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Latin
America
Recession in
the United States could have a slowing effect on the
Mexican economy later in 2008, but for now Mexico's economy
and mortgage markets are still growing. There is strong
demand for affordable housing, and the volume of
mortgage securitizations for domestic consumption has
been robust. Mexico has also been growing the volume of
cross-border securitizations, selling primarily into the
United States. When the current credit crisis eases,
Mexico is poised for high volumes of cross-border sales.
Several other countries in Latin America are
experiencing even more rapid growth. Opus International
handles Latin American operations from our Tucson,
Arizona office, where we have bi-lingual underwriters
who are familiar with the Mexican market. Opus can
provide US-style due diligence reviews that will be
particularly attractive to US and European investors.
Domestic Mexican investors can also benefit from the
independent reviews and risk assessments that Opus
International provides.
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Europe
Credit concerns and investor de-leveraging will make
2008 a difficult year for securitization of assets. UK
housing prices are clearly in decline, with home sales
volumes falling and total price depreciation of 9-10%
over the period 2008-2009 now a widely accepted
forecast. This is the same bubble-deflating pattern seen
in the US, so it is fair to say that there is probably
more credit risk in the UK today than at any time since
the early 1990s. However, the UK economy does appear to
be more fundamentally sound than the US, with better
supply-demand dynamics for housing. Most European
countries, including the UK, are less likely to suffer a
prolonged decline than the US. Tightening credit
standards are generally improving the credit quality of
new asset loans; the biggest risks lie primarily with
older loans and loans from desperate originators.
Spanish housing is a special case, with resort
properties over-built and affordability problems in many
other locations that could take years to stabilize.
Otherwise, housing in most of the Euro zone appears to
be slowing without having gone into decline. New loans
that need buyers are still being originated, portfolios
of distressed loans are being traded, and there are
still some securitizations (although not all of these
are full public offerings). Heightened investor
awareness of risk and tight credit markets in Europe
have put more emphasis on high quality underwriting and
credit risk management than ever before. Opus
International serves this need in the UK and some Euro
zone countries. We are planning to open an office in
London later this year to provide direct support to the
European market.
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Canada
The requirement to withhold taxes on Canadian interest
payments to non-resident third parties was repealed in
January 2008, creating the first real opportunity for
efficient cross-border securitization of Canadian
assets. It is even possible for US entities to provide
warehouse financing to Canadian lenders. The overall
health of the Canadian economy and the strength of the
Canadian dollar makes investing in Canadian MBS an
interesting option for diversifying an investment
portfolio. Canadian securitization has been just as
hampered by credit and liquidity problems as most of the
rest of the world, but Canadian MBS could become a very
attractive cross-border investment when the current
credit crisis eases. Opus International handles Canadian
operations from our North American Operations center in
Chicago.
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Other Markets
Opus
International may be able to serve you in other
countries besides those listed above. Please contact
Caroline Wilson at 1.305.439.0434 if you have a need for
due diligence or credit risk management services in
Europe, Mexico, Canada, or some other part of the world.
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