Mortgage lenders see opportunity beyond the border

The cold domestic housing and mortgage markets have lenders looking for warmer possibilities, and a few are spending more efforts to finance Americans who choose to purchase primary residences and second homes south of the border.

Lehman Brothers Resort Home Lending will enter the market in a big way, offering mortgage packages this year in Mexico, Costa Rica, the Bahamas, the Dominican Republic, Panama, Canada and the United Kingdom.

The programs, featuring one-, three-, five- and 10-year adjustable-rate mortgages amortized over 30 years will be available to U.S. borrowers in Mexico, Costa Rica and the Bahamas beginning June 21, said Dan Bryant, former director of GMAC International Mortgage and now senior vice president for Lehman Brothers Resort Home Lending. Lehman plans to enter markets in Canada, the United Kingdom, Panama and the Dominican Republic in September.

GMAC was the first national lender to introduce a 30-year, fixed-rate product south of the border but pulled out of Mexico late last summer when the U.S. mortgage market meltdown began to influence international partner companies. Lehman Brothers purchased some of GMAC’s Mexico back-office operation late last year.

“There’s a lot of work ahead of us but the opportunity is very exciting,” Bryant said. “There are so many things that are different in how loans are done in Mexico and other countries, yet we plan to give our customers an excellent experience.”

Wachovia Bank also has launched a program that enables the bank to purchase vacation home loans made in Mexico. The vacation home origination process is designed to look and feel like the loan origination practices in the United States, according to Wachovia.

“Having the support of a successful U.S. bank like Wachovia really speaks to the strength of the vacation home market in Mexico,” said Joe Schneider, project administrator for Cascadas de Manzanillo, a 530-acre planned-unit development on Santiago Bay just north of Manzanillo, Mexico.

How have Americans financed second homes outside the United States? Traditionally, it was get out your line-of-credit checkbook, add any savings you could muster and then pray that the seller would “carry the paper” until you found another way to refinance the balance.

Bryant said the firm will scrutinize builders and developments in specific destinations. For example, Lehman Brothers will focus on waterfront and view communities in Mexico’s Riviera Maya, Los Cabos and Puerto Vallarta.

Underfunded projects and unscrupulous developers in popular drive-in areas such as Puerto Penasco at the northern most point of the Sea of Cortes, and at a few oceanfront buildings on the northern Baja Peninsula have prompted lenders to spend more time on analysis and research before electing to approve permanent financing.

Anaheim, California-based World Wide Lending, LLC (, which plans 20 locations in Mexico, has begun to list its approved developments on its Web site. It plans to utilize a broker network throughout Mexico, while Lehman Brothers will have retail sales relationships inside each approved development.

Chris Stopp, a broker for Sacramento-based MexUs Capital, said his goal is to provide a menu of attractive loans not only second-home recreational buyers but also for retirees and sophisticated investors. “The variety of people coming to Mexico to live part-time or full-time continues to increase and their needs are different,” Stopp said. “We want to offer them an American transaction in a development they will enjoy for a long time.”

Interest rates on Mexican loans are higher — about 2 full percentage points — than those in the States because there has been no competition in the secondary mortgage markets, nor has the with Wall Street capital markets been willing 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.

The Canadian offerings could provide an attractive option, especially with the 2010 Olympic Games in Vancouver, B.C., just around the corner. Retirees and aging baby boomers “from the states” are drawn to Canada for its wonderful skiing, health care, bargain medicine, terrific sailing and clean air, but the number of second-home buyers and older full-time residents has not been as attractive to lenders as the pool of thousands of snowbirds who head south to Mexico and Latin America.

Americans can borrow from Canadian banks and vice versa. But trying to finance Canadian property with U.S. funds becomes difficult. Location, security in the property and the ability to enforce repayment simply make the package unattractive to most U.S. lenders.

Lehman Brothers is willing to gamble that it can make cross-border lending work, and that the number of Americans buying in Canada — and elsewhere — will continue to rise.

E-mail Kelly at

Talk to us

More in Herald Business Journal

FILE - In this file photo dated Monday, March 11, 2019, rescuers work at the scene of an Ethiopian Airlines plane crash south of Addis Ababa, Ethiopia.  The number of deaths in major air crashes around the globe fell by more than half in 2019 according to a report released Wednesday Jan. 1, 2020, by the aviation consultancy To70, revealing the worst crash for the year was an Ethiopian Airlines Boeing 737 MAX on March 10 that lost 157 lives. (AP Photo/Mulugeta Ayene, FILE)
Former Boeing test pilot pleads not guilty in 737 Max case

He’s the first person to be charged with a crime in connection with the Indonesia and Ethiopia crashes.

Top (L-R): Kim Daughtry, Steve Ewing. Bottom (L-R): Gary Petershagen, Marcus Tageant.
Developers court Lake Stevens council incumbents with over $20K

Over half of the campaign dollars for four candidates came from people tied to real estate or property development.

Traffic drives in view of a massive Boeing Co. production plant, where images of jets decorate the hangar doors, Friday, April 23, 2021, in Everett, Wash. (AP Photo/Elaine Thompson)
Boeing says workers must get the COVID vaccine by Dec. 8

“Compliance with these requirements is a condition of employment,” says an internal company presentation.

FILE - In this March 14, 2019 file photo, Ethiopian relatives of crash victims mourn at the scene where the Ethiopian Airlines Boeing 737 Max 8 crashed shortly after takeoff killing all 157 on board, near Bishoftu, south-east of Addis Ababa, in Ethiopia. Relatives of some of the passengers who died in the crash will mark the two-year anniversary of the disaster on Wednesday, March 10, 2021, by seeking a reversal of government orders that let Boeing 737 Max jets fly again.  (AP Photo/Mulugeta Ayene, File)
Boeing pilot involved in Max testing is indicted in Texas

He’s accused of giving the FAA false information about systems that played a role in two deadly crashes.

A handful of Northwest Union Carpenter members picket in front of the new Marysville civic center construction site on the sixth day of a region wide union carpenter strike on Wednesday, Sept. 22, 2021 in Marysville, Wa. (Olivia Vanni / The Herald)
Carpenters strike ends with new contract and a $10 raise

Roughly 500 union members were working on projects in Snohomish County. It was among the largest strikes in 18 years.

The Boeing 737 Max 10 airplane landing at Boeing Field in Seattle on June 18. (Chona Kasinger / Bloomberg)
Boeing ramps up 737 Max but 787 deliveries are still blocked

Boeing last month maintained its steady trickle of sales as it navigates the aviation downturn.

FILE - In this March 20, 2020, file photo, the Amazon campus outside the company headquarters in Seattle sits nearly deserted on an otherwise sunny and warm afternoon. Amazon said Monday, Oct. 11, 2021 it will allow many tech and corporate workers to continue working remotely indefinitely, as long as they can commute to the office when necessary. (AP Photo/Elaine Thompson, File)
Amazon to allow employees to work remotely indefinitely

Although most cannot work remotely because their duties include grabbing orders and delivering them.

With new owners demanding the Grand Apartments' longtime residents leave, Stephen Teixeira, 52, documents issues at the Rockefeller Avenue building, on Thursday, Oct. 7, 2021 in Everett, Washington.  (Andy Bronson / The Herald)
Life at the Grand Apartments in Everett is now a ‘nightmare’

Longtime residents say the new owner, an investment company, is trying to bully them out of the building.

Bob Martin, 80, owner of the The Stag Barber and Styling in Snohomish. (Andrea Brown / The Herald)
$90,000 fine doesn’t stop defiant Snohomish barber

Bob Martin appealed a state penalty for ignoring coronavirus rules and lost. It has not cut into his business.

A handful of Northwest Union Carpenter members picket in front of the new Marysville civic center construction site on the sixth day of a region wide union carpenter strike on Wednesday, Sept. 22, 2021 in Marysville, Wa. (Olivia Vanni / The Herald)
Carpenters union strikes a deal, and members are set to vote

Workers are back on the job with a tentative agreement that includes a 15.43% raise over three years.

Ryan Welch, a produce clerk, restocks grapes at the Sno-Isle Food Co-op on Friday, Sept. 17, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Everett’s Sno-Isle Food Co-op approaches its 25th anniversary

The enterprise hopes to add more square footage and more classroom space to the store on Grand Avenue.

Jeff Wagner and son Casey Wagner at their store, Wagner Jewelers, on Friday, Sept. 24, 2021 in Marysville, Wa. (Olivia Vanni / The Herald)
After 41 years, Wagner Jewelers in Marysville still shines

When the Wagner brothers opened it in 1981, they were the only game in a pretty small town.