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Mexico's Political Environment 
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Political Environment

Government intervention in the housing sector
The main political issue impacting the real estate sector is the relationship between the very real need for public or low-income housing and the manipulation of this need for electoral success. Upcoming presidential elections are in July 2000. Traditionally these elections bring the issue of public housing to the forefront of debate. The PRI (Institutional Revolutionary Party) has been seen by some as consistently using public housing as an vote-winner at national elections which have kept them in power for most of the last several decades.

Public housing is always a hot issue due to the continual shortfall between inadequate supply of stock and rising demand for units. The current shortfall is estimated to be around 7 million units. In addition, there has been strong state intervention in northern Mexico, where state governments run by the opposition National Action Party see expanding residential stock as essential to attracting workers for industries along the US/Mexico border.

Ifonavit is the main public housing scheme to support mortgages for low-income families. It was set up in 1972. There has been a pattern since then of a surge in the number of housing loans around presidential elections, with a dramatic tapering off soon afterwards. Infonavit is tax-like contributory scheme. Eleven million salaried workers make payments into Infonavit's funds via monthly paycheck deductions (5%), but since 1972, it has only issued 1.7 million loans. One third of those loans are in default, and the agency is even instituting a door to door collection scheme in an attempt to improve the default situation. 1999 loans are expected to rise to 160,000, from a 1998 total of 108,000. Infonavit is also planning to try a new method of boosting the building capacity of construction firms. The agency will give homebuilders a down payment when part of a construction project is completed, with the aim of reducing the need for the companies to take out bridging loans.
New capital is supposed to be in the process of being freed up from the newly privatized
pension system to the government-housing agency, but capital amounts and time frames are currently unclear. The question of how this new capital influx relates to the 5% surcharge that currently funds Infonavit is also unclear.

Infonavit and a second government housing agency, Fovi, made a 1999 commitment to provide low-income financing at subsidized interest rates for 200,000 and 100,000 new housing startups respectively, although the timeframe for this action is also unclear. Fovi is a fund of the Central Bank that provides low-interest mortgage financing to low- to moderate-income home buyers earning between three and six times the monthly minimum wage.4

Crime and institutional corruption
Another issue that is part of the political environment throughout Latin America generally is that of corruption. The United States Department of State's official position is that the Mexican Government recognizes the seriousness of the corruption problem in Mexico and has acted to address the issue. Anti-corruption laws with five to ten year jail terms have been passed by the Mexican legislature, and many low- to mid-level officials have been convicted of corruption or bribery charges. These steps indicate that the problem is being addressed rather than eradicated. Any businessperson should be aware of the possibility of bribery becoming an issue during the course of a business transaction in Mexico. The US State Department also warns against the "critical" level of criminal activity - including kidnapping - that occurs in Mexico City and Guadalajara.5

REALTOR® - A registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics. 

The National Association of REALTORS®, 430 N. Michigan Ave., Chicago, IL 60611   Telephone: 1-800-874-6500


DISCLAIMER:  Note:  This is not a legal document.  This write-up may contain errors and omissions and is for informational purposes only.  The above information is deemed correct, but is not guaranteed and is subject to changes and corrections. The property is subject to withdrawal from the market without prior notice.  Seller makes no presentations, warranties or disclosures as to the property except as to title.  The property is sold as is, where is with all faults and without warranty, representation or guaranty as to suitability, express or implied, (as to the condition or fitness of the property) for buyers’ use.

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Copyright © 2008 Jacob R. Casanova
Last modified: November 15, 2011