Jeffrey D. LeClair's mortgage company may be based in the Rocky Mountains, but these days his attention is aimed south of the border, at Mexico.

The president of ICM Mortgage Corp. - the Greenwood Village, Colo., subsidiary of Pulte Home Corp. will soon join a cooperative that will originate home loans in Mexico.

A few weeks ago the Mexican government approved the creation of two limited-objective financial institutions. They will be allowed to loan money for home purchases and refinances much the same way mortgage banks do in America.

Mr. LeClair said ICM was close to joining one of the two institutions, although he had not decided which. Last week he met in Mexico with members of the two ventures.

Response to Nafta

Since the North American Free Trade Agreement was ratified late last year, American homc lenders have been considering moves into Mexico.

According to U.S./Latin Trade, a monthly trade magazine, mortgage loans in Mexico grew in value 57% during the 12month period ending September 1993. By early this year, the country had 750,000 mortgage loans outstanding - a new high.

But considering a population of 85 million, there's a lot of room for growth in mortgage lending, the magazine says.

Pulte, one of the largest U.S. home builders, is starting to push into Mexico and ICM wants to follow.

In a recent phone interview, Mr. LeClair spoke with excitement about the prospects - and challenges - of lending in Mexico.

But Mr. LeClair said he is proceeding with caution. After all, no U.S. mortgage lender has done business in Mexico before.

"Everybody kind of wants to wait and see what will be," he said.

The best prospect for a successful venture in Mexico rests with a local business partner, he said.

Alignments with local banks and builders may be the best bet, he added.

Capital, which U.S. lenders have, and the ability to securitize loans are the most significant issues facing Mexican mortgage lending.

Worries Over Politics

Many lenders are wary of the the political situation in Mexico following the assassination in March of presidential candidate Luis Donaldo Colosio.

Next month lenders will address issues facing international lending at a Mortgage Bankers Association of America conference in Guadalajara, Mexico.

A couple of months ago CTX Mortgage Co., Dallas, Texas, was in discussions to join one of the two limited objective financial institutions. But the plans have since been put on hold.

According to Carl N. Hearne, the president of CTX - the subsidiary of Centex Real Estate Corp., a large U.S. home builder - backed away from the deal because of hesitations about the political situation there.

ICM's Mr. LeClair knows the situation. But he's going south anyway.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.