Introduction

Banco La Hipotecaria S.A. a regulated banking institution domiciled in the Republic of Panamá and La Hipotecaria S. A. de C. V. (El Salvador) and La Hipotecaria de Colombia,  non-regulated financial institutions domiciled in El Salvador and Colombia are the region´s only full-service, mortgage firms, dedicated exclusively to the origination, servicing and securitization of residential mortgage loans. In both countries La Hipotecaria (translated as ¨The Mortgage Company¨), has established its reputation as a leading mortgage lender by providing competitive loan programs and an unequalled ability to provide prompt, personalized service not available in state or privately owned banks. La Hipotecaria provides long-term residential mortgage financing in United States Dollars (the legal currency of Panama and El Salvador) and in Colombian Pesos in Colombia, to qualified clients in the middle and middle-lower income sectors. Furthermore, La Hipotecaria is a pioneer in the creation of investment-grade mortgage-backed securities which it offers through local securities exchanges to local institutional investors, while retaining servicing rights on all originated mortgage loans.  The previously mentioned companies are wholly owned subsidiaries of La Hipotecaria (Holding) Inc., hereinafter, “La Hipotecaria”.

A Brief Company History

La Hipotecaria began operations in May of 1997 and today its principal shareholders are Grupo ASSA, S.A., and the International Finance Corporation, (IFC).  Grupo ASSA, S. A., the majority shareholder of La Hipotecaria,  is a publicly traded company on the Panamanian Securities Exchange  whose shareholder equity exceeds US$410,000,000 and is owner of one of the region’s most important insurance companies; ASSA Insurance Company rated "A" (Excellent) by A.M. Best. (www.assanet.com)  The International Finance Corporation (IFC) is one of the world´s primer multilateral institutions and member of the World Bank Group.  Today, La Hipotecaria employs 170 people in its offices in Panama,  El Salvador and Colombia and administers a total residential loan portfolio of over 15,300 mortgage loans. La Hipotecaria enjoys the support of many international banks that provide warehousing lines of credit and the support of numerous institutional investors who invest in the various financial instruments issued in local markets by the La Hipotecaria.

Loan Origination Activities

La Hipotecaria began operations in May of 1997 and today its principal shareholders are Grupo ASSA, S.A., and the International Finance Corporation, (IFC).  Grupo ASSA, S. A., the majority shareholder of La Hipotecaria,  is a publicly traded company on the Panamanian Securities Exchange  whose shareholder equity exceeds US$410,000,000 and is owner of one of the region’s most important insurance companies; ASSA Insurance Company rated "A" (Excellent) by A.M. Best. (www.assanet.com)  The International Finance Corporation (IFC) is one of the world´s primer multilateral institutions and member of the World Bank Group.  Today, La Hipotecaria employs 170 people in its offices in Panama,  El Salvador and Colombia and administers a total residential loan portfolio of over 15,300 mortgage loans. La Hipotecaria enjoys the support of many international banks that provide warehousing lines of credit and the support of numerous institutional investors who invest in the various financial instruments issued in local markets by the La Hipotecaria.

Mortgage Loan Securitization Activities

In May of 1999, in what was the first structured mortgage securitization ever completed in the Central American Region, La Hipotecaria served as Trustee of The First Mortgage Trust.(El Primer Fideicomiso de Préstamos Hipotecarios) a special purpose vehicle (SPV) or separate legal patrimony of 595 residential mortgage loans which served as guarantee for a $15,000,000 mortgage-bond issue. Since that date and with the experience gained each year, La Hipotecaria has continued to issue mortgage-backed securities at the rate of approximately one issue per year and as of today has successfully completed ten MBS transactions. All of its securitizations have been approved by the Panamanian Securities and Exchange Commission (La Comisión Nacional de Valores de Panamá), sold through the Panamanian Stock Exchange (La Bolsa de Valores de Panamá) and fully subscribed by institutional investors and most have been rated by an internationally recognized rating agency (Fitch) who has qualified the M.B.S issued by La Hipotecaria as "investment grade" in the local markets.


In November of 2010 in one of the most important structured finance transactions in the Central American Region, La Hipotecaria acting as Trustee of the Tenth Mortgage-backed Notes Trust placed through the Panamanian Securities Exchange $96,000,0000 in MBS.  The Series A Notes, representing $86,400,000 were rated BBB by  Fitch Ratings.

Simultaneously, La Hipotecaria Panamanian Mortgage Trust 2010 – 1, a Delaware domiciled Grantor Trust acquired $72,000,000 of the Series A notes and issued parallel debt certificates in the United States under SEC regulation 144A.  With the inclusion of a financial guarantee policy issued by the Overseas Private Investment Corporation (OPIC) the certificates were rated AAA by Fitch Ratings.  All certificates were successfully place with institutional investors in the United States.  This transaction was the second cross-border mortgage securitization of La Hipotecaria.  In March of 2007 La Hipotecaria was issuer of a similar transaction in the United States under SEC regulation 144A that carried a guaranty of XL Capital Assurance. 

Technological Platform

In order to support its mortgage-loan origination, servicing and securitization activities, La Hipotecaria has developed a fully-integrated proprietary software platform unique in the Latin-American Region. The system manages all aspects of mortgage-loan servicing including, insurance management, preparation of borrower account statements, interest-rate adjustments, loan restructuring, and the management of all auxiliary accounts. The system also manages all aspects of the securitization process, including the administration of prioritized cash flows in multi-traunched transactions. Data fields are designed in accordance international standards for mortgage loan securitization activities, thus providing the historical data to support an ongoing securitization program and comply with rating-agency requirements. All client interfaces are presented in Spanish.
The software platform is legally registered as intellectual property of Online Systems, S.A., a wholly owned subsidiary of La Hipotecaria (Holding) Inc.

Summary

Although small in comparison to the activities of mortgage operations in larger developed countries, the activities of La Hipotecaria in The Republic of Panama have had a significant positive impact on the local primary and secondary mortgage markets. As La Hipotecaria grows its loan-origination capacities and prepares for future issues, with each subsequent loan securitization, La Hipotecaria refines its legal and technological capacity which in turn, improves the quality of its future-mortgage backed securities and the lives of many Latin American households.