Financing The Dream Of Global Homeownership
In this interview, Alex talks about:
- Avoiding bad advice & who to trust
- How the finance process works for U.S. Citizens in Mexico
- How MoXi works with it's borrowers from start to finish, and then some!
- How our 72-hour approval process works
- Fixed term options that are serviced in USD
Alex Koper, CEO:
We often say that our clients become part of our global family. And that is really evident when you look at the number of repeat clients and the number of clients that come back to us for second, third, and fourth transactions, they really appreciate the thoughtful guidance that we offer as well as the actual mortgage solutions that we give on a regular basis. So, it's really wonderful to see our MoXi (Global Mortgage) family grow and to see clients do multiple transactions with us over time.
Mexico and Latin America in general is such an incredible place to visit, but also to own a home. And historically speaking, foreigners really didn't have the opportunity to make Mexico and other countries in Latin America truly a home, either a second home, an investment property, or a primary residence. And now we take the responsibility of creating that possibility very, very seriously. With MoXi (Global Mortgage), foreigners now have the option to call Mexico and other parts of Latin America home.
We often hear about situations and circumstances where foreign buyers will come into a foreign country and begin a real estate purchase transaction and really work with or assume advice from maybe an attorney that they don't know or from a real estate broker who doesn't have proper licenses. And if you talk to one of our MoXi (Global Mortgage) advisors who interact with clients and prospective clients daily, you'll hear prospective clients often ask them, well, why do I need an appraisal, title search, and title insurance? And what we all often say back to that prospective client is, would you ever consider purchasing a home in the United States without a title search, without title insurance, or without a commercial appraisal? And unfortunately, a large majority of real estate transactions that close by foreigners in Mexico without the assistance of MoXi (Global Mortgage) are done without some of these very basic no-brainers.
What's interesting is that in nearly 40% of the transactions that we are a part of, we find that there are issues with the title, meaning the seller who's selling the property to the buyer that Global is representing doesn't have the legal capacity to actually sell that asset that they thought that they owned because it wasn't done properly before. And in nearly 33% of the transactions we do, and we've done tens of millions of dollars of transactions, we have an issue with either transfer tax, reverse capital gains tax, or capital gains tax on behalf of the seller. And these are not small amounts, tens of thousands of dollars that are assessed at settlement. And these are just a couple of areas where if a foreign buyer is not represented by somebody that knows what they're doing, they're going to end up having some very expensive mistakes.
One of the most powerful examples I want to share with anyone watching this video right now is that we often see an act of transactions, sellers of property who don't really own it because they didn't buy it in the right way, and they tried to save a buck or a peso in actually closing their transaction. And then we see buyers who choose to forego buying title insurance or having a legal title search done, or having their property appraised. And so MoXi (Global Mortgage) and its team takes our responsibility to educate and provide thoughtful guidance around secure ownership. We take that very, very seriously and we're committed to it.
One of the most powerful legal entities in the MoXi (Global Mortgage) structure is what's called a SOFOM, which is truly a non-bank financial institution that's regulated and audited that's important for a foreign buyer of Mexico real estate in particular because it means that you have the safety, the security, the backing of the Mexican government behind your transaction. You have capable people who pass background checks and who have a specified number of years of work experience before they're allowed to work in a SOFOM who are regularly audited. And that is a level of peace of mind that does not exist for other cross-border lenders in Mexico or in Latin America across the board.
If you're buying a home in the United States and getting a mortgage, you might interact with your mortgage company on and off consistently throughout the process of your escrow. And then you might never interact with them again other than receiving a statement in the mail or setting up an automatic payment. And that's very different for MoXi (Global Mortgage) and its clients. Not only does the SOFOM require the MoXi (Global Mortgage) to maintain a connection with their client for the life of that transaction, we're also our clients' partners in helping them navigate some of the nuances of homeownership in Mexico. For example, municipalities often don't send out paper or electronic property tax bills, property tax rates are announced at random times usually in the fourth quarter of each year, and discounts are offered for early payment. We track all of those things for our clients.
We collect through the monthly mortgage coupon and servicing some of those property taxes and make sure they're paid on time. The use of a Fideicomiso to own property as a foreigner in a restricted zone in Mexico comes with an annual fee through a fiduciary bank. And that fiduciary bank also doesn't send out a paper bill or a notification MoXi (Global Mortgage) ensures that we're collecting those funds from our clients on a monthly basis, make sure those bills get paid on time and that the property ownership remains with the client, with the buyer and is never threatened.
I'm proud of the team that we've assembled at MoXi (Global Mortgage). Our team combined has over 200 years of international lending experience, which really is there to serve our client's best interest. The team is set up very similar to a mortgage company you might expect to see in the United States with the exception of we have an entirely built out very seasoned group of legal enclosing. So we actually have attorneys on staff who have years and years of experience in combing through documents on behalf of our clients, in some cases, thousands of pages of documents, all in Spanish, just so that we can ensure that the lien is perfected and that our client as they're entering into this purchase transaction for hundreds of thousands or millions of dollars actually is going to own the asset that they're buying.
We have an operating principle or a regular saying that we talk about at MoXi (Global Mortgage) all the time. And that is that homeownership in Mexico should be exotic, and your mortgage should not. And further, we often talk about how our mortgages are boring, and frankly, to any client or prospective client that's looking for a mortgage and it seems a little bit exotic, you should be very worried about that. Run far away.
We're proud of the fact that we offer a 72-hour promise with a full and complete application and a set of income and asset documents. We will issue a firm credit decision within 72 business hours or less, empowering people to go out and confidently shop for their dream home and/or also empowering folks that already own homes and are seeking to get liquidity out of them or to get out of a mortgage that has a large balloon payment, giving them that peace of mind very, very quickly.
From there, once we have a property contract uploaded in a purchase transaction, we have an initial credit decision call and this is where the mortgage advisor joins the MoXi (Global Mortgage) Client Concierge, who will be the two primary points of contact for our client throughout the remainder of the transaction on a call walk through next steps with respect to the property itself. So ordering an appraisal and a title search, getting government certificates to ensure that there is no debt associated with the property that the buyer might inherit.
From there, those reports and documents are actually ordered, funds are collected by MoXi (Global Mortgage) to pay for some of the third party vendors. And then when those documents come back, they're reviewed thoroughly, our in-house legal counsel and in-house legal team, that's the public deed or the Escritura carefully and reviews all of the history of that particular property, subject property, to ensure that everything is in order. And our closing attorneys begin working closely with a Notario to ensure that the proyecto or the project, the plan for the closing begins and goes off without a hitch.
In a purchase transaction, our closing attorneys work closely with the seller of the property as well in order to comply with Mexican law and a number of requirements about KYC or know your customer. And from there, we arrive at a signing appointment with a set of error-free documents that are ready for all parties to sign in order to transfer the legal ownership and in order to secure and perfect MoXi (Global Mortgage)'s mortgage lien against the property. Immediately prior of the actual signing appointment, our closing team, along with the MoXi (Global Mortgage) Client Concierge and mortgage advisor will invite the client to do a pre-close closing, where the client has an opportunity to review every single piece of documentation that they will see in front of them. The following day, ask questions as much as they would like, to get answers, understand what the process looks like, not only for the closing appointment, but into the future and how servicing is handled, how payments are collected and how payments are remitted to vendors over the life of the loan.
So we really have taken a relatively complex process and turned it into digestible chunks where it really gets fun and interesting as we take one step in front of the other. Foreigners that look for financing to buy property in Mexico are often met with options that are less than ideal, very different than those that MoXi (Global Mortgage) offers to foreign buyers.
At MoXi (Global Mortgage), all our loans are made in US dollars. They're serviced in US dollars. Our interest rates are fixed and we offer flexible term lengths of 15, 20, or 25 years. We have no balloon payment. The alternative on the marketplace is either a loan not made in US dollars that has an escalating payment or escalating interest rate for some reason, has a life insurance requirement where the lender must be listed as the death beneficiary, as well as developer financing with large balloon payments after three, four or five years. So imagine moving into your dream home in Mexico or buying your dream home in Mexico and then consistently and constantly being nervous about this large balloon payment due in 36 months. We don't like that, our clients don't like that. And so we don't operate that way.
Did you know that MoXi funds & services loans in USD, is regulated and audited in the US & Mexico, and ensures compliance throughout the term of your loan?