Since I moved here in 1998, we've been plauged with the exhausting problems associated with the local mentality and policies of the Honduran banking system. If you are a "gringo" and want to finance the purchase of property here, you have litterally had to "pull teeth" to do it. As a "legal resident"... it's slightly easier... (heavy on the slightly) The outdated banking laws and customs here have continued to make even the simplist of transactions.... a nightmare! As a foreigner, you can pretty much put an "X" next to "getting a loan in Honduras". Reems of paperwork, ranging from when, how, why, what, who, ...... personal information that is irrelevant to anyone (except the loans officer across the desk), back or "stale-dated" document requirements, your father's political status, and your grandfather's social security number are just a few of the hurdles one has had to deal with here if you want bucks.
What ever happened to the "10 point" approval system like we had in Canada? What about the simple questions that modern lenders need satisfied? How much do you want? Can you pay it back? AND, most importantly, if you don't pay it back, is there sufficient collateral for the lending institution to foreclose on? ----that's what I miss.
Just this week one of my clients was jerked around by the local system. Applying for a loan more than 3 weeks ago and offering their $multi-million dive resort (free and clear) as collateral, they were told the sum of money they required "should not be a problem" as the value of their property (purchased more than a year ago) would easily cover the LTV (loan to value) ratio the bank required. (set by law) As you 'pay to play' here in this country the client paid all application/survey/loan document and appraisal fees up front and entered into a conditional sales agreement on another piece of property...believing the financing to be in the bag. Using an Appraiser from one of the big cities, San Pedro Sula, the bank began the tedious process of loan approval. This week, the Appraisal came in at less than ONE THIRD of what they paid for it, let alone today's value....meaning...there is no way in Hades that they are going to get even close to the required funding amount. What the heck did the Appraiser use for comparables? Certainly, they did not access the MLS here for comparative data. Certainly they didn't pick up a Real Estate guide and see what property values are doing here in the Islands.... and certainly, this "appraiser" or "civil engineer"(civil engineers are the ONLY recognized and legal appraiser by law) does not posess the information, credentials, nor mental capacity to professionally and accurately evaluate property.... anywhere! ---are you getting the picture yet?
The banking system is only slightly ahead of the old IBM Selectwriters.... remember those? They still use them... typewriters... to update your bank book at many institutions in Honduras. How can they possibly be competitive in the loans business.... THEY CAN'T, but they have, or should I say HAD a monopoly here.
But alas, there is light at the end of the tunnel... or better yet, there appears to be a fly in this thick, slow moving oinment that may just "leaven" the entire loaf.... it's called HSBC... or Hong Kong Shainghai Banking Corporation and it's one of the largest financial institutions in the world!! Oh, and now they are here! They have bought out one of the local banks (BGA) and have now changed over to HSBC officially. Will we now get more professional and accurate service? YES!! is the resounding answer I am told by a well known international banker from the Caymans.... "you'll see the entire banking system brought into the 21st century in a very short timeframe.... HSBC does not mess around and they WILL reform the way present banking is done in Honduras".... end of quote.
So, there you have it. Within a short time we'll be able to walk into the bank with the appropriate documents, apply for a loan and get approved in a reasonable timeframe..... and our clients couldn't be more happy! Gone will be the days of Seller take back financing at high interest rates.... gone will be the days of 3-4 month approvals..... and gone will be the days of mis-appraisals and unprofessional service.... and I'm one REALTOR who IS holding my breath....
