GF Banorte opens US$460mn credit line to Sofoles

Mexican financial group Grupo Financiero Banorte has opened credit lines for 4.75bn pesos (US$460mn today) to eight limited lending institutions, known locally as Sofoles, with guarantees from federal mortgage bank Sociedad Hipotecaria Federal (SHF), local daily Reforma reported. Sofoles must have a credit rating of BBB to qualify for GF Banorte loans. SHF has traditionally made direct loans representing over 90% of the funding to the 14 Sofoles that specialize in mortgage loans. Banks have been slow to return to the mortgage business since the 1995 Tequila Crisis. In 2002, banks and other private sector lenders (except Sofoles) were responsible for only 8.2% of the 394,867 home loans that year. Market observers believe recently passed legislation that makes it easier for creditors to foreclose on the property of delinquent borrowers should provide an incentive for banks to re-enter the home loan market. The administration of President Vicente Fox wants to see the public and private sectors financing 750,000 home purchases a year by 2006, almost double the number of homes bought at the start of his six-year term in 2000.