El Salvador Ratifies Regional Mortgages

The Legislative has ratified a Treaty for the Establishment and Implementation of Central American Mortgages signed between Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama and the Dominican Republic.

Friday, April 20, 2012

From a press release from the Legislative Assembly of El Salvador:

The Legislative Assembly has ratified with 71 votes, the Treaty for the Establishment and Implementation of Central American Mortgages signed between the Republics of Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama and the Dominican Republic.

This instrument will provide greater legal certainty for investment in the region, stimulating the market for Central American investments, facilitating and expanding access to credit, by backing mortgage securities in any country where it operates and the procedures and costs are standardized.

It will also promote the securitization of regional mortgage portfolios by having homogeneous instruments, which will allow the development of a secondary mortgage market and with this more capital will be raised for investment.

The ratification of this Treaty marks an important step in "the path of Central American integration," said the President of the Assembly, Sigfrido Reyes, becoming an "instrument of regional economic and financial integration," which means in his words that "anyone with an investment project can seek funding beyond the local financial market, and under the concept of the Central Mortgage guarantees for a loan can be provided with the best terms anywhere in the region," which will bring benefits to credit users, and competition in financial markets, he added.

For her part, Deputy Margarita Escobar, of the ARENA Parliamentary Group, expressed delight at the ratification of this instrument, and the impact it will have on the Central American market, since it means "regulation of an arrangement with a common legal framework for regional growth in real estate and in the economic sphere. "

Upon ratification by the signatory countries, the treaty will create a regional financial market to help boost lending operations.

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More on this topic

Progress in 'Central American Mortgage' Project

September 2011

Lawyers from the region met in El Salvador to make progress in the projects entitled 'Central American Mortgage' and 'Dual Nationality'.

The project 'Central American Mortgage' is an agreement that aims to provide mortgage loans in each of the member nations, using property in other countries, who are also part of the treaty, as collateral.

El Salvador: Authorities Request Congress to Pass Regional Mortgage

April 2010

The National Registry Center requested Congress to pass the Treaty for Creating and Implementing Central American Mortgages.

This type of regional mortgage could make it easier to obtain capital, especially for indirect investments and loans.

“Guatemala, Honduras, Nicaragua, Costa Rica, Panama, the Dominican Republic and El Salvador are included in the treaty, which aims to ease mortgage loans in each of the member nations, by being able to use as collateral real estate located in other member countries”, explained Diariocolatino.com.

Regional Mortgages and Real Estate

April 2012

After its ratification in El Salvador, the Regional Mortgage treaty still needs to be approved in one more country to come into force.

Salvadoran entrepreneurs welcomed the legislative ratification of the Treaty on Free Movement of Goods and Services, known as the ‘hipoteca centroamericana’ or Central American mortgage.

Challenges Ahead of Regional Mortgage

January 2010

There are issues complicating the practical execution of the Treaty for the Creation and Implementation of a Central American Mortgage.

In Guatemala, the Banking Superintendence warns on the problems that would take place in that country should the regional mortgage become a reality.

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