Since its introduction in the early part of 2005, the cross-border Mexico mortgage market — mortgage financing for foreigners purchasing vacation, retirement and investment homes in Mexico — has been compared by many realtors and developers to riding a roller coaster.  But now, a greater number of those individuals are looking at the cross-border mortgage market to help strengthen the slower real estate market.

The recent U.S. downturn, comprised of the U.S. housing bust, housing and corporate credit crunch, high gasoline prices, weaker U.S. dollar, and inflationary pressures, has taken a toll on the cross-border Mexico real estate market.  Such effects started to appear as early as last fall and continued to grow throughout the early parts of the summer, with little signs of letting up before the upcoming busy season beginning November 2008.  While prices for real estate properties in the resort areas of Mexico have not receded significantly, prices have not appreciated at the high historic levels once seen in years past.  Most notably, the overall velocity of sales over this time period has decreased considerably from years prior throughout most of the resort areas of Mexico, including Los Cabos, Puerto Vallarta and Cancun/Riviera Maya region.

Local developers, realtors and buyers who have typically shunned cross-border Mexico mortgage financing in the past are now beginning to embrace it.  Several reasons have forced these groups to take a second look.  From the realtor and developer side, financing options are one of the few tactics which help bolster sales in a slower market without sacrificing profitability.  This could not have been more apparent in the U.S. real estate boom over the last decade and, as in the U.S., the availability of mortgage financing should translate into more sales in Mexico.  The main reason for this is a simple finance principle; leverage provides buyers with greater purchasing power and greater returns. With sales volume still depressed as the busy season approaches, realtors and developers are looking to push financing options as a tactic to increase sales.  After all, pushing financing is far better for their bottom line than other popular tactics such as offering developer incentive or lowering prices.

From the buyer’s perspective, the attractiveness of mortgage financing goes even deeper.  The recent U.S. downturn and uncertainty from the upcoming U.S. presidential election have drastically eroded U.S. consumer confidence, making U.S. buyers more cautious. Intuition would suggest that a more cautious buyer prefers to lever up larger purchases in order to hold cash and maximize liquidity in the unlikely event it is needed.  Further, the U.S. home equity line, which historically has been tapped by the cross-border Mexico real estate buyer, has become more difficult and expensive to obtain.  And rising interest rates on U.S. mortgages in addition to the elimination of certain types of loan documentation in the U.S. (stated and Alt-A) have made cross-border Mexico mortgage financing look more attractive than in years prior.  Lastly, many potential buyers who have put large deposits on a Mexico property or have been seeking a Mexico property for some time are becoming more stretched financially due to underperforming investments and lower household income, all effects of the U.S. downturn. Often these buyers need additional help to secure their retirement, vacation, or investment property in Mexico and are likely to now turn towards a Mexico mortgage loan. All these scenarios have translated into U.S. buyers looking more favorably at cross-border Mexico mortgage financing. 

Demand stemming from the changing U.S. economic climate is not the only reason for buyers and industry players to recently turn to Mexico mortgage loans for their Mexico real estate purchases. Once plagued with negative media attention as the result of (i) numerous Americans and Canadians losing their real estate properties in the late 90’s, (ii) misconceptions regarding whether foreigners are legally allowed to own property (they can – see inset), and (iii) the fallout out of a couple cross-border Mexico lenders as well as the inability for some lenders and mortgage brokers to effectively close loans, the cross border Mexico mortgage loan market is finally seeing significant changes that have been ignited by greater demand.

Several positive changes have already been executed and continue to be underway in the cross-border Mexico mortgage industry.  A broader array of financing options is now available, thanks to new lenders entering the market, including Deutsche Bank and Lehman Brothers.  Additionally, mortgage brokers such as ConfiCasa Mortgage International (www.conficasamortgage.com) have implemented smoother loan processes with better communication, greater transparency and faster closing timelines. A smoother process has resulted from several years of experience for the earliest entrants like ConfiCasa, who continue to focus on implementing ways to create a financing process that more closely mirrors that of the U.S. and Canada.

With so many more heads turning towards cross-border Mexico mortgage financing, the industry is finally looking to shed its roller-coaster like past and seem more like a smooth and predictable merry-go-round.  And that is becoming a silver lining for everyone!

Boxed Inset 

Many Americans and Canadians have a common misconception that it is illegal for foreigners to own property in Mexico because of article 27.1 of the Mexican constitution, which prohibits foreigners from acquiring direct ownership of lands or waters within a zone of approximately 66 miles from a foreign border or approximately 33 miles form a coast, known as the “restricted zone”.  However, in 1993, Mexico adopted the Foreign Investment Law (FIL), which amends article 27.1, allowing foreigners to own residential property in the “restricted zone” exclusively through a “Fideicomiso”.  A Fideicomiso, (which continues to be one of the most commonly misunderstood legal instruments in residential real estate), is a trust agreement where a bank serves as a trustee, and has a fiduciary obligation to the buyer, or “beneficiary”. The beneficiary of the trust (the buyer) retains and enjoys full rights of ownership of the property, including the right to use, mortgage, lease, modify, and sell the property as desired. Despite the beneficiary of the trust having the same absolute rights as if owned directly (fee simple) in the United States and Canada, the indirect ownership (trust) structure, renewable every 50 years,  naturally confuses most buyers and unfortunately results in the common misconception that foreigners are prohibited from owning a piece of the Mexican dream.

Matthew Miller is the President and CEO of Conficasa Mortgage International, LLC a cross-border Mexico mortgage company specializing in financing Mexican properties for Americans and Canadians. You can contact him at mmiller@conficasamortgage.com or through the Company’s website at www.conficasamortgage.com.

One of the first things I counsel people about when they contact me about their desire to move to Mexico is that they need to make damn sure they know what they are getting in to. They usually know about the many benefits of living in a paradise for up to one-half the cost and the the interesting culture where people mostly practice the live-and-let-live philosophy. What many don’t consider sufficiently is how they will adjust to being a minority, or how much they will miss home, or what it’s like to change shirts three times a day when the humidity hits.

I always advise people to rent a place for several months before moving their stuff down. Many find that six months is a good experience, but the American life of the 21st century is where they are most comfortable. The corner convenience store open 24/7, local TV news blandly covering the latest house fire…the security of the familiar. But once they decision has been made, and they decide to go for it, the more minute decisions are considered. And one of the most important is what do you take and how do you get it there? The best advice is to move the stuff that you abolutely need but not everything you think you want. If you have a large house to fill you might want to move some beds and some furniture, but keep in mind that Mexico makes beautiful furniture that is going to be more practical than the Early American set that you purchased three decades ago. In very humid areas of Mexico you will want wood pieces that do well in that environment, and you don’t want things that rust easily if you are near the coast. You will want to take your computer equiptment and some other electronics, but you never know for sure what mood the custom inspector will be in…they have been known to supplement their incomes while haggling these issues. And you, the harried traveler, are not in a good negotiating position, as you just want to be on your way.

Which brings us to what I believe is a good solution: hire someone who knows what they are doing to move your goods for you. One such company, based in San Miguel de Allende, is SanMiguelMoving.com http://www.sanmiguelmoving.com/. They use a 26 foot trailer and will move you anywhere in Mexico. Prices generally run in the $4,000 - $12,000 range, depending on where and how much. They have a quote form on their web site and you can email them direct at SanMiguelMoving@gmail.com . The also offer auto delivery if you just want to fly in but have your car when you arrive.

Moving to another country is a big deal, and will stress you considerably at the beginning. You can lessen the physically hard part of it by contracting out to people who are experienced.

Working in Mexico is not easy for foreigners. Unless you are sponsored by a company based in Mexico you are prohibited from being employed as long as a Mexican can do the same job. Of course, there are exceptions. You can always find gringos selling condo timeshares in Cabo, PV and Cancun, and others find ways to work under the radar, hoping they don’t get caught. If/when they do get caught they are often expelled from the country and may have a hard time gaining entry again for some time. Generally, if you own a business you can work that business, but may even be limited there in what duties you can perform.

Now that you know you probably can’t work in Mexico, I’m going to tell you that you can. This web site http://www.esljobs.com/mexico/tesltefl-in-mexico-2/ contains a constant stream of jobs teaching English in Mexico. I counted 20 job opportunities that have been posted in just the last 2 months. Some only pay $600 - 700 a month or so, including room and board, but a Mexico City job pays $1400 plus housing and a food allowance. Speaking Spanish is generally not required, and is seen as a negative in some cases.

This is a great way to spend a year. You won’t get wealthy, but you will be enriched. Guaranteed.

It has been well-documented that the 20th century was America’s century. Or at least it has been since the end of WWII, about the time the first wave of boomers were born. We began the year 2000 as the lone super power with an economy that was the envy of the world. But there were cracks in the foundation and the past eight years have seen these cracks morph into rapidly expanding sinkholes. And there aren’t enough life-jackets to save everyone.

With a disasterous, unlawful war that is eating up $3 billion per week, our unfunded goverment obligations now total some $57.3 trillion, or about $500,000 per household. Now consider, the average household net worth is about $70,000. I’m no math genius, but how do you get the money to pay the bills? The typical American household is broke and in debt. Eventually, these numbers come home to roost and when it does America will not be the same place as it was when we grew up. Indeed, it is not now. Our country is in decline at the time that many of us are about to retire. Much of the world is catching up and there’s only so much to go around.

The oil producing countries, with the tacit approval of some in our government, have been orchestrating the largest transfer of wealth in the history of the world, from oil-users to oil-owners. At the start of the war a barrel of oil was $24.00, now it is heading towards $200.00. A gallon of gas will soon be $5.00. George Bush has just returned from Saudi Arabia, where he reportedly asked his old business friends for a price break. They told him to pound sand. Do you feel a shift in power here? Yeah, me too.

Let’s face it, most Americans are going to have to change their lifestyles and priorities in the next few years, if not right away. You better start making long term plans now. You can hunker down and hope for the best, or you can lift your head and look farther down the road, the road heading south, and find an area of Mexico that you think you might enjoy. Whatever money you have will go 30-100% farther in Mexico, depending on where you live and what your requirements are. Start your search now, or prepare for a life you had not imagined.

Yes, I believe that America will someday rebound from the pendulum swing. But it will take time, maybe a few decades, and some of us don’t have that much time left.

There was a recent Wall Street Journal story describing the number of boomers who are now borrowing money to live day-to-day. The content of the story isn’t as suprising as that it was in the WSJ, a once-reliable publication now owned by far right-wing idiot, Rupert Murdoch. They usually don’t report bad news under GOP leadership.

The AARP study reveals that one in 10 middle-aged and older Americans are borrowing money to pay their bills and to help out family members who need financial help. With spiraling gas and food prices this is a trend that is sure to worsen. Virtually everyone around my age that I personally know is worse off than they have been for years, and I’m talking about mostly professionals with higher educations. And do you know what they are asking me? “Tell me more about moving to Mexico. We need to find a way to live well on the money we have left.” I live in San Diego, a pretty conservative town, and many of my friends vote Republican. But most of them are voting for Obama in November because they are seeing the results of three decades of policies that have benefitted corporate America instead of its citizens. But just as is took many years to get to where we are, it will take many more to fix the problems that got us here. And that’s why they ask about Mexico: they want to live well for less money…now.

So, I tell them what I know to be true. I tell them that they have bought all the toys, eaten at all the restaurants, taken the cruises and the Vegas runs, and look where they are. Those things were fun, but think back about your life. When were you truly the happiest? Usually they will admit to a time in life when they didn’t have the money to buy all the toys, take all the cruises. A time when contentment was a walk on the beach or the woods, a good conversation, changing diapers and quiet evenings with the family. And I tell them that that life can be recaptured, and I tell them about Mexico.

Everyone who thinks about, or actually does, move to Mexico has their own personal reasons. The list is long and varied, but a factor on everyone’s list is the appeal of the lifestyle that Mexico offers. By that I mean the slow, uncomplicated pace of every day living where you know your neighbors, the local shopkeepers, cops and community honchos. Where there are not strip malls on every corner that look the same in Los Angeles as they do in Atlanta. Where houses are built to live in, not to impress, with 2,000 more square feet than you need. Where you can walk to buy most everything you require, often without driving your car (if you even own one) for several days. It’s just a different life than we have in the U.S., and once you experience it, you’ll never want to return to the mind-numbing, ulcer-causing treadmill in el norte.

Maybe.

Because here’s what I see way too often: some people are so wired and conditioned into Americana burnout that they can’t slow down and adapt to the Mexico tempo - and so they try to change the place they have escaped to. You see it in the expat havens that have become so popular, especially around Lake Chapala and the once idyllic beach towns like Sayulita in Nayarit and Playa del Carmen on the Mexican Riviera. They come, settle in, and then the complaints start. “We need to control the dogs in this neighborhood!”, “I’m goint to to buy a few lots, tear down some jungle, and build spec homes”, “Doesn’t anyone speak English around here?”, “Whaddya mean the maid wants more than $5.00 to clean the house?”…it goes on and on. These people, and their numbers are not small, try to turn their new home into the crappy place that they left. They act like they friggin’ own the place, and it creates a resentment amongst the locals that poisons the relationshp for everyone else. They think that because they have lighter skin they are superior.

So I’m asking you, think very hard about whether you have the right personality to live in Mexico. Before you make a permanent move, rent a place for at least 6 months and try it on. Check your temper and anxiety when you try to get something done and it’s not like it was back home in HeartAttack, CA. Can you handle it? Can you mellow-out and just appreciate a different culture without trying to change it? If not, please…stay home. You’ll only frustrate yourself and piss off everyone else.

I don’t know if you’ve noticed, but the United States has changed a lot in the past 30 years, and I’m not talking about the ubiquitous presence of everyman computers and super-sized cheeseburgers. I make no apologies for my feelings…I’m a boomer who grew up in a better time, and I don’t like what has happened. Quite simply, there has been a  covert war waged by the mega-corporate-class against We The People, and big business has won.

Maybe we can reverse course and return to being the country we were for 200 years, but it will take some time, decades, and people my age may not be around to see it happen. So we boomers need to figure out how to live our next 20 - 30 years in a way that we had envisioned, in an environment where a sense of community prevails, where a catastophic illness won’t bankrupt us, where our neighbors don’t live their lives in irrational fear of…whatever the government tells us is fearful. Yeah, we got hit by a criminal group of box-cutter weilding fanatics, but the way we have reacted as individuals, so unlike Pearl Harbor, has produced a society where we are now one or two more attacks away from martial law. Indeed, most Americans will demand it if that happens. They will agree to anything, including relinquishing their previously non-negotiable civil liberties, for the right to mindlessly stare at their TV’s every night, behind bolted doors, secure  and accepting of the new America. But it can’t happen here? Ha…don’t bet on it.

Back to what to do…where do you find a place to live the life you thought you would have before the disappearing pensions and unaffordable health care? I will be spending the next few months writing in this blog, explaining to anyone who will listen  what has happened in the United States and why moving to Mexico is your best option. There are probably other countries that would be as good, but Mexico is the place I know best. I have been traveling and sometimes living in Mexico for 40 years (I’m 58). I have seen pretty much the entire country, north to south, east to west. I know the challenges and the benefits of trying life south of the border. Keep checking in at this web site and pass it on to others who might benefit. And for those who will email me with accusations of being unpatriotic and a quitter, save the energy. I still vote, write to my representatives, and donate money to causes I support. And you should, too. I want my country, the U.S., to be  a better country than it has become. Choosing to live in Mexico does not mean relinquishing your duties as a citizen. It is an option to live a better life…it will take my kids’ generation (they are 13 and 9) to turn things around.

In one of the least surprising news stories of the day, the U.S. Department of Homeland Security and the State Department announced that it will be another year (June 2009) before the new ID requirement takes affect for border crossers. They must be a little backed up working on that border fence that will never get built, or perhaps brainstorming something akin to having all plane passengers remove their shoes before boarding. That one was inspired genius.

 Evidently there is something called the Western Hemisphere Travel Initiative (rumors of Dr. Strangelove being involved are highly exaggerated), that, when fully enacted, will make us all a lot safer…or is it paranoid? I wonder if the delay has anything to do with the timing of the  presidential election next fall. You know, not wanting one more inconvenience to be layed on the $3.50 a gallon voting public shortly before going to the polls. No, that would be way too cynical a thought. Forget I said that.

(Land of Monuments and Chicken Feet)

by Richard Kiser
This is the second of a three-part series on a cruise to Cabo San Lucas, Mazatlan and Puerto Vallarta.
 Welcome to Mazatlan. Step out to the veranda and take a deep breath -pure Mexico fills the lungs. Your eyes are greeted by an industrial marina and the worker ants are very busy. Time to set out on our next adventure. In order to get to the main gate for cruise passengers you must first hop on a little trolley that winds it’s way through cargo containers and moving forklifts –sort of like a mechanized bull fight with steroids involved. We were dropped off in front of the exit and moved through the building that contains every Mexican trinket you can think of. Exiting the building we were greeted by the entire Mexican tourist bureau. Tip #1- I suggest to everyone who is going to hire a taxi for the day to make sure your driver speaks English well, maybe have some questions in mind to force them to demonstrate their English ability. What we found was when it comes to negotiating a price for the day where money is involved they all speak perfect English. Enter Henry. While we are talking money, this guy does everything but quote Shakespeare to demonstrate his command of the language. We hire him for $60 for the day. We climb into his open air taxi and are set to go, just one thing, we are parked in. As he tries to extricate the taxi I am thinking about Austin Powers, one inch forward, one inch back repeat 20 times. As we pull out he mumbles something about his English no being so good—whatever. We’re off! We wind our way through the marina district headed to the hills and beautiful coastal views that only mainland Mexico has to offer.  Travel tip #2 - take 2 cameras, extra batteries and memory sticks.  Within 5 photos, Laura’s camera craps out, my camera runs out of memory and that sinking feeling takes place. Luckily, our cameras use the same memory and disaster is averted.  This part of the tour is where no buses will take you, hillside homes, narrow and hilly streets with great views of the ocean and the city of Mazatlan. If you take this route you will see many homes under construction and you realize they definitely have different building codes than the U.S. and from this moment on we were not entering a multi-story structure. Here come the monuments. We leave the hills and head north along the coast. This stretch is marked with a monument every 20 feet. (Small exaggeration)  Henry drops us off in front of cliff divers just getting ready to perform. I have just enough time to snap a photo of the diver platform and I catch the diver in midair, perfect. We wander a little bit and find a monument to a mermaid and her child, this is a serendipitous moment as Laura has brought Dominic with us in the hopes of leaving a little bit of him behind in beautiful and meaningful places. (Dominic passed away the previous week). We continue viewing coastal monuments from motorcycle policeman to beer making, the only one I thought was missing was a bronze of the Frito Bandito, more on this later. Off to downtown. Downtown Mazatlan is alive. Narrow streets, beautiful buildings that give you a feeling of Europe and traffic congestion to complete the feel. Henry drops us off and we head to the Mexican version of Wal-Mart. The market is a block size building containing 30 stands that sell exactly the same tourist stuff but also fresh produce you will never see in the states, and the best part, meat stands featuring pig heads, assorted entrails, and of course chicken feet. We did look for iguana on a stick but had no luck. So instead we watched the little “Mexican Deli’s” located through out the market. Now remember, there is no FDA in Mexico and we have already viewed the slicing, dicing and handling of meat and poultry without  the sanitary standards we take for granted -time to eat. We found a stand with several locals and decided to take the plunge. We ordered and while waiting watched the locals to gain the proper application of condiments to our food. Mission accomplished and no one got sick. Next stop Forte de Mazatlan. Heading north, across from the El Cid resort hotel is a private country club and armed guards. This area is where the Mexican Mafia along with Americans and Canadians choose to live. Why? Remember the Frito Bandito? Kidnappings happen every day in this area of Mexico. The homes in this area go from about 350K upwards. Nice setting, golf, tennis, pool and spa.  We stop at the club house and have a margarita while watching some tennis. Tip #3. Just pretend you belong. Off to find another special place for Dominic. 

About a mile north is the gold zone. This area is way developed and has several ocean front palapas. Henry takes us to the first spot - an ocean front restaurant that he has a deal with. We reject it and after 3 u-turns and a couple of miles, accept it. Great lunch, great margaritas, and the music playing was the Mexican version of “I did it my way”. This was played at Dominic’s life celebration and it was only natural for Dominic to also rest here. A small sprinkle of eternal life and love and it’s time to head back to the ship. I wonder what’s for dinner?

 Now most of us don’t want to be rude. After all, the beach hawkers work very hard and make very little. It’s good, honest work (the part about the drugs is actually rare) and they deserve your respect and kindness. But what you really want is to just be left alone to chill with your numb thoughts. So, how do you handle this without being a crass jerk? First, learn these three words of Spanish ” no gracias, amigo (a)”. Say this in a friendly manner, but with no equivocation. And above all, do not so much as glance at their merchandise, unless, of course, you really are in a buying mood. Then you are likely to barter a good price compared to the shops, as there is no storefront overhead for the seller. Once you show any degree of interest you have opened a door that will not easily close. If you can’t remember the three words, gaze straight ahead and simply shake your head. Generally, the same people work the same beach day after day and they all know one another. Eventually, it will be known that you are not a buyer and will be left alone, more or less.

In town it’s the time-share people who you encounter. It varies from beach town to town, but generally they have a small booth on the sidewalk. They might employ a “hook” to entice you, like “free information” or “$25.00 jeep rental”, and like all successful vultures, they can spot you  two blocks away. You, the savvy traveler, have a couple of workable options. One, when you see you are approaching  a sales booth, cross the street. Of course, you could spend way too much time doing this and it increases your chances of getting run over and badly maimed. A better method is to look and act like a local. If they perceive this they will leave you alone. This means walking with a purpose, like you know where you’re going, even though you have no clue. Lose the bright new t-shirt that advertises the local cantina and the straw hat with the multi-colored headband. Try to have tanned legs and arms. If they still come on to you, and you feel obligated to repsond, just say “I live here”. They’ll probably know you’re lying, but they won’t push the conversation.

Then, when you actually move to magical Mexico and find that time-share sales are one of your only employment opportunities, you will despise people like me who share their dubious wisdom.