Genworth Financial Corp is set to begin offering residential mortgage insurance in Japan having received authorization from the financial authority earlier this month.
Genworth, a US-based insurance company, said in a statement that Japan’s financial regulator had given the company permission to establish operations to become the country’s first monoline residential mortgage guaranty insurance provider. Japan is recognized as the world’s second largest mortgage market with $1.8 trillion of mortgages outstanding.
Genworth says it will work with the country’s national and regional lenders and specialized mortgage banks to provide attractive alternatives to mortgage options currently available to Japanese homebuyers, who prefer down payment mortgages in order to maintain cash savings.
Brian Hurley, president of Genworth’s international mortgage insurance operations in Australia, New Zealand, Japan and Canada, said, Japan’s dynamic housing market, with more than $240 billion of originations in 2004, offers tremendous opportunity for Genworth to expand its global platform to help increase homeownership, using our product innovation and technological capabilities.
Genworth also said that credit enhancement provided by the company’s mortgage insurance will help Japanese lenders increase liquidity and facilitate issuance of residential mortgage-backed securities (RMBS) to meet growing investor demand in Japan.
The Japanese market is poised for continued RMBS growth, Mr Hurley said. We believe that Genworth can play a significant role in that growth by providing products with our strong ratings that offer valuable credit enhancement and assist financial institutions in managing their capital efficiently by reducing capital requirements for low down payment lending, he added.
Mortgage securitization in the country grew from $500 million in 1999 to $22 billion in 2004.