Why Real Estate Foreclosures Are Rare in Maxico

Foreclosure, by definition, is the legal procedure for satisfying
claims against a mortgagor in default who has not redeemed
the mortgage; satisfaction may be obtained from the proceeds
of a forced sale of the property.

There are many reasons why mortgagors may fall into default
but historically it happens when the mortgagor loses his job,
loses his health, or for some other reason is unable to make his
mortgage payments in a timely manner.

Today, the majority of reasons for default are totally different.
Many recent mortgagors were able to obtain loans with little or
no credit history and little or nothing as a down payment. They
received adjustable rate mortgages and if they were ever able
to afford their monthly payments, they were no longer able as
soon as the interest rate increased and consequently the
mortgagee was forced to foreclose on the buyer. As the
foreclosure rate in a given region started to increase, so did
the availability of distressed property sales. Of course, an
increased volume of distressed properties in the neighborhood
resulted in a rapid depreciation of the neighboring properties.
With the value of a given property well below its mortgage
payoff balance, many mortgagors merely elect to abandon
their property and walk away from their mortgage; thus the
mortgagee is forced to foreclose on these borrowers as well.

This vicious circle of foreclosure events is currently occurring
at an unprecedented rate in the US. Headlines such as "US
Foreclosures Up 24 Percent in 1st Quarter "," US Banks Step
Up Home Foreclosures "," Las Vegas Tops Foreclosure List",
"Sun Belt States Lead Q1 U.S. Mortgage Foreclosures" and
"Foreclosures May Hit 1.5 Million in U.S. Housing Bust" are
seen in the news on a daily basis.

Okay, know that we fully understand the cause for and
frequency of the recent foreclosures and knowing it's a buyer's
market, perhaps, if you still have a little money left over after
the recent stock market sell off, you might be considering
shopping for a foreclosed property at a distressed sale price in
a Mexican resort city. If so, you might as well forget it; you'll
not see a foreclosure sign in Mexico!

The following is taken verbatim from Condo.com, one of the
major websites dealing in worldwide condo sales:

Mexico Foreclosures - Condo.com is the best way to find free
foreclosures listings in Mexico. Find foreclosed condos,
foreclosed condos, foreclosure properties and other
foreclosure investment opportunities in Mexico. Search bank
foreclosures, REO properties, preforeclosures, HUD homes and
more foreclosures in Mexico. Sorry! There are no search
results found. No For-Sale listings available

Well, that pretty well sums up your opportunities to "steal" a
nice condo in a Mexican resort city such as Puerto Vallarta!
There are numerous reasons why foreclosures are rare or
essentially nonexistent in Vallarta however the primary reason
is that up until just recently, all purchases were done strictly
on a cash basis. Mortgages are now available in Mexico but
only with a substantial down payment. With a solid credit
history and income stream, one might be able to purchase a
property in Mexico with only 20% down, however most of the
mortgages are with down payments approaching 50%. As you
can imagine, it takes an awfully good reason to walk away
from a property when you have that kind of investment in it!
Consequently, with 98% of the properties owned outright and
the remaining 2% with well funded mortgages, there are
virtually no foreclosures in Paradise!

Because there are virtually no foreclosures in Mexico, there
has been no significant depreciation of values there. That's not
to say that there's not been a leveling off in prices or that the
developers are not more inclined to "negotiate" today than
they were a year ago. To the contrary, prices on newly
constructed condos have never been better than they are today
and bargains can be found throughout the city. This is to some
degree due to over building during the past ten year boom
period and partly due to the reduction in prices of steel and
other construction materials as well as the decrease in
construction labor rates as the Peso recently devalued by 30%
relative to the US Dollar.

For the reasons regarding foreclosures outlined above, you
should never see your investment value plummet in resort
destinations such as Vallarta as it has in many desirable
locations throughout the US. Because the North Americans
have been recently hit so hard financially combined with the
fact that the local developers have overbuilt, it´s a true
buyer's market on the Mexican Riviera. There are 1,000´s of
new condos currently on the market in PV and with interest
rates at an all time low, the time to buy will never be better.
Any North Americans still holding cash will never find a better
time or place to invest; besides, where else can you live in a
climate better than Hawaii, 2-4 hours from home, all the
amenities of home, as many or more activities than at home,
and at a fraction of the price? So, why wait; come on down and
explore the possibilities; just don't look for any foreclosure
signs in Puerto Vallarta or any other resort destination in
Mexico!

Jim Scherrer is a retired entrepreneur from Houston, has
owned property in Puerto Vallarta, Mexico for 25 years, and
has made Vallarta his permanent residence for the past eleven
years. He founded Puerto Vallarta Real Estate Buyers´ Agents
(PVREBA), whose mission is to reveal all the recent changes
that have occurred in Vallarta while dispelling the
misconceptions about living in Mexico. PVREBA acts exclusively
as buyers´ agents by introducing North Americans to Vallarta,
showing them properties that meet their needs and budgets,
and assisting them through the foreign buying process, with all
payments made by the listing agents. For the full series of 52
articles regarding Retirement in Puerto Vallarta as well as
pertinent Puerto Vallarta links, please visit us at
http://www.pvreba.com/ and click on ARTICLES.

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Why Real Estate Foreclosures
Are Rare in Mexico