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					Mortgage Market in Mexico

noviembre de 2009

Contents
I. II. III. IV. V. VI. VII. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role Securitization Model for Mexico and Current Strategy Pension Funds & BORHIS Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

2

SHF: Mandate & activities, Mission & Vision
SHF was created in 2001 as a government financial institution oriented to foster the development of the primary and secondary mortgage markets. As a Mortgage bank: SHF grants long term financing to financial intermediaries and covers their interest rate risk. SHF does not lend directly to individuals. As a Guarantor: SHF offers products like mortgage insurance and financial guaranties. Until 2013, SHF will have the 100% guarantee from the Federal Government. After 2009 SHF will not be able to grant finance, hence, it is necessary to develop alternative mechanisms of housing financing. SHF considers the securitization of mortgages as the most efficient mechanism of housing financing.
3

Mission: Lead the development of a competitive market in order to allow all Mexicans be able to acquire a residence.

Vision: To be an innovative institution in solutions to develop social housing.

Contents
I. II. III. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role

IV.
V. VI. VII.

Securitization Model for Mexico and Current Strategy
Pension Funds & BORHIS Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

4

Over the next 25 years, the number of households will grow at an annual rate of 2% and the year of 2012 will have the larger number of household formation.
From 2000 to 2030 the number of households in Mexico will grow 83%. These favorable population dynamics is coupled with an annual per capita income of approximately USD $9,500*
Number of Households in Mexico
Million Households
45 40 35 30 25 20 15 10 5 0 41.8
Thousands of New Households
700 690 680 670 660 650 640 630 620 610 600

According to official estimates, 672,018 new households were formed during 2005 throughout the country. This figure will rise up until 2012, when 691,242 new households will be formed.
Population by Age Groups in 2004
691 667 36 34 32 636 25.5 30 28 26 24 22 20

22.8

9.8 4.8

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

New Households

Total Number of Households

1940

1970

2000

2030 e/

Source: CONAPO

Source: CONAPO

/* PPP Methodology
5

20

20

Million of Households

36.3

38

Housing Demand
 In Mexico, there are 26.7 million families of which: 17.2 million already have an adequate house. 9.4 million families do not have an adequate house and haven’t been attended yet. Annually, around 500,000 new families are generated, of which approximately 60% are in conditions of demanding a mortgage loan. In addition to the families that do not have an adequate house, there are 4 components that together generate the annual housing demand.
Estimation of the Housing Demand in 2008
Component New Families Families without a House Families demanding a Better House Families who are Granted a Loan after a Former Rejection Total Number of Houses 299,977 765,113 71,565 22,724 1,159,379 % 25.8% 65.9% 6.3% 2.0% 100.0%

Source: INEGI.
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Housing Demand: Strengthening of the Middle Class
DISTRIBUTION OF FAMILIES ACCORDING TO THEIR INCOME (%)
34.4 and more 30.1-34.4

Dollars Earned per Day

A gradual increase of the middle class is expected. This will allow a strengthening of the housing demand from financially healthy families.  Between the year 2000 and 2006, the percentage of families that received more than 12.9 dollars a day increased from 72.8% to 80.2%. The low income sectors are the ones that have experienced greater increases in their income per family between the years 2000 and 2006.

25.8-30.1 21.5-25.8 17.2-21.5 12.9-17.2 8.6-12.9 6.5-8.6 4.3-6.5 0-4.3 0 10 20 30 2006 2000

In 2006, 80.2% of the families received more than 12.9 dollars a day



40

STRENGTHENING OF THE PURCHASING POWER OF THE LOW AND MIDDLE CLASSES Quarterly Income per Family (Dollars)
I II III IV V VI VII VIII IX X

2000 2006 Total Change % Change

$462 $791 $329 71.1%

$793 $1,177 $384 48.5%

$1,080 $1,382 $301 27.9%

$1,376 $1,742 $366 26.6%

$1,708 $2,050 $342 20.1%

$2,135 $2,388 $253 11.8%

$2,677 $3,085 $408 15.3%

$3,407 $3,805 $398 11.7%

$4,934 $5,084 $150 3.0%

$12,526 $11,330 -$1,196 -9.6%

Source: INEGI.
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Demographic dynamics: a challenge and opportunity in the mortgage market
MORTGAGE PORTFOLIO IN MEXICO Million Dollars

Even under very conservative assumptions, SHF estimates that the residential mortgage portfolio will grow from USD $80,724 millions in 2007 to USD $338,300 millions 2020.

400,000 350,000 300,000 250,000 200,000 150,000

100,000
50,000

-

20062007 20082009201020112012 201320142015 2016201720182019 2020

INFONAVIT and FOVISSSTE

SOFOLS and Banks

The flow of financial savings available in the country will not be sufficient to finance the growth of mortgage portfolios. The sale of mortgage portfolios to domestic institutional investors as well as foreign investors is an absolute must to maintain the growth of the mortgage sector.

The projections of the mortgage portfolio are based on potential estimated demand assuming an 3% annual growth rate for GDP and the same levels for mortgage rates than those of 2006.

2500 2000 1500 1000 500 0

ACCUMULATED NET FLOW NEEDED TO FINANCE MORTGAGE LOANS
2006 Billion Pesos

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Private Mortgages Siefores Savings Savings from banks

To attend the growing demand of mortgage loans in the following years, it was necessary to develop a Residential Mortgage Backed Securities market.
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Contents
I. II. III. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role

IV.
V. VI. VII.

Securitization Model for Mexico and Current Strategy
Pension Funds & BORHIS Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

9

The industry is still dominated by the two Federal Housing Funds, INFONAVIT and FOVISSSTE.
About ¾ of loan originations still do not involve a private intermediary undertaking at least part of the risk inherent to the transaction. FOVI/SHF has greatly diminished its importance as the funding source for mortgages originated by private intermediaries thanks to the development of the market.

Mortgages by Financing Source
INFONAVIT + FOVISSSTE 84%
INFONA VIT + FOVISSSTE 75%

SOFOLS FOVI Funding 13%

BANKS 3%

2002
Total 341,939 Loans

SOFOLS SHF Funding 5%

2006

B A NKS and SOFOLS Own Funding 20%

Total 675,041 Loans

10

INFONAVIT
The board of directors is represented by workers, employers and the Federal Government. INFONAVIT receives on a monthly basis, 5% of the formal private sector workers payroll, and credits to personal accounts. INFONAVIT loans, interest rates and payments are indexed to the minimum wage (MW)*. INFONAVIT interest rates are not market rates, there is an implicit interest rate subsidy on all its lending. INFONAVIT relies on payroll deduction for its collections when borrowers are employed by firms in the private sector. Collection mechanisms for unemployed borrowers or those migrating to the public or the informal sectors still need to improve. Average dollar amount of their loans: $22,000
* MW= usd$ 148.4 per month 11

FOVISSSTE
Similar to the objective and sources of funding from INFONAVIT, FOVISSSTE is a wage-based housing fund for federal employees, and is the institution in charge of providing housing financing to over two million of federal government employees.
The board of directors is represented by different government agencies and by ISSSTE (the public pension fund for federal employees).

FOVISSSTE receives on a monthly basis, 5% of the federal employees payroll, and also collects through a pay-roll deduction mechanism.
FOVISSSTE loans, like those of INFONAVIT, are indexed to the minimum wage and pay lower than market interest rates; however to a greater extent.

FOVISSSTE lags behind INFONAVIT on revamping its operating procedures, particularly regarding the servicing of the loan portfolio.

12

BANKS
Until 1994, banks were the only private intermediaries doing mortgages in Mexico. In 1995, the “Tequila Crisis” bankrupted the Mexican banking system and private banks abandoned the mortgage market. Past-due loans became rampant, specially in the mortgage portfolio of banks. Banks did not have efficient collection mechanisms or foreclosure procedures. By 2004 it became clear to banks they had been out of a profitable market, and they entered back aggressively by: Undercutting Sofoles in price Buying up the largest Sofoles Banks originated approximately USD 7,300 millions of loans in 2007.

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SOFOLES
Sofoles were created in 1994 as a result of NAFTA. They are Non-bank banks similar to mortgage banks in US. They have two basic characteristics :  Cannot take deposits from the public.  Can only lend to a specific sector: housing, automobiles, education, etc.

Since then, Sofoles have successfully been originating and servicing loans under FOVI & SHF programs:
  Relatively homogeneous originating and servicing standards, as well as standardized loan product. Sofoles will originate approximately USD 2,200 million of loans in 2007.

14

FOVI, which was manage by the Central Bank until the creation of SHF, started funding SOFOLES in 1995.
Collections on outstanding portfolio

Central Bank loans (guaranteed by the Federal Government)

Sofoles

Construction loans for homebuilders and mortgages for individuals

World Bank and IADB

Fovi‟s funding to Sofoles was long term, fully matched and indexed to minimum wage inflation. Under the macroeconomic environment after de “Tequila Crisis” this was the only source of long term funding for mortgages.
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SHF started operations in 2002, overtaking the activities of FOVI but with a new capacity to get funding from the capital markets.
Local capital and international derivatives markets SHF hedges market and prepayment risk through debt and derivatives markets MI is offered to prepare loans for securitization

Mortgage Insurance
MORTGAGE LENDING

Central Bank loans

SOFOLES

World Bank & IADB

SHF funds SOFOLES on a matched funds basis, absorbing market and prepayment risk
16

Contents
I. II. III. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role

IV.
V. VI. VII.

Securitization Model for Mexico and Current Strategy
Pension Funds & BORHIS Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

17

Participation of SHF in the securitization model
SHF does not perform the same activities that Fannie Mae or Freddie Mac: it neither purchases loan portfolios nor does it issue MBSs with its own Guarantee attached. Instead: SHF offers Mortgage Insurance covering the first loss of up to 35% of loans, whether they are part of a pool of an MBS (BORHIS) or not. SHF offers Partial Financial Guarantees to structures that meet certain requirements. These usually do not cover more than 15% of MBS (BORHIS) outstanding balance. SHF supports the liquidity of the MBS (BORHIS) by continuously quoting bid-ask prices (with tight bid-ask spreads) for every issue in the market. All this activity is channelled through one of the eleven “BORHIS Market Makers”.
However, the goal of SHF is similar that of the GSEs: to foster the liquidity to the mortgage markets as a means to promote the affordability of mortgages.
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How is the market organized to issue MBS (BORHIS)?
= Depends on the preferences of the issuer, but Mortgage Insurance is necessary unless a 100% Financial Guarantee Insurance on the MBS exists.

Mortgage Insurance Companies
PREMIUM Mortgage Insurance (First loss up to 30%) Loan + Mtg.Insurance

Financial Guarantee Insurance Company/Mezzanine
PREMIUM Total or Partial Financial Guarantee Insurance and Mezzanine

SOFOL or BANK $
Mortgage

SPV (funded and administered by private entities)
SPV acquires mortgage portfolios, structures and issues MBS (BORHIS)

AAAmx rated MBS (BORHIS)

Debt Markets

$

$

BORROWER

19

The securitization Model
Two type of structures are being placed in the market.
Mortgage Insurance + Partial Enhancement (Partial Financial Guarantee or Mezzanine Bond) Assets
Mortgage Portfolio (100%) + Mortgage Insurance

Full Financial Guarantee Insurance (without Mortgage Insurance) Assets
Mortgage Portfolio (100%)

Liabilities
Senior Bond 87%

Liabilities
Senior Bond 88%

Mezzanine Bond 10%

Equity 3%

Equivalent to a Partial Financial Guarantee

Equity 12%

May be partially substituted by a Mezzanine Bond
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SHF has been actively seeking the entrance of private providers of guarantees. The end-game is a market based system relying on private providers of financial solutions.
Investor and market maker in initial and secondary markets
SPV
Mortgage Portfolios

Financial Intermediaries • Banks • Sofoles

$

L O A N S

MBS

$ MBS

Capital Markets

K
Mortgage Insurance

Financial Guarantee Insurance

21

The number of participants in securitization has steadily increased, first Sofoles, then banks by 2006 started to have an important participation
The number of intermediaries participating in securitizations is also higher every year. In 2007, 3 banks have already securitized their mortgages, and we expect this number to keep growing.
Scotiabank Bancomer HSBC Banorte CyC Patrimonio ING FINCASA GMAC Patrimonio) GMAC (CyC) Metrofinanciera GMAC (HIPNAL) GMAC Su Casita 2006 Banorte CyC Patrimonio ING FINCASA GMAC Patrimonio) GMAC (CyC) Metrofinanciera GMAC (HIPNAL) GMAC Su Casita 2007 Bancomer HSBC Banorte CyC Patrimonio ING FINCASA GMAC Patrimonio) GMAC (CyC) Metrofinanciera GMAC (HIPNAL) GMAC Su Casita 2008
22

GMAC (Patrimonio) GMAC (CyC) Metrofinanciera GMAC (HIPNAL) GMAC Su Casita 2004 Metrofinanciera GMAC (HIPNAL) GMAC Su Casita 2005

Securitizing mortgages has proven to be a successful mechanism to originate mortgages recurrently and at competitive rates
 Through 2007, we have witnessed important progress on the issuance of mortgage backed securities:  On 2007, $2,352 million USD were securitized, representing an increase of 107% of the amount observed in 2006.  And also on 2006, banks started working towards securitizing their mortgage portfolios, managing to account for 33% of the issuance of BORHIs in 2007.
Amount Securitized Issuances (Million USD) Mortgages Non-bank institutions (SOFOLES) 2007 1,263 12 49,326 2006 950 13 30,926 2005 260 5 8,359 2004 250 3 9,562 2003 54 1 1,979 Subtotal 2,777 34 100,152 Banks 2007 2006 2005 2004 2003 Subtotal 777 186 963 3 1 4 10,025 3,931 13,956

Total MBS issuance per year Years 2003 2004 2005 2006 2007 Total Amount (million USD) 54 250 260 1,136 2,352 4,052 Issuances 1 3 5 14 17 40 Securitized Mortgages 1,979 9,562 8,359 34,857 59,351 114,108

Other Types of Issuances (Cross Border, BORHIs Repackaging, HiTo Bonds) 2007 312 3 7,927 Subtotal 312 3 7,927 Total 4,052 41 114,108

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On 2007, the average size of issuances also increased, making BORHIs a more appropriate instrument for institutional investors Issuances increased their individual volume, averaging around $131 million USD in 2007.
Average per issuance (million USD) 54 83 52 81 131 74
Average per issuance (million USD)

Year

% of increase

140

2003 2004 2005 2006 2007 Average 2003-2006

141% 57% 151% 61% 0% 177%

120

100

80

60

40

20

2003 2004 2005 2006 2007

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BORHIS offer very attractive yields to Foreign Investors:
YTM: BORHIS* vs. “Mexican Government Real Rate Benchmark”, “TIP’s + EMBI+”, TIP’s (Dic-2003 – YTD)
7.0%

6.0%

5.0%

4.50% 3.59% 3.35% 2.23%
Jun-04 Jun-05 Jun-06 Ago-04 Ago-05 Ago-06 Jun-07 Abr-04 Oct-04 Abr-05 Oct-05 Abr-06 Oct-06 Abr-07 Ago-07
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4.0%

3.0%

2.0%

1.0%

Dic-03

Dic-04

Dic-05

Feb-04

Feb-05

Feb-06

Dic-06

BORHIS* TIP's 20 yr

UDIBONOS** TIP's 10 yr + EMBI+

TIP's 20 yr + EMBI+ TIP's 10 yr

By the end of 2007, Borhis mantained the same YTM in average.
*Weighted Average YTM (calculated, at each time, with the outstanding amount of each issue). Source: VALMER; Mexican Price Vendor. **Government Real Rate Benchmark (with similar duration to that of the BORHIS). TIP’s = Treasury Inflation Protected Bonds; EMBI+ = Emerging Markets Bond Index (Mexico).

Feb-07

Today there are 11 Market Makers participating in SHF‟s program to foster the liquidity of BORHIS in the secondary market.
SHF acts through these institutions, and quotes prices both ways on every security at very tight margins throughout the day.

26

There is a lot of room for efficiencies being translated into more affordable mortgages.
FIXED RATE PESO POOL OF MORTGAGES SECURITIZATION
25% First Loss Mortgage Insurance

+ 87% Senior security

14.00% 1.25%
0.85% 1.10%

Average rate on mortgage portfolio Servicing Fee
MI P&C and Life insurance + structuring and securitization costs

=

Mortgage Portfolio
10% Mezzanine Piece 3% Subordinated Security

0.17% 8.34%
2.29%

Mezzanine
Funding rate for MBS Excess Spread

27

The BORHIs market is still on its early stages, so it is important to correct and adjust some aspects in order to improve its efficiency

Some aspects must be strengthened to continue providing this market with dynamism, sustained growth and security for the investor.
 Homologation and standardization of the periodic information reported by servicers and trustees, aiming to add transparency to the analysis and monitoring of the structures. Value the bonds in terms of prices instead of rates to provide simplicity to their valuation. Establish a standardized public calculator to price the structures. Make structures homogeneous. Adjust the rules that define the characteristics of BORHIs to line up the incentives and distribution of risks between participants. Adjust the operation rules of market makers.
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    

In order to satisfy the demand of institutional investors and widen the range of BORHIs available, different types of issuances have been promoted:

We have worked to generate a great variety of types of BORHIs with the objective of attracting different investors through diverse tranches.
Likewise, SHF participated in the creation of Hipotecaria Total (HiTo), a company that allows the securitization of mortgages at real time, in a similar way as the Danish model. We are supporting Covered Bonds as another securitization option. These schemes offer different options for both, investors and issuers.

29

Contents
I. II. III. IV. V. VI. VII. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role Securitization Model for Mexico and Current Strategy Pension Funds & BORHIS| Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

30

Mexico Pension Funds System

Individual Pension Fund Account*

AFORES
Pension administrator

PRIVATE EMPOYER PUBLIC EMPOYER

$
SIEFORES
Pension Investment Fund

$$$
* Mexican pension funds have an investment portfolio of around $79,000 Million USD (8.21% of the GDP in Mexico)
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 Invests Pension Funds  Regulated by CONSAR who defines investment policies

SIEFORES & BORHIS: matching necessities

One of the aim objectives of the SIEFORES is to invest the income of pension funds in order to obtain the best returns with financial instruments that comply with the regulator investment policies.
Taking into account that pension funds look for a long term basis investment, there is a need for long term financial instruments to match the necessities of the pension saving accounts. The regulator of SIEFORES establishes strict conditions for the type of financial instruments that could comply with the pension funds portfolio. BORHIS are an attractive investment option for SIEFORES in terms of: Risk Level Term Quality of the bond & bond underlying

Timing of the issuances
32

SIEFORES & BORHIS: matching necessities

The 70% of BORHIS investors is distributed within SIEFORES, Banks and stock exchange specialists.
The participation of BORHIS within the SIEFORES portfolio represents the 1.7%
BORHIS HOLDERS
7% 20% 2% 37%

Although the participation of BORHIS in the SIEFORES portfolio is important, the % of such bonds is limited. SHF is working together with CONSAR to increase the % of participation of MBS.

19%

15% BANKS Stock Exchange specilists Others

SIEFORES SHF INSURANCE CO

33

Contents
I. II. III. IV. V. VI. VII. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role Securitization Model for Mexico and Current Strategy Pension Funds & BORHIS| Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

34

In order to prevent the low-income population from living in irregularity or illegality and in stark conditions, it is necessary to provide it of housing.
Historical Mortgage Loans1

The interest rates decrease observed during the last years has benefited the mortgage loan market.
Housing Demand by Income Level2 Housing Demand Target Segment

Potential Market (Houses)

Attended Segment

This has traduced into an increase of the housing supply and demand, as well as of mortgage loans. However, the main beneficiaries have been the formal workers. The housing supply for informal and/or lowincome workers is still too limited.

Familiar Income in Mimimum Wages

New mechanisms should be created in order to supply housing to this segment of the market, which represents more than 80% of the population. To attend the low-income and informal workers, this market should be provided of attractive characteristics to constructors.
1 Source: 2

Softec, “Mexican Housing Overview 2006” Source; Softec, “Mexican Housing Overview 2006” and figures from SHF

35

In spite of the development of the mortgage market and of the diminish in the interest rates, the increase in the prices of houses has not allowed the low-income sector to be benefited.
 The government has established the need to generate 6 million mortgage loans during the period 2006-2012, which traduces in 339,762 acres of urban ground with the required infrastructure and equipment*.
 In Mexico, many urban development programs have been carried out. However, the following is necessary to benefit the low-income population:    The State and Municipalities should influence the type of housing that the constructors build. Alternative financing sources for the development of infrastructure should be explored. The urbanization process – equipment of land, construction of housing, and individual sales - should be enhanced in order to reduce the cost of land and to give access to housing to the low-income population.

To give access to quality houses to the low-income population, the participation of the States and Municipalities is needed, as well as the creation of attractive conditions for the investment of constructors in social housing.
*Source: Softec, “Mexican Housing Overview 2006” 36

Participation of Constructors in the Housing Market
One of the problems regarding the lack of attention to the low-income market consists in the fact that the constructors found this segment less profitable and more risky. The typical cost structure for constructors according to the market segment is showed below. *

The costs of investing in social and economical housing are duplicated with respect to the residential housing costs. The contrary happens with the profit margin.

Concept / Housing Type
Profit Margin (before taxes) Unforeseen Expenses Financial Costs Sales and Merchandising Administrative Costs Project and Supervision Processes and Licenses Construction Infrastructure Ground

% with respect to sales

Social
10% 5% 8% 5% 4% 4% 2% 40% 14% 8%

Economical
10% 5% 8% 5% 4% 4% 2% 40% 12% 10%

Middle
15% 5% 6% 5% 4% 4% 2% 39% 8% 12%

Residential
18% 5% 4% 5% 4% 4% 2% 38% 5% 15%

Plus
20% 5% 4% 5% 4% 4% 2% 33% 3% 20%

*Source: Softec, “Mexican Housing Overview 2006”

37

SHF has, among its objectives, the promotion of accessibility to housing. As a result, it has taken an active role in the development of ground that can be used for the development of social housing.

SHF, in coordination with BANOBRAS and several Financial Institutions, has defined and implemented different projects known as “Macrodesarrollos”. These have the objective of creating management and financing methodologies for the States and Municipalities in order to generate low cost housing in a sustainable environment. These “Macrodesarrollos” consider the creation of:
 A self-sustainable city, adjacent and complementary to the already existent one, that offer jobs and services to the population –health, education, diversion, transport, etc.(avoiding to create dorm cities or isolate urban developments).  Spaces that allow housing meant to all social classes (providing urbanized and well located grounds).  Public spaces that allow to develop a communitarian life – centers and sport areas, among others-.  Spaces for the environmental protection and enhancement.  Open spaces for primary activities – agriculture and farming-.  Legal and political certainty that will allow to offer housing at lower costs.

38

To improve the access to mortgage loans, all participants and markets developed for the Residential Mortgage Backed Securities should be directed to the steps currently unattended and to the low-income population.
All the advances achieved in the market and the products developed by SHF to promote the Residential Mortgage Backed Securities, should be used to attend the steps in the chain that are actually unattractive.
Acquisition of ground Primary Infrastructure Equipment Sale of Urban Ground Construction of houses Sale of Houses Maintenance

Housing Demand

Current Cover 6 a- 25 Mimimum Wages

Current Participation of SHF
Securitization • Investors • Mortgage insurers • Financial guarantors • Structuring agent

Future Cover 0 - 5 Mimimum Wages

Future Participation of SHF
39

The advantages of this model can be observed in three different directions:
States and Municipalities
     Obtain a financing source to promote an ordered urban development. Line up the constructors’ interests with the urban development planning. Stimulate the development of social housing projects. Is an important instrument to confront the illegal development of cities. Besides, the States and Municipalities might attend the low-income population, subsiding the land for social housing through the urbanization of ground.

Low-income population
  Urban developments with adequate equipment, services, employment sources, and infrastructure linked to public spaces. Access to houses with infrastructure, at regular prices and with the possibility of obtaining credits and subsidies.

Urban Developers
   The State or Municipality will guarantee the legal security of the project, as well as its basic infrastructure and urbanization. Permissions and licenses are previously granted. Urban design and individualization scheme with loan products of SHF, INFONAVIT, and other entities. Obtain financing for business lines that were previously unfeasible.
40

Contents
I. II. III. IV. V. VI. VII. Introduction Demographic Dynamics, Housing Demand and Financing Needs The Mexican Mortgage Market including FOVI/ SHF role Securitization Model for Mexico and Current Strategy Pension Funds & BORHIS| Low-Income Mortgage Alternatives Challenges ahead in Housing Finance

41

Challenges ahead in Housing Finance
To attend the population that has not been attended, SHF has the following actions to achieve:
 Strengthening and consolidating the Residential Mortgage Backed Securities Market.  Promoting the entrance of new specialized financial institutions in the unattended sectors: microfinance institutions, non-bank banks, and savings and credit institutions.  Developing of adequate products for these markets: savings and leasing.  In coordination with other housing institutions, adjust the Program of Subsidies to extend the access to mortgage loans.  Development of financial markets to attend the financing of infrastructure, equipment, and maintenance of the production of sustainable housing.  With respect to the previous point, SHF will take advantage of its experience in the development of securitization markets to securitize the franchises and flows of these Macrodesarollos.
42

Contacts:
Paloma Silva Edith Castro „msilva@shf.gob.mx „ecastro@shf.gob.mx
noviembre de 2009


				
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