HUD AND CHINESE MINISTRY OF CONSTRUCTION LAY FOUNDATION FOR GROUNDBREAKING SECONDARY MORTGAGE MARKET CREATION IN CHINA

SHANGHAI, CHINA - U.S. Housing and Urban Development Secretary Andrew Cuomo today (Sunday) took the first step in implementing a housing finance pilot project that will help China establish a secondary mortgage market and ultimately securitize residential mortgages.

The program, under development by HUD and Chinese Ministry of Construction officials, is expected to result in a pilot securitization program that will be implemented by Chinese financial institutions.

The development plan calls for a series of substantive working groups comprised of U.S. public and private sector officials, U.S. private sector financial institutions and Chinese government and financial officials. Discussion from these working groups will result in an action plan for the securitization program.

HUD and the Ministry of Construction have targeted the end of the year for the launch of the pilot project.

"The application of this program will be a historic step for the Chinese and the way homes are bought and sold in this country," said Cuomo, who announced this proposal at a forum hosted by MetLife insurance in Shanghai. "By enhancing primary market institutions and creating a secondary mortgage market, China will be able to generate more resources that will be used to increase homeownership by Chinese families."

Cuomo added that HUD will organize and host a study tour in July on American primary and secondary mortgage markets for Chinese finance experts, and establish one- to two-week externships for Chinese officials with private companies in the U.S. this autumn.

At the forum Cuomo met with Chinese housing and finance representatives as well representatives from U.S. companies involved in domestic and international mortgage markets including: GMAC-RFC; PMI; Bear Sterns; EDS Inc.; and AGS Financial.

Cuomo came to Shanghai as part of a four-day visit to China to foster cooperative efforts with Chinese housing officials on the development of housing and housing finance in China.

Later in the week Cuomo plans to visit housing developments in Pudong and Jinan and meet with Chinese representatives of the US-China Residential Building Council in Beijing.

HUD's increased international efforts under Cuomo mark a resumption of international activities by the Department carried out in the 1960s and 1970s. Other recent HUD international activities include assisting Central American countries in the aftermath of Hurricane Georges and Mitch by providing technical assistance for housing finance, building technologies and community development, and working with South Africa on projects to spur home ownership.