportunities in Today's International Marketplace

Article excerpt

Investment bankers and financial services providers have been aggressively pursuing opportunities presented in international markets for the better part of the decade. For a variety of reasons, mortgage lenders have been the noted exception to this trend.

When the United Nations held its Monetary and Financial Conference in Bretton Woods, New Hampshire, in 1944, it gave birth to the concept of a global economy utilizing global financial systems and international cooperation. In the years that followed, transnational corporations expanded into select global markets, yet the turbulence and uncertainty associated with the Cold War often made certain cross-border operations risky ventures. Then, in November 1989, the Berlin Wall fell.

In the ensuing 10 years, the concept of a global economy underwent a remarkable period of transition and growth. Nations embraced free-market institutions as governments recognized the value of open markets, freedom of capital flow and regional economic integration. Today, a new World Trade Organization, a single European market, treaties such as the General Agreement on Trade and Tariffs, and market-oriented philosophies in post- and present-Communist countries are just some of the components strengthening the globalization of the world economy.

Investment bankers and financial services providers have been aggressively pursuing opportunities presented in international markets for the better part of the decade. For a variety of reasons, mortgage lenders have been the noted exception to this trend. Now it is time for residential mortgage lenders to access these broader markets. Conditions are more favorable than ever, and opportunities for the globalization of the mortgage market abound.

We in America's residential mortgage finance industry have faced consolidation, tight profit margins and overcapacity for some time now. Obviously, the prospect of broadening our customer base through global expansion is desirable. In addition, profit margins in foreign markets are higher, and the housing finance industry outside of the United States is less competitive than on our own shores. Most importantly perhaps, in other countries the concept of customer service simply has not been fully developed. Combine the prospect of higher profit margins, lower competition and volume increases enhanced through a service-driven production philosophy, and it becomes abundantly clear why globalization is an attractive undertaking.

For more than 20 years, U.S. mortgage lending institutions have been able to compete and prosper, in part because of their growing investment in technology and processes. The realities of the market have driven the most successful mortgage lenders to leverage efficiencies and utilize leading-edge technology to compensate for thin profit margins. Again, because foreign mortgage banking markets have been less competitive, advanced technology and efficiency have not been seen as necessary tools for competition; however, the acceleration of globalization is rapidly changing those perceptions.

Increasingly, nations are recognizing the tremendous economic stability that results when a solid housing infrastructure is in place, and they are now actively pursuing ways to bring efficient, low-cost mortgage financing to the citizenry. Who better to assist in this endeavor than U.S. mortgage lenders? In addition to offering efficient origination and servicing operational capabilities, U. …

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