Mexico Mortgage Loans- How We Got Started

This blog is written by the staff at Mexico Mortgage Loan (www.mexicomortgageloans.info) and is intended to inform potential borrowers on both the Mexican real estate market and financing in Mexico. In order to trust our content, we have provided a brief history of our partners Jon Olkoski and Jim Spencer.

Olkoski and Spencer met while worked together at the same US wholesale lender as Account Executives. They later worked together at IMI Group, a Phoenix-based, direct lender for US and Canadian citizens financing properties in Mexico. Their core responsibilities included growing the wholesale lending platform, marketing the new IMI 30 product, developing a retail lending presence by soliciting business from realtors and other referral sources as well as working with developers of residential projects to obtain construction financing.

Working at IMI Group would prove to be a valuable experience. Says Spencer, "Every day it seems like we were met with new challenges. This is still a very new market and there was definitely a learning curve. As soon as we would conquer one challenge, a new one would emerge. For example, we might forge a partnership with one fiduciary bank to handle bank trusts, only to find that they were abandoning that aspect of their business and we were left finding a new partner. Something as simple as obtaining a title policy, which can be handled quickly in the United States, takes much longer. The public registry was not as automated and sophisticated as what we see in the US. I remember speaking to a closing coordinator in one resort area and she mentioned that they had a pretty archaic system of records dating back hundreds of years. Everything was paper based and they had to literally search to find their records. Many of the states are working on transferring their records to computers, but this is a pretty arduous task. Every file seemed to have something strange and it was a challenge determining an appropriate course of action. Eventually it got easier, though. We were continually working on ways to improve the process and speed up the time it takes to get files closed."

In January of 2008, the employees at IMI Group were notified that they could no longer fund loans. The credit crisis occurring in the US financial markets had affected IMI Group and they transitioned from a direct lender to becoming a mortgage broker. What this meant is that they no longer funded the deals themselves but instead must rely on GE, Loredo National Bank and other lenders in Mexico to handle the fund loans.

In April of 2008, Olkoski and Spencer partnered to open up their own branch of Playa Capital of Mesa, AZ. This partnership would combine the 5 years of expertise that Playa Capital had developed at the broker level in Mexico with the in depth knowledge of Mexico that Jim and Jon developed at the lender level. "We are aware of a lot of mortgage brokers in Mexico but Playa Capital is one of the few companies that we feel comfortable working with. They have a solid reputation and a lot of integrity. Similarly, I know that Playa Capital would not have made a branch arrangement with most other groups."

Mexico Buyers Guide-terminology

Mexico offers a great opportunity for foreigners looking to invest in real estate. US and Canadians looking to purchase and finance property in Mexico can benefit from becoming familiar with some of the terminology involved in a typical Mexican real Estate Transaction.

What is a fideicomiso and why is it important?
A fideicomiso is a bank trust which is renewable every 50 years. It is similar to a deed of trust in the United States. Many borrowers buy in Mexico without obtaining a fideicomiso and either pay a mortgage directly to the developer or to a seller. This is dangerous since the borrower does not have legally recorded ownership of the property.

Who is the notario publico?The notario publico is a government position of high power. Among the numerous responsibilities of a notario publico is the handling of land disputes, recording of real estate transactions and determining property taxes.

What is an escritura?
An escritura is the deed that a property owner receives in Mexico. The public registry is not as sophisticated in many Mexican markets as it is in the United States. Since this is the case, it is good to obtain a copy of the escritura from the existing owner at the time that you write a purchase contract. This document is crucial to obtaining financing and most lenders will need a copy of it.

This is the first installment of our Mexico Buyers Guide Blog and does not even begin to touch on the complexities of closing a loan in Mexico. More information can be found at http://www.mexicomortgageloans.info/. Please feel free to contact us via our website in order to gain more knowledge into the process of financing a property in Mexico.