Binding mortgage offer in Mexico: 20 days, free

What you ask for, and on what basis

The lender must provide, at the client’s request, a credit application form listing everything the applicant has to declare to obtain the offer and “todos los documentos y requisitos necesarios para la contratación del crédito” to present on acceptance. The offer is issued “con base en la información que de buena fe declare” the applicant, “sin requerir la presentación de los documentos que soporten dicha información”. In practice this lets you collect offers from several lenders without assembling a full file for each.

What the offer must contain

Article 6 lists the minimum content:

1. the amount of the loan and how it is paid out;
2. the form of amortisation;
3. the ordinary interest rate, the default interest rate and the Costo Anual Total (see the CAT guide);
4. the applicable commissions;
5. the lender’s express acceptance that it will receive early repayment from any other lender, assigning its rights under the contract to it, and that it will admit substitution of the debtor (arts. 13 and 14);
6. the expenses payable by the borrower;
7. the causes and penalties of early termination; and
8. anything else the Reglas (general rules issued by the finance ministry) require.

The law adds that the Reglas are to set a standard format for the application and the offer, so that you can compare offers from different lenders. Item 5 matters later if you want to move the loan: see switching mortgage lender.

The 20 days and how to accept

The offer “obligará a la Entidad por un plazo de 20 días naturales contados a partir de su fecha de recepción”. It takes effect only if, within that period, you:

• give written notice that you accept; and
• submit all the supporting documentation for what you declared in the application.

The lender may not ask for any document beyond those listed in the application form. Calendar days include weekends, so counting from the date of receipt matters.

What the lender can still check

The lender must grant the loan on the offered terms provided it verifies: your identity; the truth and authenticity of your data; your creditworthiness “conforme a las sanas prácticas y condiciones de mercado”; the carrying out of an appraisal by an authorised appraiser; and compliance with other legal formalities. If the appraisal differs from the value you declared for the property, the lender “procurará mantener la tasa de interés ofrecida”, which is an effort obligation, not a fixed guarantee.

The appraisal must be done by an appraiser authorised by the Sociedad Hipotecaria Federal (article 7), and you have the right to choose the appraiser from the list the lender presents.

Practical use

CONDUSEF’s article on choosing a mortgage (dated 10 February 2014, so an older page) tells borrowers to ask for the binding offer, which shows what the loan will cost “en pesos y centavos”, and to compare lenders. Compare on the same amount, term and rate type. Keep the date of receipt, because the 20 days run from it. Do not confuse the offer with an approval: the conditions above still apply.

If the lender does not comply

Article 18 of the law gives supervision of compliance to the CNBV for financial entities and to PROFECO for the other lenders, without prejudice to CONDUSEF’s powers. A borrower who thinks a lender is refusing to issue an offer, or is adding documents not listed in the application form, can therefore take the matter to those bodies. Keep the written application, the dates and the offer itself, since the 20-day period and the list of documents are the points a complaint would turn on.

Which professional to consult

Ask the mortgage lender for the application form and the offer. A real estate lawyer can compare the offer with the draft mortgage contract. See mortgage lenders, real estate lawyers and appraisers.