Thursday, June 21, 2007

Scotiabank Mexico to Co-Finance Homes for Government Workers

Dow Jones Newswires, Anthony Harrup, 21 June 2007

The Mexican unit of the Bank of Nova Scotia, Grupo Scotiabank, signed an agreement Thursday with the State Workers Social Security Institute, or Issste, to co-finance mortgages for government employees.

The program is similar to one implemented by Infonavit, the government-run mortgage fund for private-sector workers, where employees can use funds accumulated in their housing accounts as down payments on home loans.

Ricardo Garcia, head of mortgage lending at Grupo Scotiabank, said in a telephone interview that the bank expects to grant about 2,500 mortgages in the first year under the agreement, which includes two programs.

Under one program, for homes valued up to about $95,000, workers would provide the down payment and a loan from Fovissste, with Scotiabank financing the rest.

A second program has no upper limit, and would include the down payment with the bank financing the rest. Those mortgages could also be for up to 100%, Garcia said, adding that the program opens up greater possibilities for middle- and higher-level government employees to obtain mortgages.

In a joint press release, Issste said that its expects the program will allow its home financing fund Fovissste to grant 30,000 more home loans to workers over the next five years than it would have been able to under its traditional system, where mortgages are allocated by lottery.

Scotiabank is the first to join the co-financing agreement with Issste, which is also open to other banks.