Real Estate Financing Company (REFC), a new residential mortgage company based in Riyadh, Saudi Arabia, is expected to launch operations in 2009 to provide Sharia-compliant, third-party financing for home purchase in Saudi Arabia. Future plans call for additional branches in Saudi Arabia as well as on-line development.
Currently, there is little third-party residential financing available in Saudi Arabia. The founding investor group of REFC has experience in the Saudi housing industry, having led construction projects in that market and sees synergies between their construction businesses and potential growth with the inauguration of a third-party, home-finance institution.
Clayton Holdings, Inc., a US based due diligence, surveillance, and specialty consulting provider, has been engaged as the lead consultant in the formation of REFC. For Clayton, the consulting contract marks a telling shift in the company’s business model — once among the largest pre-issuance due diligence providers in the private party residential mortgage securitization market, the firm has had to rely on avenues to build revenue as the subprime and related mortgage markets literally disappeared during the last 12 months.
Clayton will work with REFC to size the Saudi housing market and creating the firm’s strategic business plan, as well as conducting an IT/vendor systems assessment, creating necessary operational documentation and performing ongoing implementation assistance. In addition, Clayton will work with the institution to create exit strategies for the loans, including securitization in a Sharia-compliant environment.
“Knowing the broad benefits of home ownership and being part of making it more accessible to a whole new market makes this project very exciting,” said Bruce Legan, president of Clayton Consulting. “The challenge is to balance the efficiencies of proven best practices with the strictures of Sharia and the cultural nuances of the modern Saudi life.”
By Paul Jackson, Housing Wire Magazine (USA) July 21, 2008