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 Puerto Vallarta Real Estate | April 2007 
Cross-Border Finance: Mortgage Docs Without Borders
 John Adams - Bank Technology News
A peek at beach-front real estate listings in places like Florida and California can lead to extreme sticker shock-even with the cooling of the real estate market in those sunny climes over the past year.
That's leading some U.S. residents to look longingly below the border to Mexico for vacation property. But that market has traditionally been a tough nut to crack for ordinary citizens for reasons ranging from language differences to legal uncertainties to limited financing options.
A new partnership hopes it's got the key to unlock this market for Mexico's northern neighbors. GainClients, a firm that specializes in Website technology for real estate financing, teamed up in December with Carefree Mortgage, a leading Mexican mortgage lender, to launch a Web-based platform-called Financial Relationship Management (FRM); The FRM platform is intended to connect buyers, sellers, brokers, and financing in one easy-to-use package.
The goal is to have realtors with their own Websites sign up for the platform; so far the results are encouraging, says Ray Desmond, CEO of GainClients. In mid March Desmond said the product was too new to have reliable loan origination numbers. But he said that 100 real estate agents signed up for the platform in just one single week in late February.
Desmond says there's a big market to tap. "There's a million (U.S. citizens) living in Mexico. It's a boom for vacation and retirement-type homes because the properties are less expensive. You can get close to the beach at a fraction of the cost of buying in Florida or California."
"In the past, there wasn't a vehicle like this to finance residential properties in Mexico," continues Desmond, who notes that buying property in Mexico from a developer typically requires a down payment of at least 30 percent with mortgage rates of about 12 percent.
 By comparison, the mortgage products available from Carefree through the FRM platform include purchase financing of up to 80 percent, traditional refinancing and cash-out refinancing. Title insurance is also available.
"It's as safe and secure as buying a property in the U.S. And the consumer laws in Mexico are very favorable," Desmond says.
But GainClients' ambitions go beyond being a facilitator of real estate transactions. Desmond says the company also hopes to cut the cost of purchasing Mexican property by greatly streamlining the process.
The FRM platform provides mortgage loan marketing, creation, processing and fulfillment in a single system. The platform also includes a lending product that features search engine submission, link libraries, keyword management and integration to Vuecentric's MortgageDashboard loan origination system, online loan application and fulfillment, compliance and fraud mitigation.
MortgageDashboard, a Web-enabled platform that takes advantage of service-oriented architecture to integrate various stages of loan processing, has been modified for the Mexican market to take local differences into consideration, including workflow issues such as disclosure and closing forms and differences in the way property addresses are listed in Mexico.
"A U.S. realtor can have the site geared toward the Mexican market, yet the loan creation, processing and origination can be done seamlessly," says Jorge Sauri, VueCentric's CEO.
In fact, Sauri argues, creating electronic mortgage origination in Mexico is probably easier than in the U.S. because there are fewer legacy systems that need to be replaced; plus, there's a relatively small number of tech vendors.
"We can achieve seamless processing and delivery of the mortgage loan in a shorter period of time because it's a more controlled environment," Sauri says.
Desmond argues that "People in the U.S. and Canada have been reluctant over the years to buy property in Mexico because they aren't familiar with the ins and outs. But this system can handle the idiosyncrasies."
While technology is clearly integral to the FRM solution, the challenge around penetrating the Mexican mortgage market has less to do with technology hurdles than with finding institutions that are willing to purchase and fund mortgages, Sauri says.
Seen in this light, Carefree's participation is critical and, in fact, it has already helped spur some secondary market attention from the likes of GE Capital, GMAC and Deutsche Bank.
Vuecentric is looking to develop similar mortgage markets in the Caribbean and other parts of Latin America, according to Sauri. So stay tuned. |
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