Washington, D.C., June 6, 2005
– The International Finance Corporation, the private sector arm of the World Bank Group, signed an agreement to provide a $115 million financing package to GMAC Financiera, a housing finance and securitization entity in Mexico. IFC’s financing consists of a $65 million revolving loan that will help fund or acquire low- to middle-income mortgage loans, and a $50 million credit enhancement facility that will support the company’s mortgage-backed securities program in Mexico.
GMAC Financiera, a non-depository entity established in 2000 by Residential Funding Corporation (GMAC-RFC), provides mortgage and construction warehouse lines of credit to
sofoles
—specialized financial intermediaries in Mexico—and is building its presence in the secondary housing finance market through its securitization program. GMAC Financiera is currently the only securitization conduit in Mexico, having launched three issuances of mortgage backed securities in the local capital markets.
IFC’s investment, signed by Assaad Jabre, IFC’s Acting Executive Vice President, and Jose Landa, Managing Director of GMAC-RFC’s Latin American operations and Chairman of the Board of GMAC Financiera, underlines IFC’s strategy to develop the housing sector in Mexico by providing funding to key players, as well as to contribute to the development of the country’s capital markets.
Mr. Jabre said, “IFC’s support to GMAC Financiera is a key step in our housing strategy for Mexico. This financing will enable the company to continue extending mortgage finance to
sofoles
as they seek to diversity their funding base. It will thus ensure that these intermediaries can keep providing housing finance to a large section of previously underserved groups in the country.” Mr. Jabre added, “IFC’s financing also fosters the development of the local capital markets by introducing a new risk-asset class that fits well with the investment needs and objectives of institutional investors in Mexico.”
Mr. Landa said, “GMAC Financiera is pleased to have built a strong partnership with IFC by working together to develop the housing sector in Mexico. IFC’s financing is a vote of confidence in our Mexican operations, and we look forward to broadening our relationship with the IFC in other countries, in Latin America and beyond.”
GMAC Financiera is recognized as an important alternative source of funding for
sofoles
and a key player in Mexico’s secondary housing finance market. GMAC Financiera has experienced high growth over the last four years and has developed strong relationships with the mortgage
sofoles
and other relevant industry players in Mexico.
IFC’s strategy in the housing sector in Mexico has adopted a phased approach. The first phase has focused on helping develop a vibrant primary mortgage market by providing local currency debt facilities to major originators in the sector such as Hipotecaria Su Casita, Hipotecaria Nacional and Hipotecaria Credito y Casa. The second phase is more directly focused on ensuring the development of the secondary mortgage market. IFC’s financing to GMAC-RFC is in alignment with this second stage. In all stages of this strategy, IFC has collaborated with Mexico’s Sociedad Hipotecaria Federal, a federal mortgage funding institution, in ensuring consistency with the local authorities view on the approach to developing the housing market.
The development of a broad-based housing finance market is an important building block for Mexico's financial sector. A functioning mortgage system will help create a more liquid housing market and enable more first-time buyers to purchase their own property, which in turn will help improve living standards.
The mission of IFC
(www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
