CURRENT PROJECTS
Central Asia Primary Mortgage Market Development Project
Russia Primary Mortgage Market Development Project
Ukraine Mortgage Project
THE CHALLENGE
Although it is rapidly growing in Russia and Ukraine, the housing finance market in the CIS region is still a fraction of that in comparable economies. Financial institutions often do not have sufficient experience in carrying out mortgage-related lending operations, with differing industry standards and practices exacerbating the difficulties. Potential borrowers, similarly, are unaware or misinformed of the mortgage opportunities.
THE IFC APPROACH
As an investment institution, IFC provides credit to banks for mortgage financing around the world. This puts us in a unique position to complement our lending activities with advisory services that help banks develop their mortgage programs effectively. IFC projects work with various counterparts:
With policymakers and the industry: IFC works with key stakeholders – including banks, law firms, rating agencies, insurance and servicing companies, and government agencies – to standardize mortgage practices across the industry. In Russia, we have set up a working group comprised of all the major mortgage market players to identify the key barriers to residential mortgage lending and to develop and implement common solutions. By working with policymakers in Central Asia, our projects have impacted new legislation that facilitates better lending practices and industry growth.
IFC also conducts workshops and seminars and develops glossaries and reference guides to promote standardization and best practices of the mortgage industry with the lender and borrower alike.
With mortgage-lending institutions: IFC enables financial institutions to develop their mortgage lending programs by creating standardized lending, servicing and funding procedures, which will improve mortgage borrowing affordability for the population. In Russia and Ukraine, we have helped to develop uniform closing documentation and consumer protection initiatives. Our projects conduct in-depth assessments of mortgage lending operations at partner banks, and help them to improve business practices and reduce lenders’ and system-wide risks.
The combination of support from IFC Advisory and Investment Services often creates a unique opportunity for selected lending institutions to improve their processes and gain access to financing not typically available to them.
With mass media and the public: Working with such internationally renowned educational institutions as Moscow State University to provide mortgage-specific courses to journalists, IFC can train the media to cover the mortgage market knowledgably. In Russia, marketing and PR officers from our partner banks also participate in our initiatives aimed at increasing public awareness about mortgage financing.
KEY ACHIEVEMENTS as of July 1, 2007
Improved market standardization to enable easier mortgage lending. IFC projects have developed 10 standard products for the mortgage lending industry in Russia, including a widely used mortgage note to help standardize the terms and conditions of mortgages. In partnership with Moody’s Investors Service, IFC developed Russia’s first mortgage dictionary, which will allow all parties to use the same terminology in conducting mortgages.
Supported an increase in mortgage loan portfolios. IFC projects have worked to increase the mortgage loan portfolios of 8 partner banks in Russia, representing almost 65 percent of the total mortgage portfolio, excluding state-owned banks. We have contributed to a drastic decrease in transaction costs on property sales in Kyrgyz Republic and Uzbekistan – from 5% and 10% of the transaction value, respectively, to an average of below 0.1% of property value.
Better regulatory framework. IFC has helped the Uzbekistan government draft and adopt the Law “On Mortgage,” and provided recommendations on creating or amending 18 laws in Russia.
Improved understanding of the mortgage market. Projects have provided trainings and consultations to more than 77 organizations including banks, insurance companies and industry specialists. A masters-level mortgage class for journalists at Moscow State University has been adopted and replicated in Russia with the potential to expand in Ukraine.
Partner banks have attracted $31 million in additional investment through working with IFC.
IFC remains committed to working with partners; to improve practices, to standardize documentation, to remove barriers to the development of the housing finance markets and to make the public more informed about mortgages.
CONTACT INFO
IFC Advisory Services in Eastern Europe & Central Asia
Elena Klepikova
Senior Operations Manager
Financial Markets
36/1, Bolshaya Molchanovka Str., 3rd Fl.
Moscow 121069, Russia
Tel: +7 (495) 411-7555
Fax: +7 (495) 411-7556
International Finance Corporation
Global Financial Markets Department
Mariya A. Kravkova
2121 Pennsylvania Avenue, NW
Washington, DC 20433, USA
Tel: + 1 (202) 473-3336
Fax: +1 (202) 974-4851
