Foreign Bank will Lend to U.S. Residents Purchasing Real Estate in Costa Rica.

Real Estate is blowing up all over Costa Rica from everything to luxury beach front vacation homes in Jaco Beach to pent house suites in a metropolitan park tower. Costa Rica is building it all… and fast. Even famous actor and movie producer Mel Gibson owns land in the popular tourist destination and is also looking to move his film production company to the booming little country. With all this expansion, development, and growth several United States companies are also expanding to attend to their migrating clients.

Lehman Brothers Bank is one U.S. based company that has moved business to the tropical oasis. Lehman Brothers, a top-tier investment bank and market leader in mortgage and consumer loan securitization, headquartered in Wilmington, Delaware, has announced plans to finance mortgages for foreigners planning to call Costa Rica their new home.

The bank is making history on the local real estate front in Costa Rica as it will be the first foreign bank in Costa Rica to provide home financing to non-residents in the area. There have been other groundbreaking companies that have moved to Costa Rica to help provide mortgage services to foreigners to help their dream of a tropical sanctuary become a reality. However, most of these companies, like Costa Rica Mortgage located in both San Jose and in Tamarindo Beach, are independent mortgage brokers rather than actual banks.

Lehman Bros. signed a deal with Stewart Title, with an office already located in the capital city, and made plans to facilitate the financial process on Costa Rican soil. Eric Hibbert, the managing director of Lehman’s resort home lending group in New York, believes that when it came to expanding Lehman’s mortgage lending opportunities outside the United States, “they (Stewart Title) were a natural fit”.

Stewart Title Latin America is an independent agent for Stewart Title Guaranty Company and a service provider for Stewart Title Guaranty de Mexico S.A. de CV and is designed to help U.S. citizens navigate foreign real estate transactions in Latin America. The company has a network of offices in Mexico, Central America and the Caribbean, to help solidify any vacation home, retirement estate, or real estate investment of your dreams. Hibbert announced that Lehman also intends “to use all the title companies that are operating in Costa Rica” meaning the deal will not be exclusive.

Until about three years ago non-residents in Costa Rica were not permitted to use Costa Rica banks to take out home mortgages, however, the real estate market didn’t see an effect on home sales at all. Potential buyers would cross borders with cash in hand and some would even take out second mortgages back home instead in order to purchase the home of their dreams.

After realizing the large and ever growing foreign market for Costa Rica real estate, some other local banks have since loosened up their lending procedures and restrictions, opening up the mortgage market to foreigners, however, the red tape is still a little sticky, and most legal contracts are written all in Spanish.

Stewart Title plans to work with seven other local banks ranging between private institutions such as HSBC and Scotiabank to the state-controlled national bank Banco Nacional and Banco de Costa Rica.

Stewart Title didn’t hesitate to sign on to Lehman’s Costa Rican endeavor thanks to Lehman Brother’s international name recognition which is believed to give confidence and security to future borrowers.

Operations were set to commence as of July 1, 2008 about the same date that Lehman Brother’s opened a similar agreement in Mexico. Continued global expansion seems to be something in the near future for Lehman Brothers. Future clients will be able to inquire about six different amortization periods. One to 30-year fixed-rate mortgages with 20% down on the home purchase price will be available for future property owners, however, the mortgages aren’t going to be a piece of cake to obtain.

Only those with a credit score of 700 or higher will be considered, however, the mortgages will be secured with the property through a lien filed with the National Registry of property. Lehman only plans to deal with U.S. citizens in the beginning of operations with the intention of expanding their services with time.

The official launch of the Stewart/Lehman endeavor was held this past June at the Hotel Playa Conchal in the northwestern province of Guanacaste. When Hibbert was asked why Costa Rica was chosen he explained that “when you look at the demographics of the baby boomer population, we believe that there will be a lot of baby boomers looking for vacation (and living) opportunities outside of the United States. Costa Rica has built a very nice brand, and people are heading there.”

This post's rating:

Related Stories

Filed under: Business on July 8th, 2008