Companies that are conducting due diligence related to siting a Mexico manufacturing facility will, no doubt, come across the name of the “Instituto del Fondo Nacional de la Vivienda para los Trabajadores”. INFONAVIT, as it is is called by its acronym in Spanish, is federal organization that was established in 1972 to provide worker housing credit in Mexico to maquiladora employees, and other individuals employed in the formal sector of the country’s economy.
Credit extended to workers through Mexico’s National Worker’s Housing Fund, enable them to:
- Build a home
- Purchase a home
- Expand or remodel a dwelling
- Pay an existing mortgage
- Rent a home
Upon establishing themselves in Mexico, companies are required by the nation’s constitution, (artículo 29 fracción II de la Ley del Instituto del Fondo Nacional, specifically), to register both themselves and their workers with INFONAVIT. Administrative obligations set by the federal housing agency prescribe that newly hired workers must be added to INFONAVIT rolls within five business days of having begun to lend service to their new employer. The employer must also advise INFONAVIT officials within five days of an employee’s departure, so that the individual is removed from the roster of those that are entitled to receive housing credit benefits.
Additionally, the nation’s constitution mandates that employers must contribute five percent over and above the value of each workers’ salary to the fund. This is so that, what has become the largest mortgage lender in Latin America, can make worker housing credits in Mexico available to eligible parties for the aforementioned purposes. Employer contributions are paid on a bi-weekly basis. Should a company not fulfill its obligations under the IFONAVIT National Housing Law, it may be subject to a levy of fines that can total between three to three hundred and fifteen times the locally established minimum wage. It is important to be aware that, in Mexico, there is more than one minimum wage rate. The Mexican government determines several legal minimum wages that are established on the basis of regional cost of living data and professional occupation.
When Mexican maquiladora workers, and others that hold positions in the formal sector of the Mexican economy are granted loan created through INFONAVIT, they have certain defined rights,and must fulfill several obligations. It is also important to remember that once INFONAVIT credits are issued, employer contributions are paid directly to the employees account, rather than to the federal government. At the time of property acquisition negotiations are also held in order to determine what the employee’s contribution will be to loan repayment.
In order to legally qualify for INFONAVIT worker housing credit in Mexico, recipients of funds must make certain that the conditions are met, and that certain information is provided on loan applications. The information that is listed below is incomplete, but illustrative.
Beneficiaries of worker housing in Mexico granted by INFONAVIT must make certain that:
- All loan documentation contains the full and complete name of the credit recipient;
- The property being built, bought, expanded, remodeled or rented is legally titled and recorded in the Public Registry of Property;
- The house being sold is titled in the name of the individual, or individuals, doing the selling.
- The full location (street name and number, neighborhood and plot number), as well as complete information on dwellng characteristics (type of construction, non-attached buildings and finishings) is contained in loan description paperwork:
- The purchase price of the dwelling or newly constructed home is noted clearly on paperwork related to the property’s sale.
The Fondo Nacional de la Vivienda para los Trabajdores (INFONAVIT) currently makes credits of up to eight hundred and fifty thousand pesos (or sixty-five thousand US dollars) available to low-income maquiladora, and other private sector, workers. Mortgage payments on sums borrowed are calculated to be proportional to workers’ salaries, and are deducted directly from their paychecks. This method of collection minimizes risks to the lender.