Central American Mortgage Will Boost Banking System

Published by Latin Lawyer, October 2010.

A Central American mortgage law which was approved in Guatemala and rejected a few days later in the Costa Rican Congress, could lead to a more sophisticated banking system, according to a lawyer familiar with the legislation.

The law, which came into force in Guatemala on 15 October but is still awaiting approval in other Central American countries, will allow people to take out a mortgage using as a guarantee property that is located in a different Central American country.

"As a direct result [of the law], we will see how the banking industry will evolve in its size, as more, and larger transactions, will take place." says Central Law Honduras' Jesús Humberto Medina-Alva. "Furthermore, the financial market's evolution will provide grounds for more sophisticated transactions, increasing the need for additional legal work from law firms, for both the banks and the corporations."