(MENAFN) Saudi Arabia is considering Fannie Mae-style draft plan for a real estate refinancing company, Reuters reported.
The proposed regulations, which were published by the Saudi central bank, fleshed out the laws, principally by saying the government may establish Saudi Real Estate Refinancing Corp to develop a secondary market in home mortgages.
A secondary mortgage market allows lenders to expand risk and tap new sources of funds. Fannie Mae was established by the US government in the 1930s to finance such a market.
The regulations are part of long-awaited government efforts to develop a housing mortgage sector in the Kingdom where the restrictions of Islamic sharia law have made it difficult to secure lending against property.
According to the draft, The proposed corporation, with a minimum registered capital of USD535 million, would have to stay majority state-owned but real estate financing companies would be allowed to acquire stakes up to a combined total of 30 percent.
The corporation might also offer shares to the public. It could provide the secondary mortgage market with access to both local and foreign financing instruments.
Saudi Arabia, the world's top oil exporter, faces a chronic housing shortfall, particularly among lower and middle-income people, as land prices rise rapidly.