Mortgage Market Analysis, (Local Currency) Mortgage Product Design, Legal-Regulatory Policy Design, Housing Finance Institution Design, Strategy and Business Consulting, Investment Reconnaissance

Note: this section covers my general analytical, policy and business consulting work in mortgage finance.

  • for my crisis-related mortgage sector work, see section on Crisis Management.
  • for my work related to access to credit mechanism in housing / mortgage finance, i.e. contract savings for housing and insurance, see section on Access to Credit.
  • for my work related to mortgage capital markets, i.e. MBS and covered bonds, see section on Capital Markets.

Through my work with the German mortgage bank association (Verband deutscher Hypothekenbanken, VdH) during the 1990s on EU policy and legal-regulatory affairs I was introduced into the European and U.S. mortgage sectors. In 1995, in the aftermath of the large property lending crisis of the early 1990s, I performed the first transatlantic commercial mortgage credit risk study that inter alia worked with disaggregate credit risk data from the U.S. and Germany. What sounds trivial today, a significant credit risk decline with declining loan-to-values in office building financings, was validated for the first time in Europe with credit data then. The findings inspired the risk-based capital requirement approach of the Basel II banking regulations.

In 1997, together with my U.S. mentor Michael Lea, fmr. chief economist of Freddie Mac, I wrote the first transatlantic comparative analysis of mortgage prepayment risk. Prepayment regimes and their relation to the ability to use bond refinancing for long-term mortgages, are a key structural determinant and cause for fragmentation in European mortgage finance. Inter alia they are causal for the preponderance of variable rate regimes in Europe that experienced high default rates during the 2007-13 Global Financial Crisis. In 1998 a pan-European study on mortgage consumer protection regulations for the European Commission followed. The goal already then was to upgrade the Consumer Credit Directive to cover mortgage finance.

After returning from Washington in 2001, my unique specialist role enabled me to push the European mortgage market integration agenda with DG Markt at the Commission, long before the financial crisis. In 2003 together with Mercer Oliver Wyman’s London office, jointly with Matthew Sebag-Montefiore and Simon Low, I worked on the financial integration of European mortgage markets. Until 2007 we deepened this pioneering pan-European research agenda with work on European mortgage lender risk and funding strategies and later with work on distribution channels. As we moved faster to the proposed EU mortgage credit directive after the outbreak of the financial crisis, in 2009 I joined forces with London Economics to assess the most critical elements of the proposed directive. The Directive got finally passed in 2014.

For my European mortgage (and sovereign) crisis management work, including heading an emergency task force by Brussels think tank CEPS that took stock of the structural determinants of the crisis, see separate section. While we succeeded in curbing some of the riskiest European practices – e.g., promoting more fixed rate lending in Spain – some of the most obnoxious issues have remained. My work program on German prepayment reforms in which I worked both for consumer protection groups (2013 European study for VZBV), mortgage banks (see above) and government (2017 Ministry of Justice working party on prepayment indemnity reforms) is an example. Is Europe unable to reach reasonable legal-regulatory compromise based on basic economic analysis?

As the financial crisis continued, I was retained first by World Bank and later by EBRD during the 2010-2014 time window to analyze and help stakeholders in resolving the impact of the foreign currency mortgage lending crisis in Central and Eastern Europe. We advised local stakeholders regarding exit paths from the increasingly defaulting portfolio and brought local currency lending reform back on the agenda.

I have also been involved in numerous emerging markets work programs in mortgage sector analysis, policy reform and housing finance program and institution design, inter alia in Philippines, Poland, Russia, Ukraine, Brazil, Mexico, Philippines, Armenia, Iran, Uzbekistan, Kyrgyzstan, Turkey, Saudi Arabia. Between 1996 and 2002 I was involved in the largest World Bank housing finance technical assistance program ever in the Philippines. In 2004-2006 with Michael Lea and Steve Butler I designed Turkey’s housing finance legislation. 2000 and 2010-12 I performed extensive housing finance work programs in Brazil for World Bank. In 2004 I analyzed the housing finance reform program and the insolvency situation of the housing bank Bank Maskan in Iran. In 2006 I wrote the first mortgage code of ethics for Russia and later worked extensively in Ukraine on mortgage consumer protection.

From 2004 to 2015 I had shared my office with and provided regular German market analysis services for Hypoport AG, Europe’s leading B2B mortgage origination / broker platform and one of the oldest German Fintechs. In particular before the financial crisis I had performed investment reconnaissance services for numerous specialized mortgage sector clients, including Countrywide Financial (U.S. servicer), PMI (U.S. mortgage insurer), Bausparkasse Schwäbisch Hall (German contract savings institution), Nykredit (Denmark), Absalon (Joint Venture between Soros and the Danish mortgage bond system), with targets ranging from German/European to global markets.

Since the 2010s I am specialized on working with mortgage lenders and housing finance agencies as a business consultant focusing on corporate strategy and organization, program / operations development, risk management and funding strategies. I also perform due diligence analyses for investments or mergers/acquisitions and continue to do investment reconnaissance In 2013 I evaluated the Mexican housing finance agency SHF in the aftermath of the financial crisis. 2015-2018 saw comprehensive institutional development work in Armenia, Kyrgyzstan and Uzbekistan. In 2018/19, with Boston Consulting Group I designed construction guarantee programs for the Real Estate Development Fund in Saudi Arabia. With Roland Berger since 2020 I have been advising mortgage finance companies in Saudi Arabia.

Selected project references mortgage market / products / policy / institutions / business consulting / investment reconnaissance

2021/22“Global stocktaking of Rent-to-own schemes, development of a global investment framework and development of investment proposals in three emerging markets (Colombia, Kenya, Indonesia)”, including mortgage market analysis of Colombia, Kenya, Indonesia. With Roland Berger Consulting.International Finance Corporation
2020“Strategy Consulting Regarding the Acquisition of a Mortgage Finance Company by a Commercial Bank”, business consulting.Saudi-Arabian commercial bank / Roland Berger Consulting
2020“Market Analysis, Target Group, Financial and Operational Analysis and Strategy Design for a Mortgage Finance Company”, business consulting.Saudi-Arabian mortgage finance company / Roland Berger Consulting
2018/2019“Design of Real Estate Development Guarantee Products”, focus on off-plan, self-construction, developer guarantees, including evaluation of the housing construction finance market.Real Estate Development Fund Saudi Arabia, Boston Consulting Group
2018/19“Mortgage Covered Bonds in Georgia – Pre-Feasibility Assessment and Technical Proposal”, including analysis of mortgage lending portfolio and bank lending conditions, regulatory conditions (with Salome Skhirtladze, Ana Kvaratskhelia, David Abesadze).      National Bank of Georgia/Asian Development Bank
2018/19“Feasibility study and design proposal for a contract savings for housing system in Armenia”, including housing finance market analysis (modernization, mortgage loans) with disaggregate datasets.NMC Armenia/ Central Bank of Armenia, Kreditanstalt für Wiederaufbau
2017/18“Consultancy on Mortgage Market Reforms in Uzbekistan”, including housing finance market review and formulation of a housing finance legal-regulatory reform roadmap.Asian Development Bank, Manila
2016/18“Strategy Consultancy Benefiting the State Mortgage Company in Kyrgyzstan”, including the design of targeting for social and lower-middle-income housing finance programs.Kreditanstalt für Wiederaufbau, Frankfurt
2014“Paper on Mortgage Boom-Bust in Transition Countries and Regulation Response”National Bank of Poland
2013“Vorfälligkeitsentschädigungen (mortgage prepayment indemnities) in Europa”, study on regulations in 6 European countries and their impact on mortgage product availability and pricing.German consumer protection association VZBV
2012“Mortgage Regulation Policy Dialogue with Selected Countries of the CEB and SEE Regions”, covering Hungary, Serbia, Croatia, Romania, TurkeyEBRD
2011A New Mortgage Credit Regime for Europe“, Paper prepared for the CEPS-ECRI Task Force on A New Retail Credit Regime for Europe (with Marc Rothemund)CEPS
2011“Sistema Brasileiro de Poupança e Empréstimo – Current Risk Issues and Reform Options in a Changing Brazilian Capital Market Environment”, World Bank Policy Note.

World Bank
2010“Study on Diagnosis and Regulatory Proposals to Address Risks for Consumers and Banks Associated with Foreign Currency Mortgage Lending”, covering Hungary, Ukraine, Latvia, PolandWorld Bank
2009“Study on the Evaluation of Costs and Benefits of Different Policy Options for Regulating Mortgage Credit in the European Union” (with London Economics)DG Markt/EU Commission
2008“Study on European Mortgage Distribution”, EU comparative study (with Matthew Sebag-Montefiori and Simon Low).Mercer Oliver Wyman / European Mortgage Federation
2007“Does Housing Finance Promote Economic and Social Development in Emerging Markets?”, empirical analysis.International Finance Corporation
2006/08“Workshops on Mortgage Lending Code of Ethics, Russia”Russian banking federation, International Finance Corporation
2006“Establishment of Mortgage Rules and Legislation in Ukraine”, focus on developing consumer protection regulation in mortgage finance (Code of Conduct or law), including a series of bank workshops, in UkraineEU-TACIS / UNIA
2005“Risk and Funding in European Residential Mortgage Markets – Responding to Changes in Mortgage Demand”, EU comparative study (with Matthew Sebag-Montefiori and Simon Low).Mercer Oliver Wyman / Mortgage Insurance Trade Association
2004“Liberalizing Housing Finance Lending”, study prepared as part of the Urban Upgrading and Housing Reform Project.Government of Iran / World Bank
2003“Study on the Financial Integration of European Mortgage Markets”, (with Matthew Sebag-Montefiori and Simon Low).Mercer Oliver Wyman, European Mortgage Federation
2000“Separating Homeownership Subsidies from Finance: Traditional Mortgage Market Policies, Recent Reform Experiences and Lessons for Subsidy Reform.” Land and Real Estate Initiative Research Papers, Background Series # 14. Coverage inter alia of Hungary, Czech Republic.World Bank

Selected papers and presentations mortgage market / products / policy / institutions / business consulting / investment reconnaissance

Local Currency Housing Finance Instruments adapted to High Inflation and/or Real Interest Rates“, Workshop held at the National Bank of the Kyrgyz Republic, Bishkek, September 2017.

Action Plan for Housing Finance Policy for Kyrgyzstan“, Workshop held at the State Mortgage Company, Bishkek, November 2016.

SANAD Housing Finance Study MENA – Research and Field Visit Results“, Workshop held at Finance in Motion, Frankfurt, March 2016. Without investment reconnaissance results.

Mortgage Consumer Protection in Europe – New Regulations, Ongoing Challenges“, Presentation held at the 3rd International Forum on Housing Finance organized by Ministry of Land, Infrastructure and Transport of Korea, Seoul, November 2015.

Mortgage Market and Regulation Trends in CEE Countries“, Presentation held at a Workshop of the National Bank of Poland, Warsaw, November 2013.

Specialized Housing Finance Institutions in Crisis – Unwind or Reform?“, Presentation given at the International Monetary Fund, June 2012.

A New Mortgage Credit Regime for Europe“, Final Presentation of CEPS-ECRI project, Brussels, June 2011.

Early Repayment and Rate Adjustment/Reset“, Presentation during the CEPS-ECRI project, Brussels, October 2010.

Regulation of Foreign Currency Mortgage Loans – the Case of Transition Countries in Central and Eastern Europe“, Presentation given to the 4th World Bank conference on Housing Finance in Emerging Markets (with Simon Walley), Washington, May 2010.

Consumer Information & Protection in Mortgage Finance – Some Lessons from Subprime and Issues in Emerging Mortgage Markets“, Presentation given to the 3rd World Bank conference on Housing Finance in Emerging Markets, Washington, May 2008.

Mortgage Market Integration in Europe: Structures and Policy Issues“, Presentation given at Kreditanstalt für Wiederaufbau, July 2007.

Sistema Brasileiro de Poupança e Empréstimo (SBPE) – Issues and Reform Options“, Presentation given to the Brazilian Central Bank BACEN, February 2007.

 “Regulation: Connecting with the Financial Sector”. In: J.D. von Pischke (Ed.): „Housing Finance in Emerging Markets“, sponsored by Kreditanstalt für Wiederaufbau. Frankfurt am Main, 2007.

Lending for the Acquisition of Unfinished Housing Units and Linkage of Sales and Loan Contracts – Options for Better Consumer Protection for Ukraine based on International Experiences”, for EU-Tacis Project ‘Establishment of Mortgage Market Rules and Legislation in Ukraine’, 2006.

Selected media work mortgage market / products / policy / institutions

To be continued.