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 Vallarta Living | Home & Real Estate | March 2006 
Mortgage Group is Eyeing Mexico
 Jonathan J. Higuera - Arizona Republic
| | With an eye on the growing Mexican real estate market and American buyers, IMI Group Inc. hopes to create a secure lending environment for firms interested in financing such real estate deals. |
As more Americans look to buy property in Mexico, U.S. mortgage bankers are faced with the dilemma of making loans in an uncertain environment or missing out on a lucrative opportunity.
Mortgage lenders want to know how they can recoup their investments if a borrower defaults. And even if they could repossess, most don't want to end up with Mexican property.
But they also don't want to turn their back on a chance to lend to baby boomers searching for second-home or retirement-home opportunities to the south.
With an eye on the growing Mexican real estate market and American buyers, IMI Group Inc., an international mortgage lender based in Phoenix, hopes to create a secure lending environment for firms interested in financing such real estate deals.
Although the strategy is still coming together, IMI's chief executive officer, Tim Kelley, says the goal is to create a secondary market for mortgage loans that would work in much the same manner that the U.S. secondary mortgage market works with Fannie Mae and Freddie Mac.
Those two quasi-public entities help keep a steady flow of capital moving into the U.S. primary mortgage lending industry by purchasing primary mortgage loans, which are then used as a security. That in turn has lowered risk and helped keep down consumer loan costs.
The end result is a more secure lending environment with clear standards and procedures for lenders when borrowers default.
But to simply transfer the U.S. system to Mexico is fraught with obstacles, which makes the endeavor a long-term commitment.
Kelly and his firm, already funded with $600,000 from capital investors, are in discussions with Standard & Poor's and German bankers interested in the plan for Mexico real estate backed by U.S. credit. He hopes it will lead to another asset class for investors to invest in.
He estimates it would take 10 well-financed firms buying primary mortgages to make it a mature market.
He also estimates they would need to be able to buy $500 million to $1 billion in loans in a given year.
Currently, some U.S. banks are making mortgage loans to customers buying Mexican property.
But the lending parameters for those banks can vary widely. Some may offer 25-year loans and others insist on 15-year loans. Some offer fixed interest rates whiles others offer variable rates. Typically, closing costs for Mexican property have been high, yet another obstacle for ownership.
And interest rates are higher than U.S. interest rates, often as high as 12 to 13 percent.
In a related effort, Kelley and others are set to launch March 24 an international mortgage lender's association that could address many of these issues. "We need to have an organized body to consolidate information, educate the public, lobby on both sides of the border and identify best practices," he said.
Reach the reporter at (602) 444-8831 or jonathan.higuera@arizonarepublic.com. |
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