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 Vallarta Living | Home & Real Estate | September 2005 
Mortgage Plan Offers 'Little Piece of Mexico'
 Wire services
Isabel Estrada, a mother of eight from the village of Izucar de Matamoros in the central Mexican state of Puebla, was finding it hard to conceal an almost childlike delight when the governor of the state handed over the keys to her new house on Saturday.
The small house, in a modern development in the long shadow of the volcano Popocatapetl, was a gift from two of her sons, who have lived and worked as waiters in the United States for the past seven years.
José Luis and Antonio Suárez will pay her 20-year mortgage of about 274,900 pesos (about US25,500) from Astoria, Queens, where they both live and work.
They got their loan from Hipotecaria Su Casita, the mortgage bank, under a new program, "Su Pedacito de Mexico" "Your little piece of Mexico" and will make their monthly payments at a bank branch in New Jersey, even though the mortgage is denominated in pesos.
The houses in Estrada's new estate are small, and none costs more than 405,000 pesos. But there are signs of a slowly establishing lower-middle class. New cars sit on driveways, while roofs have satellite dishes.
State authorities are helping to publicize the mortgages in the United States hence the presence of the state governor at the ceremony to hand over Estrada's keys. The hope is that transborder mortgages could help transform migrants' dollars into a true "patrimony" for families in Mexico.
Big Money
The potential is enormous. According to the Bank of Mexico, the central bank, migrants sent back US16 billion to their families last year, while figures for the first half of this year suggest this number could top US20 billion for 2005. An increase of 24 percent last year followed a rise of 36 percent the year before. Only petroleum exports provide the country with more foreign exchange.
Remittance money has grown 150 percent since 2000, while the U.S. migrant population has increased by only 16 percent. Some of this can be explained by improvements in the Bank of Mexico's system for tracking remittances. There is also increased competition within the market, as U.S. banks have built alliances with Mexican counterparts to enter the market, pushing down commissions. Suspicions also persist that at least some of the money is used for illicit purposes.
But while the impact of remittance dollars is undoubtedly profound, there are arguments over whether it is uniformly positive. "For some people, remittances allow them to buy a basic basket of essential goods," says Rodolfo Tuirán, of Sedesol, Mexico's social development ministry. "But overall, in terms of poverty, remittances don't have a significant impact. They do, however, have an important impact on inequality they increase it. Of every US100 received, US75 goes to homes that aren't poor."
According to Sedesol research, if all the remittances were suddenly to stop, the proportion of Mexicans living in poverty would rise only from 47.1 to 48.5 percent. The proportion of remittance money going to poor families is falling.
Helping The Home Town
The challenge is to find ways to channel remittances for development. So far this has been done through the 623 Mexican clubs, or home-town associations, registered in the US. Several states have "three-for-one" programs, where each dollar from the home-town associations is matched with a dollar each from the municipal, state and federal governments.
This money goes towards schemes such as paving roads or providing drinking water. Such "collective remittances" accounted for about US300 million last year, and gave migrants some control over how their money was used.
By improving conditions in impoverished rural pueblos that have seen the most outward migration, they have also helped arrest the depopulation of agricultural areas and limit the urban sprawl around Mexico's biggest cities.
Offering cross-border mortgages is perhaps a more potent way for migrants to ensure that their dollars go towards tangible economic advancement. Apart from Su Casita, Hipotecaria Nacional, this nation's largest mortgage lender, is also piloting a scheme to offer trans-border mortgages, jointly with state governments, as is Houston-based Conficasa, which is marketing mortgages to migrants jointly with another Mexican lender, CIT.
Booming Business
Su Casita has offered about 400 mortgages to date. Eduardo Uranga, director of the program, expects to offer 500 cross-frontier mortgages this year, and more than 1,000 next year. By 2010 he expects loans originated in the United State to reach 10 percent of Su Casita's portfolio.
Allowing the free flow of migrants' dollars back to Mexico increases the chances they will return and stems the flow of new migrants. The Suárez brothers' work in New York has allowed Francisco, their youngest brother, who will be sharing his mother's new house, to take an international relations degree at Puebla's Autonomous University.
And taking out the mortgage will make it easier for them to return. "They suffered and so did I," says Estrada. "When you leave, you have this illusion of having a house, of living better. That's what drives everyone. But this sacrifice they've made has been very beneficial. Now they have something better when they return." |
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