The SOFOLES: Niche Lending or New Leaders in the Mexican Mortgage Market?

W00-2: The Mexican mortgage market experienced significant turbulence in the 1990s allowing a newly created financial intermediary, the Sociedades Financieras de Objeto Limitado (SOFOLES) to gain entry into the low income mortgage market. The SOFOLES have instituted innovative loan origination and servicing policies and have spurred greater competition and specialization in the financial sector. Due to innovations and government rate subsidization, the SOFOLES’ profits have been impressive. However, the question remains as to whether the SOFOLES can survive in a more competitive financial environment…