Vivienda

Housing Finance in Emerging Markets

SECURITIZATION MARKET IN COLOMBIA

ALBERTO GUTIERREZ Washington. DC, May 2008
1

CONTENT

1. The Colombian Mortgage Sector

2. Titularizadora Colombiana (TC)

3. Key Aspects For Securitization

2

GENERAL INFORMATION

COLOMBIA: 2007

•

Population:

44 Million

•

GDP per capita:

US$ 4,000

•

Inflation:

5,6%

•GDP Growth:

7,5%

•

Currency:
3

Colombian Peso

HOUSING FINANCE EVOLUTION
Specialized Mortgage Banks Funding: Short term deposits – Market Risk Primary Market Experience Initial Securitizations (95/99): USD 800 million
Individual / Low Standardization / High Cost

1970-2000:

Crisis 97/02

2000:
New Housing Law

Loans in units (UVR) linked to inflation Recent development offixed rate peso loans Incentives to Capital Markets funding Mortgage Securitization Regulation Creation of Securitization Companies

4

MORTGAGE LOANS DEVELOPMENT
11,1%

Mortgage loans/ GDP

Mortgage loans* evolution in Colombia/ GDP

70%
8,0% 7,2% 6,5% 5,5% 4,5% 4,0% 3,8% 4,0%

60%

50%

40%

30%

20%

10%

0%
1999 2000 2001

2002

2003

2004

2005

2006Source: European Mortgage Federation, Federal Reserve

Source: Superfinanciera

Mortgage Loans 90 days delinquency rate
25%

Main Causes Mortgage Sector Crises 1997-2002 - GDP Contraction
20% 15% 10%

- High Interest Rates

- High Unemployment

- Fall in House Prices

5%

- Legal Framework Instability

0% Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Ene-95Ene-96 Ene-97 Ene-98 Ene-99 Ene-00 Ene-01 Ene-02 Ene-03

5
Source: Superfinanciera

2007

USA

EU

Asia Colombia Latin America

MORTGAGE LOANS

Mortgage Loans (# / $) 100.000

800.000 / US$7,3 b

New Loans per year (Average #)

Denomination

UVR (Real Value Units) and Pesos Fixed Rate UVR + 9% 14% Fixed Rate 15 – 20 years Monthly Fixed Payments (PesosUVR) 80% 30%
6Interest Rate

Term

Amortization System

Maximum LTV

Maximum PTI

Origination of Mortgage loans
Anual Originations (US$ Million)

2000

$1.875

1800 UVR Pesos
82% 69% 14%

1600

1400

1200

Millones de Dólares

1000

800

600

5%

29%

400
86% 71% 31% 18%

200

95%

0 2004 2005 2006 2007

2003

Nota: Se utilizó la TRM promedio de 2007 para obtener losvalores en dólares Fuente: Superfinanciera

7

CONTENT

1. The Colombian Mortgage Sector

2. Titularizadora Colombiana (TC)

3. Key Aspects For Securitization

8

TITULARIZADORA COLOMBIANA (TC)

•

Creation: 2001 - Specialized in mortgage loans securitization (RMBS)

Shareholders: 5 Private Mortgage Banks + IF

•

Objectives:

Housing funding from Capital MarketsLower Risks for the System

•

Rules:

SPV: Universalidad

Supervision: Finance Superintendence

Temporary Income Tax Exemption for Securities

Capital:

US$70 Mill

ROE (5 years): 22%
9

MORTGAGE SECURITIZATION STRUCTURE
Titularizadora Colombiana
- Purchase Loans - RMBS Structure - RMBS Placement - Run the process

Originators Banks
- Loans (Assets) - RMBS (Liabilities)Universalidad (SPV)

- Originate - Sell loans - Loans Servicing

Market Títulos Hipotecarios - Investors RMBS

- Originators - Titularizadora

Credit Enhancements

-IFC -Government Guarantee on RMBS Backed on Social Housing Loans - Titularizadora Colombiana

10

TC ACTIVITIES

•

Selection of Originators and Servicers:

Standards and Qualification

•

Mortgage LoansEligibility Criteria: Scoring

•

Structuring and Placement of RMBS:

Statistics and Models

•

Administration of the Securitization Process (Master Servicing) Loans Servicing Supervision Payments Information to the Market

•

RMBS Market Development

•

Credit Enhancement Provider
11

TRANSACTIONS SUMMARY 2002-2008
Number
9 7 3 9,600 24400 90,200

Issuances

Number of Loans...