Ministry backs money laundering, real estate reforms

Mexico's finance ministry is backing legislation that would tighten up money laundering regulations as well as improve corporate governance and access to venture capital, undersecretary Alonso Garcia was quoted as saying by Reforma. Garcia said the ministry also wants to strengthen the real-estate market by fomenting mortgage-backed securities (MBSs) and introducing real estate investment trusts (REITs). MBSs allow mortgage lenders to sell their portfolios on secondary markets and raise funds for new loans. This is especially important for special mortgage lenders known as Sofoles, who are prohibited by law from taking deposits. A REIT is an investment vehicle that trades on an exchange like a stock, but resembles a mutual fund as it makes money buying, selling and managing real estate investments. Mortgage lending has grown steadily even though the Mexican economy stumbles through its second year of recession. Consolidated mortgage loans climbed 5.9% to 52.2bn pesos (US$4.6bn) at the end of September, as Sofoles and banks boosted lending. However, the government still provides about 90% of mortgage loan funding, and banks that are still recovering from the 1995 financial crisis have yet to show an aggressive appetite for lending. In other news, the undersecretary said the ministry would look to increase the liquidity of capital and debt markets in order to compensate for political bickering between the country's three main parties over a raft of controversial reform proposals. The Fox administration is channeling its debilitated political capital into pushing forward energy, fiscal, labor and pension reforms in 2004. Financial sector reform is the only structural reform of the 10 promised by Fox that has been passed since he took office in 2000.