NHB looks at foreign ally for mortgage company

National Housing Bank (NHB) is scouting for international investors to set up its mortgage guarantee company. The company was envisaged in 2002 to compensate lenders such as banks and housing finance companies in case of defaults by home loan borrowers.

According to an earlier agreement, NHB was supposed to hold 43 per cent stake in the proposed company, AIG was to hold 41 per cent , and IFC and ADB each were to hold 8 per cent each, said S Sridhar, Chairman and Managing Director, NHB. After AIG exited, NHB has been seeking another partner for the venture. “We are looking for foreign partners particularly from developed countries who have the required expertise in mortgage guarantee and can provide us with the technical support. There could be three-four partners in the company, including NHB,” Sridhar said.

Banks will find it easier to securitise their loans, as the MGC will entourage standardisation of loan documents and processes, and provide additional credit enhancements to the portfolios of mortgage lenders. NHB is also formulating uniform valuation standard for property, which is expected to come out in 3-4 months.