New Legislation
In November 2007 Costa Rica’s Legislative Assembly enacted a new policy for the collection of secured and unsecured, defaulted debts. Loopholes in past legislation permitted delays in the foreclosure and collection processes. Essentially, credit grantors had no recourse. It could take the grantor anywhere from 8 months to 2 years to foreclose on a property. With the new legislation, only paying the debt in full will prevent a foreclosure from proceeding, reducing this period to three, max four months total.
The mechanism is amazingly simple. Three auction dates are set for each property in foreclosure. In the past, the second and third auction dates were set only after the outcome of the first auction proceeding. Because nothing, other than payment in full, can stop foreclosure proceedings, the three dates are set up front, ten-business days apart.
Another notable amendment in the policy has provided for court appointed representatives, specialists in foreclosure proceedings, to conduct the auctions. The process is no longer a judge’s dominion as in the past. In addition, for the first time ever, municipal government entities can collect on real property tax payments in default where past legislation did not allow them to exercise this option.
Four years ago, unemployment was at a low level, interest rates were down, and the Dollar to Colon exchange was cheap. This led to banks issuing millions of dollars worth of credit for real estate, personal loans and credit cards. Today, the global economic situation has hit Costa Rica to an extent where unemployment has risen, the interest rates are adjusting higher, and banks are limiting their lending and readjusting credit limits. The new legislation allows banks to attach the defaulted credit card and personal loan debts as a lien on real estate.
Foreclosures in Costa Rica are at an all time high and increasing due to the agility of the new legislation. Since May 20, 2008, the date the law went into effect, a thirty percent increase in foreclosures has been documented. By the spring of 2009, at this rate of increase, a fifty (50%) percent rise in foreclosures is projected. Never before has there been such an opportunity in Costa Rica to purchase real estate at below market prices.
Foreclosure Investment in Costa Rica
Real Estate investing historically has proven to be a solid investment tool - yielding highest returns with lowest risks, as evidenced by real estate dividends consistently outperforming those of the S&P 500. And now real estate investing, particularly real estate foreclosure investing in Costa Rica has taken a sharp positive turn with the execution of recent legislation. This new legislation along with the current global economic situation and Costa Rica’s longstanding attractiveness to foreign investors has created an once-in-a-lifetime investment opportunity. For the foregoing reasons Forbes Investments C.R., S.A. (FORBESCR) has put together an incredible investment opportunity for a limited number of investors. Foreclosure investing in Costa Rica is a unique industry, as few know the specifics of the business and even less has the financial means to participate. It is essentially uncharted territory creating a huge supply of properties from which to select for our investors.
Valerie Frank-Solorzano, founder and President of ForbesCR, has over 13 years experience in the US mortgage industry. She has worked for banks, brokers, and lenders. Her experience ranges from opening, staffing, and operating two mortgage brokerage shops to owning her own mortgage company. When the mortgage market began to show signs of implosion, she shifted her focus and training to another area of interest and knowledge- real estate financial markets, foreclosures and short sales- about which she had years of experience through her work with banks and collaboration with brokers and lenders in the real estate field. Her expertise is evident in her book, The Educated Borrower- Your Mortgage Bible.
In the early 80s, Valerie lived for more than five years in Costa Rica when her parents served in the US Foreign Service. Married to a Costa Rican citizen, Valerie returned to the country to pursue opportunities in her field. The timing was perfect with the global economy, Costa Rica’s recent legislation, and the serendipitous meeting of her Costa Rica foreclosure mentor, she launched a new career. She is fluent in several languages giving her a distinct advantage in working with English, Spanish, and Portuguese speaking investors.Today, she is a foreclosure market expert in Costa Rica and is expanding into other foreclosure markets in LATAM with her training program.
In the early 80s, Valerie lived for more than five years in Costa Rica when her parents served in the US Foreign Service. Married to a Costa Rican citizen, Valerie returned to the country to pursue opportunities in her field. The timing was perfect with the global economy, Costa Rica’s recent legislation, and the serendipitous meeting of her Costa Rica foreclosure mentor, she launched a new career. She is fluent in several languages giving her a distinct advantage in working with English, Spanish, and Portuguese speaking investors.Today, she is a foreclosure market expert in Costa Rica and is expanding into other foreclosure markets in LATAM with her training program.
