Investor Now Buying Existing "Seller's Paper" Mexican Mortgages

Patrick Harrison - pGringo.com
June 24, 2013


Puerto Vallarta, Mexico – It is rare to have an investor arrive in Mexico who is actively seeking to purchase Developer/Seller Financed Mortgage Notes… but that is exactly what is happening.

“Seller’s Paper” refers to loans held by either a private seller or developer who provided their own financing to sell their property, so in effect, the seller is also the mortgager.

Mexico has always been traditionally an all cash market, but increasingly sellers have found that it was far easier and faster to sell their properties by offering financing terms to their buyers. These are fairly common, not only for individuals who are selling their homes or condos, but also for developers wishing a faster turn-around on their sales.

The drawback of seller-financing is that it ties the seller to the property for a longer period of time and subjects them to the possibility of default on the part of their buyer. Sellers typically don’t want to hold mortgages. For a developer, this means that a great deal of their capital is tied-up in completed units, which does not allow them to move forward with the business of building and selling more properties. Having a dependable avenue to unload those loans can be invaluable.

Once in a great while, we find investors that actively seek these situations to relieve the sellers of carrying the loans. This allows the seller/mortgager to take that loan off of their books and walk away with the cash and reduce their risk. Almost always, this requires that the current holder of the note will discount the note for the investor, but this is balanced by decreasing risk and putting cash in their pockets. They no longer have to wait for the sale to be completed — they can walk away satisfied. The discount will directly correlate to the outstanding balance of the loan, along with the terms of the loan. The higher the interest and lower the amortization period, the lower the discount.

The one caveat for this program is that this investor is seeking loans from qualified borrowers. This makes a great case for hiring a good firm to pre-qualify your seller-financed transactions. If you or your realtor wishes to offer seller financing as an option to help sell your home, hiring a qualified firm to carry-out due diligence on your buyer is a great idea, even if you are not planning on selling the note. Basically, you are pre-qualifying your buyer so that the loan can be sold easily to the interested investment firm.

MEXLend is the exclusive representative of this investor and is currently evaluating loan packages for this program across Mexico. So if you are a developer holding loans or an individual who provided your buyer financing out of pocket, give MEXLend a call to evaluate your situation.  

MEXLend can be reached online at www.mexlend.com.mx or www.mexlend.com or by calling toll-free at 1.800.3.Mi.Casa or 322.222.7377.  From the US or Canada, call 917.779.9061.

Born in Seattle, WA, Patrick Harrison has been living in PV since 2003. Drawing on his experience in entertainment, radio, retail and sports marketing in major US cities, Patrick opened his own business here in Vallarta, P. Gringo Marketing & PR, a successful Public Relations Firm that targets the English-speaking tourist and local communities. You can contact Patrick at patrick@pgringo.com.

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