New administration committed to fostering foreign investment
December 08, 2006
LA JOLLA, Calif. -- The new political administration in Mexico is committed to continuing the flow of foreign investment into the country - including
the promotion of second homes and retirement residences - and United States mortgage lenders have taken the message to market.
GMAC International Mortgage this week announced it had rolled out a 30-year, fixed-rate mortgage for Americans buying property in Mexico in addition
to a "stated income" or limited documentation option for a slightly higher interest rate. Both components also are available to borrowers for
"cash-back" refinances, allowing customers to pull out up to 50 percent of the cash value of their primary residence or second home in Mexico. The
cash-back ratio will increase to 70 percent in January, according to Dan Bryant, director of GMAC International Mortgage.
GMAC is the first national lender to introduce a 30-year, fixed-rate product south of the border. The news was the most significant announcement made
at the annual Mexico Resort Development Conference, attended by more than 300 major developers, builders, lenders and investors targeting real estate
in Mexico.
Dr. Jorge Castaneda, Secretary of Foreign Affairs under former president Vicente Fox, said president-elect Felipe Calderon targeted tourism in his
political platform and will follow through with those initiatives during his six-year term in office. Calderon has retained critical figures,
including Carlos Gutierrez, the national housing director or Comisonda Nacional de Vivenda.
Miguel Gomez-Mont, a developer and popular tourism proponent whose father has been active in Mexican politics for years, moves in as executive
director of FONATUR, the tourism development agency of Mexico, replacing John McCarthy.
"A lot of the positives will continue and Americans who are looking to buy south of the border will not experience any change,’’ said Bruce Greenberg,
a Tucson, Arizona–based appraiser, who has offices in San Jose del Cabo and Hermosillo.
The appointments come as a positive message to North American builders, developers and lenders who have brought to market thousands of homes, hotels
and fractional units the past six years. The major players foresee this significant momentum as a long-term trend especially as the enormous baby boom
generation ages and considers its retirement options.
GMAC now offers a 30-year fixed-rate mortgage at approximately 8.75 percent; a 20-year mortgage at 8.5 percent, and a six-month adjustable-rate
mortgage tied to the LIBOR (London Interbank Offered Rate) at approximately 8 percent. Other North American lenders - including Collateral
International, GE Money, Wachovia, M & I, Textron, IMI, Johnson Capital and CS Mortgage - are expected to tweak their programs to offer 30-year
fixed-rate loans with cash-back components. Countrywide also is rumored to be gearing up a Mexican loan package.
Interest rates on Mexican loans are higher than those in the U.S. because there has been no competition in the secondary mortgage markets or with Wall
Street capital markets to purchase the loans as securitized assets. Once the loans become more attractive and marketable to investors, interest rates
will drop, according to financial analysts.
"Our real competition is the U.S. mortgage markets," Bryant said. "When they need funds, borrowers can often get a home equity loan with a lower
interest rate on their home in the States. But if they don’t have that equity in their U.S. home, they are finding that their Mexican home often has
appreciated and can look to those funds via refinance."
The ability for Americans to tap into the equity of their Mexican homes and take the cash back to the U.S. for investment is absolutely new – and
arrived sooner than expected. Greenberg, who has made more than 600 professional appraisals in Mexico in the past decade, said he recently was asked
to appraise eight condominiums in Puerto Penasco, commonly known as Rocky Point, a popular beach area for Arizonans at the northern point of the Sea
of Cortez. The units, priced at $300,000 four years ago, now are hovering in the $450,000 range.
"It was interesting because only two of the eight condos were for purchase by new buyers," Greenberg said. "The six others wanted to refinance their
units to help offset the cost of housing in the U.S. Most of these people had their U.S. loans adjust higher and they wanted to put more cash down.
That was first – it usually is the other way around."
Recently, the government of Mexico implemented new appraisal standards including an updated manual on valuation methodology, the requirement of Errors
and Omissions Insurance coverage, and the retention of records for their registered appraisers. The new appraisal law in Mexico also lays out the
penalties for noncompliance and has made a huge difference for international lenders.Don Alley - 12-8-2006 at 08:16 PM
Quote:
Originally posted by grover
"As a wholly owned subsidiary of General Motors, GMAC Financial Services strives..."
Yeah, years ago General Motors figured, why let banks and finance companies get the loan business from the cars they make and sell, so they stared
offering their own financing, GMAC.
For a while, they bought and owned our home mortgage.
Eventually the GMAC financial may be all that's left of General Motors.
Well, good luck with their new plan to let ordinary consumers initiate loans secured by third world assets.bajarich - 12-8-2006 at 09:36 PM
Now the Mexicans will be able to buy more home than they can afford, just like here in the States. I wonder if they will get the ARMS and the
Interest Only loans that are enslaving so many people these days.capt. mike - 12-9-2006 at 06:46 AM
sometimes i like to go down to my bank and visit my money.
and other times i like to see if i can "rent" some more!!Don Alley - 12-9-2006 at 07:45 AM
Quote:
Originally posted by capt. mike
sometimes i like to go down to my bank and visit my money.
"I'm sorry, sir, your money is not here right now. It's in a proposed new timeshare at some place called Ensenada Blanca, near some place called
Loreto. But you may visit it there."
Cypress - 12-9-2006 at 07:50 AM
If the cost of new vehicles continues to rise they might offer automobile financing for 30 yrs.
Let the folks make their own decisions .
beercan - 12-9-2006 at 10:39 AM
Just like the electorate did here in the U.S. .Many save and invest wisely, most don't !
Quote:
by bajarich
Now the Mexicans will be able to buy more home than they can afford, just like here in the States. I wonder if they will get the ARMS and the
Interest Only loans that are enslaving so many people these days.
Enslaving ?
MrBillM - 12-9-2006 at 10:53 AM
That's a paticularly specious use of the word.
We are talking about a legal financing device and the free will exercise of those choosing to utilize it. IF someone unwisely opts
for the Choice and suffers, SO WHAT ! The responsibility lies with that person alone.capt. mike - 12-9-2006 at 01:13 PM
i can no longer afford to rent money from my bank.
so from now on i am only going to lease it!!!!jerry - 12-9-2006 at 01:46 PM
your 100% right mr billm people who make choices need to be responsible for those choices if you live beyond your means noone and no agency should
bail you out but you
i doubt
sylens - 12-9-2006 at 06:47 PM
many mexicans will qualify, as i assume loans will require u.s.ofa assets as collateral...these loans are for gringos, i'm fairly sure.
i also guess prices will really begin to climb with easier terms available...no more need to pay all cash.Don Alley - 12-9-2006 at 09:15 PM
OK, some of you are talking about loan recipients being responsible for their own actions. But there is another side to that coin...
Are the LENDERS going to be held responsible for their actions? If they screw up, who are they going to drag down with them? Like the biggest auto
manufacturer left in the US? How many stock and bond holders will know they are invested in Mexican real estate developments?
How many people on this board have said never spend more on your Mexican home than you can afford to lose? And now we're going to see a market for
Mexican mortgages?
I really wonder if there is any such thing as due diligence anymore. Mexican real estate is the new dot-com boom.JZ - 12-10-2006 at 12:33 PM
This is a huge announcement. 10 years from now people might look back on this as a turning point. It legitimizes investments, makes investments a
lot more affordable, and makes the investments a lot more liquid. Now is the time to buy.
Gored Again !
MrBillM - 12-10-2006 at 05:16 PM
No, not Al.
American investors and taxpayers have been shafted for years over bad loans made by U.S. banks in the third-world. When they "forgive" or write-off
those loans, somebody has to pay up and that somebody is us. This will be no different. The banks always get bailed out.bancoduo - 12-16-2006 at 03:49 PM
Go to [ripoffreport.com] and type in GMAC. I think there are some issues about them.TMW - 12-17-2006 at 11:36 AM
After reading some of the reports on the ripoff site, I think there are a lot of stupid people that have no business getting any kind of loan.
