LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

Published in the Official Gazette of the Federation on December 30, 2002.
Updated with reforms published in the same Gazette on June 13, 2003, February 7, 2005, June 15, 2007, May 25, 2010, and January 10, 2014.

LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

INDEX

TITLE I
General Aspects

CHAPTER I
General Provisions

CHAPTER II
Prior Information

TITLE II
Contracting of Secured Credits

CHAPTER I
Binding Offer

CHAPTER II
Property Appraisal

CHAPTER III
Formalization of Secured Credit

CHAPTER IV
Interest Rates and Reference Indices

TITLE III
Subrogation of Credits

CHAPTER I
Debtor Subrogation

CHAPTER II
Creditor Subrogation

TITLE IV
Common Provisions

TRANSITORY ARTICLES

LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

Title I

General Aspects

Chapter I

General Provisions

Article 1. This Law is of public order and aims to regulate financial activities and services for the granting of Secured Credit, for the acquisition, construction, remodeling, or refinancing intended for housing, with the purpose of ensuring transparency in its granting and fostering competition.

Article 2. The following apply supplementarily to this Law, in the order indicated:
I. Special commercial laws;
II. The Commercial Code, and
III. The civil legislation of the Federal Entity where the legal acts referred to in this Law are carried out.

Article 3. For the purposes of this Law, the following are understood:
I. Repealed.
II. Secured Credit. The credit granted by Entities with a real guarantee, whether through mortgage, pledge, stock guarantee, guarantee trust, or any other form, intended for the acquisition, construction, remodeling, or refinancing related to real estate. For the purposes of this definition, operations carried out by Entities subject to the sale with retention of title, lease with purchase option, or installment sale modalities are equated to Secured Credit and will have the same treatment granted by this Law.
III. Secured Credit for Housing. The Secured Credit granted related to housing.
IV. Real Estate Developer. It is the commercial company, owned by an individual or legal entity, that habitually engages in the construction, remodeling, or sale of real estate, using or granting Secured Credit.
V. Entities. These are commercial companies that directly or through any legal figure habitually engage in the granting of Secured Credit.
VI. Rules. The general provisions issued by the Secretariat of Finance and Public Credit, in accordance with this Law, which must be published in the Official Gazette of the Federation.
VII. Creditor Subrogation. It is the substitution of the creditor Entity in a Secured Credit by another, under the terms of this Law.
VIII. Debtor Subrogation. It is the substitution of the Debtor in a Secured Credit by another, under the terms of this Law.
IX. Professional Appraiser is the person who holds a postgraduate professional license in appraisal issued by the Secretariat of Public Education and who is authorized for this purpose by the Federal Mortgage Society, S.N.C.;
X. Controller. It is the professional appraiser who has a special power to sign on behalf of and in representation of the Valuation Unit corresponding to the appraisals it certifies;
XI. Valuation Unit. It is the legal entity that is registered as such in the Federal Mortgage Society, S.N.C., in accordance with the provisions it issues.

Chapter II

Prior Information

Article 4. Repealed.

Article 5. Entities, regarding Secured Credits for Housing, must provide in their establishments open to the public, to those who request it or allow it to be obtained from an electronic medium located in said establishment, a printed brochure, whose purpose will be to inform the terms and conditions of the Secured Credits for Housing offered by the Entity and whose minimum content will be:
I. Commercial name of the Entity;
II. Maximum amount of the credit with respect to the appraisal value;
III. Ordinary interest rate, penalty interest rate, and the Total Annual Cost;
IV. Terms, amortization system, and periodicity;
V. Conditions for early payment of the Secured Credit for Housing;
VI. Maximum commissions, which will include any expense in favor of the Entity that the borrower may incur;
VII. Approximate information related to federal and local contributions and other mandatory expenses derived from the nature of the operation, which are not borne by the Entity, corresponding to procedures and services provided by third parties;
VIII. Expenses that the applicant will incur even if the Secured Credit for Housing is not formalized;
IX. Services that the applicant must contract obligatorily as a condition for the granting of the Secured Credit for Housing;
X. Amount of periodic installments, if applicable, and
XI. The other requirements that, if applicable, are established by the Rules.

The Rules may establish the format of the information in such a way as to allow the applicant to compare it, with the objective that they choose in an informed manner the credit that best suits their interests. The delivery of this brochure will be free, even if the applicant chooses not to contract the Secured Credit for Housing with the Entity. Likewise, Entities must allow the consultation of the information contained in the brochures through remote electronic means.

Title II

Contracting of Secured Credits

Chapter I

Binding Offer

Article 6. Entities, regarding Secured Credits for Housing, are obligated to extend, at no cost, a binding offer at the request of the applicant and based on the information declared in good faith by the latter, without requiring the presentation of documents supporting such information.

To this effect, Entities at the client's request must provide a credit application, which will contain all the requirements that the applicant must declare in order to obtain the binding offer. This application must establish all the documents and requirements necessary for the contracting of the credit and that must be presented upon acceptance of the offer.

The binding offer has the purpose of establishing the specific terms and conditions under which the Entity obligates itself to grant the Secured Credit for Housing to the applicant, and must contain, at least:
I. Loan amount and method of delivery;
II. Amortization method;
III. The ordinary interest rate, penalty interest rate, and the Total Annual Cost;
IV. Applicable commissions;
V. Express acceptance by the Entity granting the credit, that it will receive the advance payment thereof by any other Entity and will assign all its rights derived from the corresponding contract, as well as the express acceptance that it will admit the substitution of the debtor, in terms of articles 13 and 14 of this Law;
VI. Expenses borne by the borrower;
VII. Causes and penalties for early termination or resolution, and
VIII. Those established by the Rules.

The Rules will specify the format of the credit application and the binding offer, with the objective of facilitating the comparison carried out by the applicant against offers from other Entities.

The binding offer will be formulated in writing and will bind the Entity for a period of 20 calendar days counted from the date of its receipt. The foregoing will take effect, provided that within said period the applicant gives written notice of acceptance of the binding offer and presents duly completed all supporting documentation of the information declared in the application. This is understood on the basis that the Entity cannot request any additional documents to those indicated in said application.

The Entity is obligated to grant the Secured Credit for Housing in the terms and conditions established in the binding offer, provided that the Entity proves: the identity of the applicant; the truthfulness and authenticity of the data provided by the applicant; the creditworthiness of the applicant in accordance with sound market practices and conditions; the carrying out of an appraisal conducted by an authorized appraiser, and compliance with the other formalities required by Law.

If, after the appraisal is carried out, there are differences between it and the declared value of the guarantee, the Entity will endeavor to maintain the interest rate offered in the binding offer.

Chapter II

Property Appraisal

Article 7. The appraisals of the real estate assets subject to Secured Credits for Housing must be carried out by expert appraisers authorized for this purpose by the Federal Mortgage Society, S.N.C. The borrower has the right to choose the expert appraiser who will intervene in the operation from the list presented by the Entity.

To this effect, the Federal Mortgage Society, S.N.C. must establish through general rules the terms and conditions to obtain the authorization of expert appraiser, which will be renewed every 3 years. Likewise, the Federal Mortgage Society, S.N.C. may establish, through said rules, the methodology for the appraisal of real estate assets.

Article 7 bis. Obligations and Prohibitions of Professional Appraisers.

Professional Appraisers will have the following obligations:
I. Maintain confidentiality regarding the information they know and handle in connection with the carrying out of appraisals, unless they use it for statistical purposes;
II. Promptly bring to the knowledge of the Federal Mortgage Society S.N.C. and the respective Valuation Unit, any act or situation that, in the exercise of the appraisal function, could translate into benefit, damage, or prejudice for them, or for any of the persons involved in the appraisals they carry out;
III. Sign the appraisals they carry out, and
IV. Those established by the general rules, as well as those determined for this purpose by the Federal Mortgage Society S.N.C., provided that they do not contravene what is established in this Law.

Professional Appraisers may not:
I. Transmit totally or partially, under any title, the effects derived from the authorization;
II. Present themselves as such until they have the corresponding authorization, or when it is not valid;
III. Carry out appraisals under the authorization granted by the Federal Mortgage Society S.N.C. regarding assets other than Real Estate;
IV. Carry out appraisals on real estate regarding which the Valuation Unit that processed their authorization, its partners, directors, or employees, as well as their spouse, their relatives by blood within the fourth degree, by affinity, or civil relatives, have an interest that could negatively influence the impartiality that must prevail in the appraisals;
V. Carry out appraisals in which some illicit benefit may result for them, the partners, directors, or employees of the Valuation Unit that processed their authorization; or when persons are involved with whom their spouse or their relatives by blood up to the fourth degree, by affinity or civil relatives, have a manifest enmity; and
VI. Those established by the general rules, as well as those determined for this purpose by the Federal Mortgage Society S.N.C., provided that they do not contravene what is established in this Law.

The Federal Mortgage Society S.N.C. may sanction the non-compliance with the obligations and the commission of the prohibited conduct referred to in this article, in the terms and conditions established by the provisions issued for this purpose by the aforementioned Society.

Article 7 ter. Obligations and Prohibitions of Valuation Units.

Valuation Units will have the following obligations:
I. Maintain confidentiality regarding the information they know and handle in connection with the certification of appraisals, unless they use it for statistical purposes;
II. Promptly bring to the knowledge of the Federal Mortgage Society S.N.C. any act or situation that, in the exercise of the appraisal function, could translate into benefit, damage, or prejudice for it, or for any of the persons involved in the appraisals they certify;
III. Allow the Federal Mortgage Society S.N.C. to carry out supervision and audits related to appraisal matters; as well as the technical, accounting, corporate, training, methodological, computer, and operational aspects of said valuation units;
IV. Remove or, if applicable, replace Professional Appraisers and controllers when so indicated by the Federal Mortgage Society S.N.C. or any other competent authority;
V. Assume responsibility for Professional Appraisers and controllers under their service, derived from their respective acts in appraisal matters;
VI. Sanction their Professional Appraisers and/or controllers, when they do not comply with the corresponding regulations in appraisal matters, with the obligations contained in this Law, or incur in any prohibition contained herein, and
VII. Those established by the general rules, as well as those determined for this purpose by the Federal Mortgage Society S.N.C., provided that they do not contravene what is established in this Law.

Valuation Units may not:
I. Transmit totally or partially, under any title, the effects derived from the Registration;
II. Present themselves as such until they have the corresponding Registration;
III. Certify appraisal reports under the registration granted by the Federal Mortgage Society S.N.C. regarding assets other than real estate;
IV. Certify appraisals on Real Estate regarding which the Valuation Unit, its partners, directors, or employees, as well as their Professional Appraisers or controllers, the spouse, relatives by blood within the fourth degree, by affinity or civil relatives of these, have an interest that could negatively influence the impartiality that must prevail in the appraisals; as well as those that are the property of clients representing forty percent or more of the billing of the respective Valuation Unit, in the current fiscal year;
V. Certify appraisals in which some illicit benefit may result for them, their partners, directors, or employees; or when persons are involved with whom their Professional Appraisers or controllers, the spouse, or relatives by blood up to the fourth degree, by affinity or civil relatives of these, have a manifest enmity; and
VI. Those established by the general rules, as well as those determined for this purpose by the Federal Mortgage Society S.N.C., provided that they do not contravene what is established in this Law.

The prohibition indicated in fraction I is excepted for Valuation Units that merge, split, or transform in accordance with the applicable legislation.

Chapter III

Formalization of Secured Credit

Article 8. Repealed.

Article 9. Public notaries before whom the deed is granted will have the following obligations:
I. Verify that the financial clauses contained in the credit contract coincide with the terms and conditions offered in the binding offer;
II. Verify that no expenses or commissions borne by the borrower are included, which should have been included in the financial clauses, and
III. Those provided by the Rules.

Chapter IV

Interest Rates and Reference Indices

Article 10. Repealed.

Article 11. The Federal Mortgage Society will publish monthly in the Official Gazette of the Federation, information exclusively related to the conditions of the market for Secured Credits with mortgage guarantee, which allows interested parties to evaluate the binding offers they receive. This information must also be disseminated through the Internet page of the Federal Mortgage Society or other electronic means.

Article 12. Repealed.

Title III

Subrogation of Credits

Chapter I

Debtor Subrogation

Article 13. When the sale of a real estate asset subject to a Secured Credit that has not yet been fully amortized is concluded, the buyer may be subrogated in the rights and obligations of the Debtor, without the need to constitute a new guarantee, in order to avoid duplicating the expenses inherent to the Credit, to the detriment of the acquirer. The foregoing, provided that the buyer presents a credit application to the Entity and complies with the other requirements and obligations established in article 6 of this Law.

Article 14. When there is a Secured Credit to a Real Estate Developer for the purpose of constructing real estate assets for subsequent commercialization, buyers may be subrogated in the rights and obligations of the Real Estate Developer, individualizing said credit in the proportional part thereof corresponding to the part or real estate acquired, without the need to constitute a new guarantee, with the purpose that no new expenses are passed on to the detriment of the buyer. The foregoing, provided that the buyer presents a credit application to the Entity and complies with the other requirements and obligations established in article 6 of this Law.

Chapter II

Creditor Subrogation

Article 15. In the event that a Secured Credit is paid early through the contracting of a new one with another Entity, said Entity will be subrogated by operation of law in the rights of the subrogating creditor and the original guarantee and its priority will remain unchanged, to avoid the constitution of a new guarantee and the inherent expenses thereof.

In Creditor Subrogation, when the subrogated creditor is a credit institution, a multiple-purpose financial society regulated by having links with a multiple banking institution, the National Housing Fund Institute for Workers, the Housing Fund of the Institute of Social Security and Social Services for State Workers, or the Social Security Institute for the Mexican Armed Forces; it will not be necessary to formalize said subrogation in a public deed, being sufficient that the following procedure is complied with:

I. That the subrogating creditor, within a period of fifteen calendar days counted from the date of the request made by the debtor, issues a document stating the amount of the total debt of the Secured Credit, calculated on the date on which said debt is to be settled. The cited document must include a detailed description of the concepts that make up the total amount.

When the debtor does not agree with the amount contained in the document referred to in the previous paragraph, they may present a clarification request to the subrogating creditor, and the latter must confirm the amount or, if applicable, issue a new document with the correct amount within a period not greater than ten calendar days counted from the presentation of the aforementioned request.

The respective request may be presented in writing at the branch where the secured credit is located, or in the specialized unit of the institution in question. In all cases, the institution is obligated to acknowledge receipt of said request.

Non-compliance with what is established in this fraction by the subrogating creditor, regardless of the payment of damages and losses that may apply, will be sanctioned with an administrative fine of ten thousand to fifteen thousand days of the general minimum wage in force in the Federal District calculated on the date of the infringement, which will be imposed by the National Commission for the Protection and Defense of Users of Financial Services, in accordance with the procedures established in the laws applicable to it;

II. At the moment the payment to the subrogating creditor is made for the amount of the document referred to in fraction I, it must be made known to them that the same is made for the purposes of what is established in the first paragraph of this article, in order for the guarantee to remain unchanged. Once said payment is made, the subrogating creditor will have no right to claim any other payment regarding the Secured Credit in question;

III. That for it to take effect against third parties, the document referred to in fraction I of this article, the document accrediting the total payment of the debt of the Secured Credit, and the public or private document ratified before a public notary in which the Creditor Subrogation is stated, are registered in the electronic folio referred to in article 21 of the Commercial Code, both of the subrogating creditor and the subrogated, directly, immediately, automatically, and at no cost, and

IV. That the subrogated creditor requests the taking of note of the registry entry made in the Public Commerce Registry, relating to the subrogation referred to in the previous fraction, in the real folio of the corresponding real estate in the Public Property Registry or special registries. The foregoing, in order that in said folio the annotation relating to the act of subrogation is maintained until the corresponding encumbrance subsists.

In accordance with what is established in article 17 of this Law, the National Housing Fund Institute for Workers, the Housing Fund of the Institute of Social Security and Social Services for State Workers, and the Social Security Institute for the Mexican Armed Forces, cannot be subrogating creditors but may be subrogated creditors in the terms of the second paragraph of this article.

Title IV

Common Provisions

Article 16. First paragraph.- Repealed.

The commission established for early payment in Creditor Subrogation in Secured Credits at variable rates, may not be higher than one percent of the remaining amount of the credit that remains to be amortized.

Article 17.- The provisions of this Law are exempted for Secured Credits granted in compliance with obligations derived from collective labor contracts. Likewise, Article 13, 14, and 15 of this Law are exclusively exempted for Secured Credits granted, financed, or guaranteed by the National Institute for Housing Funds for Workers, the Housing Fund of the Social Security and Services Institute for State Workers, the Popular Housing Fund, or any other public entity that carries out such activities.

Credits granted, financed, or guaranteed by the Federal Mortgage Society, S.N.C. will be subject to Article 15 of this Law provided that the new Entity subrogates itself in turn, under the terms and conditions of the original contract with the Federal Mortgage Society, S.N.C. The provisions established in Articles 13 and 14 of this Law will apply only when the Entity maintains the same conditions of the original transaction with the Federal Mortgage Society, S.N.C.

Article 18.- The National Banking and Securities Commission, with respect to financial entities that grant Secured Credit, and the Federal Attorney's Office for Consumer Protection, with respect to other Entities that habitually grant Secured Credit, within the scope of their respective competencies, will monitor and supervise compliance with this Law and the provisions emanating from it. This is without prejudice to the powers held by the National Commission for the Defense of Users of Financial Services in terms of its Law.

(6) Article 19.- Without prejudice to the provisions of Articles 13, 14, and 15 of this Law and with the objective of achieving a greater reduction in transaction costs for Subrogation of Debtor and Subrogation of Creditor, the Ministry of Economy may conclude coordination agreements with States and Municipalities to eliminate registration costs and notarial fees, ensuring that in cases of subrogation, the same costs of a new transaction are not charged, and if possible, eliminating them. This is to benefit borrowers and incentivize the reactivation of credit.

(5) Article 19-Bis. In Credits with mortgage guarantee, Entities must grant before the corresponding public notary the deed stating the extinction of said encumbrance once the borrower has paid the outstanding guaranteed balance or for any cause the referred credit has been extinguished.

(5) The Entity must make available to the borrower the first testimony of the respective public instrument within sixty business days following the date on which the referred credit has been extinguished.

(5) In the case where the law in the matter does not require a public instrument for the release of the encumbrance, the Entity within a period not exceeding twenty days must deliver to the borrower the certificate of release of the obligation under its charge, for compliance, for its registration in the Public Registry of Property and Commerce, running at the expense of the Entity the certifications or ratifications of signature before a notary for the cancellation.

(7) In the case of Subrogation of Creditor, the subrogated creditor must observe what is provided in the three preceding paragraphs, as applicable.

(7) Non-compliance with the provisions of this article will be sanctioned with an administrative fine of an amount of fifteen thousand to twenty thousand days of the general minimum wage in force in the Federal District calculated on the date of the infraction, which will be imposed by the National Commission for the Protection and Defense of Users of Financial Services with respect to financial entities, and by the Federal Consumer Protection Attorney's Office with respect to other Entities, within the scope of their respective competencies, in accordance with the procedures established in the laws applicable to them.

(7) Article 20.- If in the contracting of the Secured Credit an insurance is offered to the debtor at his expense, the cost and consent to contract said insurance must be expressly stated in the same section in which his consent will be obtained. Likewise, if such insurance is established by the Entity as a requirement for contracting the credit, the debtor must be informed that contracting it with the Entity itself is optional.

TRANSITORY PROVISIONS

(1) FIRST. This Law will enter into force on January 1, 2003. The provisions of the Law will not apply to credits contracted prior to its entry into force.

(1) SECOND. The Ministry of Finance and Public Credit, the Ministry of Economy, the Bank of Mexico, and the Federal Mortgage Society must publish, within a term not exceeding six months from the entry into force of this Law, the provisions that correspond to each of them to issue. Until the Federal Mortgage Society publishes the rules referred to in Article 7 of this Law, Entities must offer a list of appraisers to the borrower, so that he is in a position to choose an expert appraiser.

Mexico, D.F., December 15, 2002.- Dep. Beatriz Elena Paredes Rangel, President.- Sen. Enrique Jackson Ramírez, President.- Dep. Adela Cerezo Bautista, Secretary.- Sen. Sara I. Castellanos Cortés, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on the twenty-sixth day of the month of December of two thousand two.- Vicente Fox Quesada.- Signature.- The Secretary of the Interior, Santiago Creel Miranda.- Signature.

TRANSITORY PROVISIONS

(Decree by which various provisions of the Law on Transparency and Promotion of Competition in Secured Credit are reformed, published in the Official Gazette of the Federation on June 13, 2003)

UNIQUE. This Decree will enter into force the day following its publication in the Official Gazette of the Federation.

Mexico, D.F., April 29, 2003.- Dep. Armando Salinas Torre, President.- Sen. Enrique Jackson Ramírez, President.- Dep. Rodolfo Dorador Pérez Gavilán, Secretary.- Sen. Yolanda E. González Hernández, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on the tenth day of the month of June of two thousand three.- Vicente Fox Quesada.- Signature.- The Secretary of the Interior, Santiago Creel Miranda.- Signature.

TRANSITORY PROVISIONS

(Decree by which various provisions of the Law on Transparency and Promotion of Competition in Secured Credit are reformed and added, published in the Official Gazette of the Federation on February 7, 2005)

Article First.- This Decree will enter into force the day following its publication in the Official Gazette of the Federation.

Article Second.- Persons who currently hold authorization as an expert appraiser before the Federal Mortgage Society, S.N.C., will have a term of three years, counted from the entry into force of this Decree in the Official Gazette of the Federation, to obtain the professional certificate referred to in Article 3, fraction IX, being able during the course of said term to act as expert appraisers.

If, after the aforementioned term has concluded, they do not obtain the aforementioned professional certificate, the authorization as an expert appraiser will be cancelled for them.

Mexico, D.F., December 14, 2004.- Dep. Manlio Fabio Beltrones Rivera, President.- Sen. Diego Fernández de Cevallos Ramos, President.- Dep. Marcos Morales Torres, Secretary.- Sen. Sara I. Castellanos Cortés, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on the third day of the month of February of two thousand five.- Vicente Fox Quesada.- Signature.- The Secretary of the Interior, Santiago Creel Miranda.- Signature.

TRANSITORY PROVISIONS

(Decree by which the Law for Transparency and Ordering of Financial Services, published on January 26, 2004, is abrogated, the Law for Transparency and Ordering of Financial Services is issued, and various provisions of the Credit Institutions Law, the Law for Protection and Defense of Users of Financial Services, and the Law of the National Banking and Securities Commission are reformed, added, and repealed, published in the Official Gazette of the Federation on June 15, 2007).

ARTICLE FIRST.- This Decree will enter into force the day following its publication in the Official Gazette of the Federation.

ARTICLE SECOND.- Infractions to the general provisions issued by the Bank of Mexico, in matters of total annual cost (CAT), credit cards, advertising, statements of account, and contracts, committed by credit institutions and limited object financial societies, prior to the entry into force of this Law, will be sanctioned by the Bank itself in accordance with the laws in force at the moment the cited infractions were committed.

ARTICLE THIRD.- Entities will have a term of up to one hundred eighty natural days from the entry into force of this Decree, to adapt to the provisions thereof.

ARTICLE FOURTH.- For the effects of what is provided in Article 48 Bis 2 of the Credit Institutions Law, the Bank of Mexico will have thirty days from the entry into force of this Decree to issue the general provisions.

ARTICLE FIFTH.- Upon entry into force of this Decree, the Law for Transparency and Ordering of Financial Services published in the Official Gazette of the Federation on January 26, 2004, will be abrogated.

ARTICLE SIXTH.- Upon entry into force of this Decree, the following legal provisions are repealed from the Law on Transparency and Promotion of Competition in Secured Credit:

Articles 3, fraction I, 10, and 16 first paragraph.

Article 4. Without prejudice to the foregoing, the General Rules issued by the Ministry of Finance and Public Credit under said Article will continue in force, with respect to the Entity in question, until such time as the authorities that are competent, in accordance with what is stated in Article 12 of the present Law for Transparency and Ordering of Financial Services, issue in the scope of their respective competence, the general provisions that this latter Law provides for in matters of advertising.

Article 8. Without prejudice to the foregoing, the General Rules issued by the Ministry of Finance and Public Credit under said Article will continue in force, with respect to the Entity in question, until such time as the authorities that are competent, in accordance with what is stated in Article 11 of the present Law for Transparency and Ordering of Financial Services, issue in the scope of their respective competence, the general provisions that this latter Law provides for in matters of adhesion contracts, understanding that such provisions will contemplate the minimum content indicated in fractions I to VI of said Article 8 for Secured Credits for Housing.

Article 12. Without prejudice to the foregoing, when the authorities that are competent, in accordance with what is stated in Article 13 of the present Law for Transparency and Ordering of Financial Services, issue in the scope of their respective competence, the general provisions that this latter Law provides for in matters of statements of account, they must include the calculation of the Total Annual Cost corresponding to the rest of the validity of the Secured Credit for Housing.

ARTICLE SEVENTH.- Upon entry into force of this Decree, Articles 87-I, fraction II; 87-L, second paragraph, and 87-M, fraction IV, are repealed from the General Law of Organizations and Auxiliary Credit Activities.

ARTICLE EIGHTH.- The general provisions that the Bank of Mexico has issued in matters of advertising, statements of account, or adhesion contracts directed to credit institutions or limited object financial societies will remain in force until such time as the general provisions that, in accordance with what is provided in this order, the National Banking and Securities Commission issues regarding the mentioned topics enter into force.

Mexico, D.F., April 26, 2007.- Sen. Manlio Fabio Beltrones Rivera, President.- Dep. Jorge Zermeño Infante, President.- Sen. Renan Cleominio Zoreda Novelo, Secretary.- Dep. Antonio Xavier Lopez Adame, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on the twelfth day of the month of June of two thousand seven.- Felipe de Jesús Calderón Hinojosa.- Signature.- The Secretary of the Interior, Francisco Javier Ramírez Acuña.- Signature.

TRANSITORY PROVISIONS

(Decree by which various provisions of the Law for Transparency and Ordering of Financial Services, the Credit Institutions Law, the Law to Regulate Credit Information Societies, the Law on Transparency and Promotion of Competition in Secured Credit, and the Bank of Mexico Law are reformed, added, and repealed, published in the Official Gazette of the Federation on May 25, 2010)

First. This Decree will enter into force the day following its publication in the Official Gazette of the Federation.

Second. The Bank of Mexico will issue the general provisions referred to in Article 4 Bis of the Law for Transparency and Ordering of Financial Services within a term of sixty natural days counted from the day following the entry into force of this Decree.

Third. Entities will have a term of ninety natural days, counted from the day following the entry into force of this Decree, to comply with what is provided by Article 4 Bis 1 of the Law for Transparency and Ordering of Financial Services and 48 Bis 2 of the Credit Institutions Law in matters of basic credit card product.

Fourth. Persons who operated before the entry into force of this Decree as Clearing Chambers in terms of what is provided by Articles 19 and 19 Bis of the Law for Transparency and Ordering of Financial Services, will have a term of ninety natural days counted from the date on which the general provisions to be issued under said provisions enter into force, to present the respective authorization request.

Fifth. Societies will have a term of one hundred eighty natural days counted from the day following the entry into force of this Decree to comply with the obligations referred to in Articles 2 and 36 Bis of the Law to Regulate Credit Information Societies.

Credit Information Societies will have a term of up to one hundred eighty natural days from the entry into force of this Decree to present to the Commission the agreement mentioned in Article 36 of said Law.

Credit information societies must obtain authorization from the National Banking and Securities Commission regarding the tariffs that said societies must offer to their Users for credit reports, in terms of Article 36 Bis of the Law to Regulate Credit Information Societies within the one hundred eighty natural days following the entry into force of this Decree.

Sixth. For the effects of Article 20, Societies must eliminate, within a term not greater than 90 natural days, from their databases records whose origin was not informed by Users prior to this reform. For re-registration, Users must specify the dates of origin of the credit and of its first default, the latter cannot be greater than 72 months.

Mexico, D.F., February 11, 2010.- Sen. Carlos Navarrete Ruiz, President.- Dep. Francisco Javier Ramirez Acuña, President.- Sen. Martha Leticia Sosa Govea, Secretary.- Dep. Carlos Samuel Moreno Teran, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on fourteen May of two thousand ten.- Felipe de Jesús Calderón Hinojosa.- Signature.- The Secretary of the Interior, Lic. Fernando Francisco Gómez Mont Urueta.- Signature.

Transitory Provisions

(Decree by which various provisions in financial matters are reformed, added, and repealed and the Law to Regulate Financial Groupings is issued, published in the Official Gazette of the Federation on January 10, 2014)

ARTICLE FIFTY-FOURTH.- In relation to the modifications referred to in Article Fifty-Third of this Decree, the following will be observed:

I. The general provisions that detail the registration procedures provided for in Article 15 of the Law on Transparency and Promotion of Competition in Secured Credit must be issued by the Ministry of Economy within sixty natural days following the entry into force of this Decree.

Likewise, the Ministry of Economy must implement a format in accordance with Article 20 of the Commerce Code for the inscription of the subrogation referred to in Article 15 of the Law on Transparency and Promotion of Competition in Secured Credit within a term not greater than 6 months following the entry into force of this Decree.

TRANSITORY PROVISION OF THE DECREE

UNIQUE. This Decree will enter into force the day following its publication in the Official Gazette of the Federation, except for what is provided in ARTICLES TWENTY-FIFTH, fraction I; THIRTIETH, fractions IV and VI; FORTIETH, fractions I and II; and FIFTIETH, fractions I and II, which will enter into force on the dates established in said provisions.

Mexico, D.F., November 26, 2013.- Dep. Ricardo Anaya Cortes, President.- Sen. Raúl Cervantes Andrade, President.- Dep. Javier Orozco Gomez, Secretary.- Sen. María Elena Barrera Tapia, Secretary.- Signatures.

In compliance with what is provided by fraction I of Article 89 of the Political Constitution of the United Mexican States, and for its due publication and observance, I issue this Decree at the Residence of the Federal Executive Power, in Mexico City, Federal District, on nine January of two thousand fourteen.- Enrique Peña Nieto.- Signature.- The Secretary of the Interior, Miguel Ángel Osorio Chong.- Signature.

EXPOSICION DE MOTIVOS
(Decree of December 30, 2002)
Mexico has been undergoing a critical stage for development for two years. Since mid-2000, it was anticipated that 2001 would be a difficult year in the global economic context. Forecasts pointed towards a significant slowdown in the growth rate of the world economy; this loss in the dynamism of international markets would be the result of a prolonged period of expansion in the world economy that resulted in inflationary pressures and the consequent macroeconomic imbalances, which, until a few weeks ago, showed their effects on interest rates and generally on global economic indicators. Mexico transitions in this adverse international context throughout 2001, a year in which the change of government, the slow recovery of international markets combined with the strict control over monetary policy implemented in the country, slowed down the recovery process of our economy. Towards the end of 2001, the tragic events of September 11 in the United States come to reconfigure, once again, the expectations of recovery in the global economic environment. In this way, to date, economic recovery has been postponed, meaning a huge setback to the country's development, which saw interrupted a trend of growth in gross domestic product that reached levels of 7.1% annually. The final balance of this process yields hundreds of thousands of jobs lost, stagnation in infrastructure development, the freezing of social spending and, consequently, the worsening of poverty. Despite the adverse effects of such a prolonged crisis, in the end we have learned a great lesson: the urgent need to generate mechanisms that protect the development of the national economy against the blows of the international economic context by boosting the economy from an internal perspective; in other words, we have learned that it is indispensable to generate policies that, based on the strengthening and boosting of the development of internal markets, reduce our economic dependence in relation to international markets; in particular, with respect to the economy of the United States. The present Initiative constitutes a first, but important effort, towards a new model for economic development. A model based on schemes for strengthening the national productive sector. A model based on boosting the Mexican identity of investments. A model consistent with decisive support for national production. In short, a model tending to procure greater economic independence. The present project will constitute a decisive factor for the recovery and reactivation of the economy from a national perspective. The Initiative that we now submit to the consideration of the Honorable Congress of the Union seeks to reinforce two major aspects in operations related to mortgage credit: competition and transparency. The first aspect refers to competition among Financial Institutions by establishing, by law, that debtors who have signed a mortgage credit with certain contract conditions, have the possibility of signing a
new contract, under more favorable conditions in interest rate, terms, amortizations, among others. Likewise, the present project will strengthen the responsibility of public notaries, will also generate pressure for the files of the Public Property Registry to be updated, and improvements in the efficiency of appraisal procedures will be promoted. Additionally, the project contemplates the establishment of a secondary market for mortgage credits. Thus, in the present Initiative, mechanisms are established that, by law, will generate and promote competition among the various Financial Institutions, regarding mortgage credit offers. This will ultimately translate into a reduction of mortgage credit interest rates, thereby incentivizing family investment and a strong boost to the Mexican economy, using the construction industry as a trigger, an industry characterized by demanding, 97% of its total inputs, goods produced in the country. Likewise, it should be remembered that the construction industry is an activity with high intensity in the use of labor, so we are convinced, it will decisively contribute to reducing unemployment levels in the country. On the other hand, construction is directly linked to 43 branches of economic activity, thus generating greater dynamism of the activity itself. In summary, this scheme constitutes an important generator of growth and employment; likewise, by generating an internal economy with greater dynamism and solidity, the growth of gross domestic product is stimulated. A second aspect of the Initiative refers to transparency. The project we submit to the consideration of this honorable assembly contemplates, by law, the obligation of financial institutions to provide clear, expeditious, simple information, without giving rise to interpretations, the terms and conditions that will be included in credit contracts. In this way, the present Initiative integrates a scheme for the protection and certainty of those who demand credit. In summary, the present project constitutes an effort to build agile mechanisms that give dynamism to the national economy and allow its recovery, through schemes that promote competition, and constitute triggers for the productive development of the country, under the shadow of legality and transparency. For all the above, the following is submitted to the consideration of this Honorable Assembly:
Exposición de Motivos
(Decree of June 13, 2003)

Background
On December 30, 2002, the Transparency and Competition Promotion Law in Secured Credit was published in the Official Gazette of the Federation, which entered into force from January 1, 2003.
This regulation aims to make transparent the information delivered to the public, regarding the credits granted by the various entities, providing greater legal certainty and more precise information on the terms and conditions of these credit offers.
Likewise, this law seeks to generate greater competition among the entities granting financing, which could promote the reduction of interest rates and generally improve conditions for credit consumers.
Concrete Proposals
The proposed reforms aim to fully comply with the objectives of the law, which will allow a more adequate and effective application of it, as the mechanisms established by the regulation are specified and the scope of some scenarios contained therein will be clarified. In this sense, the following is proposed:
One of the most important requirements established in the law is the obligation of entities to inform anyone intending to acquire credit, on the total costs inherent to such operation over the course of a year, which is called the Total Annual Cost.
Regarding this, and in order to constitute it in such a way that it reflects with greater precision the expense related to the financing granted by the entities, it is proposed to modify paragraph I of article 3, so that insurance policies that Entities require to be contracted and that in some cases significantly increase the expenses borne by clients are integrated into the calculation of the Total Annual Cost. This would allow the general public to make a more precise comparison of the different services offered by entities. It is proposed to exclude self-financing systems from paragraph II of article 3, because the improvement in the regulation of these systems should be addressed in the Federal Consumer Protection Law, which is the regulation responsible for guaranteeing the legal certainty of consumers who carry out operations within self-financing systems, in a more efficient manner, by establishing provisions that oblige Providers to disclose relevant information that allows said consumers to make adequate decisions. On the other hand, given that the scope of application of the law involves various commercial societies, which without being financial entities can grant financing, it is proposed to provide in the wording of article 10 the intervention of the Ministry of Economy within its competence, to define the components, calculation methodology and frequency of the Total Annual Cost, clearly determining the competence of each authority that intervenes in its integration. This proposal is consistent with what is established in the current text of article 16, where the participation of the Ministry of Economy within its competence is delimited. It is provided through the present reform to clarify some issues regarding debtor subrogation in order to make it more functional and coherent with civil and financial legislation. Regarding this, it is proposed to clarify that the provisions established in article 6 of the law are applicable to the case of debtor subrogation, the above, with the purpose of requiring the issuance of binding offers in these cases, allowing banks to comply with what is established in article 65 of the Credit Institutions Law regarding the credit evaluation process. Likewise, it is proposed to clarify that debtor subrogation is an option that the buyer can exercise and not an obligation as it seems to be inferred from the current wording of article 13. For the above, it is proposed to unify the content of said article with that of article 14. In order to avoid confusion or conflicts regarding the applicability of the law, the reform proposes to clearly define in the first transitory article that the law does not apply to credits that were contracted prior to its entry into force, that is, the principle of non-retroactivity of the law is embodied in it. Finally, it is proposed to substitute in the Second Transitory Article, the mention of the National Banking and Securities Commission by the Federal Mortgage Society,
since it is the latter that has the obligation to issue rules in accordance with article 7 and not the mentioned Commission. Likewise, it is clarified that the rules referred to in the second sentence of said article are those that the Federal Mortgage Society must issue, in accordance with article 7 of the law. For the above reasons, we allow ourselves to submit to the consideration of this honorable assembly the following Initiative of EXPOSICION DE MOTIVOS (Decree of February 7, 2005) The Transparency and Competition Promotion Law in Secured Credit aims to regulate financial activities and services oriented towards granting secured credit for the acquisition, construction, remodeling or refinancing intended for housing, with the aim of ensuring transparency in its granting and promoting competition. When a housing appraisal is requested, it is common to hear: "Do you want it to sell or to buy?" We know that a house located on the same street, built with the same measurements, design and materials, have appraisals that start from the principle of "as I see it, I give." We have seen how expert appraisers sign valuations of real estate properties of which they do not even know the location, only by the request of the entity for which they work. The term of expert appraiser derives from the first half of the last century when, as there were no professionals dedicated to valuation, any person who was judged to have "expertise" in knowing the value of the goods to be valued was appointed. In Mexico, 16 universities have established postgraduate study programs at the levels of specialties, master's degrees and doctorates. Likewise, there are legal norms that require that appraisals be carried out by persons with a professional license as an appraiser, such as the Regulations of the Federal Fiscal Code, in its fourth article, and the Appraisals Commission of National Goods. Currently, the applicant must choose between the list presented to him by the entity to an "expert appraiser", becoming judge and party. The law commented here is a transparency law, and as such, it must promote, respect and enforce it; the Federal Mortgage Society (SHF) must not allow the "entity's" discretion to present lists of expert appraisers. The expert appraiser, today professional appraiser, is in a state of direct dependence on the "entity", by seeking to belong to its roster, thus causing dependence on it and obligation to represent its interests, leaving aside the transparency that must prevail. It is a competition law, and as such, it must promote it, in no way direct it. There would be no competition to appraise the properties financed by the "entity" when it selects its lists of expert appraisers and obliges the accredited person to choose from the limited list presented to them. The supposed distrust that the entity might argue regarding the appraisals would not proceed, since the SHF records are available and - in addition - there is the "damage insurance" with
which the valuation unit has. It is urgent to establish controls so that unfavorable experiences of a new Fobaproa are not repeated. Officially validating an appraisal by those who only have the SHF registration before any "financial entity" will allow competition and transparency. The above, to give the opportunity for their professional update. The proposals presented to this Plenary will guarantee fair payment to persons to whom credit is currently granted to acquire a home, and will allow competition with the transparency that the times require. For the above and founded, I allow myself to present the following EXPOSICIÓN DE MOTIVOS (Decree of June 15, 2007) The financial sector in Mexico has achieved unprecedented strength in contemporary history, overcoming the backlog it had been carrying since the last banking crisis, in December 1994, all as a result of economic stability and the environment of certainty that is experienced in the country. According to figures from the National Banking and Securities Commission, by the end of 2005, multiple banking generated profits of almost 48 billion pesos, 83% more than a year before, and 256% (3.5 times) greater than those reported at the end of 2000. Just in the first half of 2006, the profits of multiple banking totaled 29,502 million pesos, almost 18% more than in the first semester of 2005, and 16.25 more than those obtained from January to December 2004. These results are a clear reflection of the profitability and solidity of banking, and should account, at the same time, for more and better services, at competitive and more accessible prices for users, as well as a more decisive labor of support and financing for the private sector. However, contrary to what the operating results of multiple banking suggest, its success is based on the concentration of operations in consumer credit, in more and higher commissions for the services it provides, and excessive interest rates, which do not reflect the decrease in the cost of collection and in the reference interest rates of the market, nor do they translate into better services for users. The total credit portfolio has been steadily increasing since 2002, reaching a total balance of 1 trillion 256 billion 520 million pesos by June 2006, representing a nominal growth of 8.2% compared to the end of 2005, that is, in just six months[3], mainly due to the items of commercial credit, consumer credit and housing credit. Of the total portfolio outstanding as of June 2006, 37% constituted commercial credit, 24.36% consumer credit, and 16.26% housing credit. However, the dynamism of the items comprising the credit portfolio shows very important differences. For example, while credit to companies and individuals reported an increase of 6.2% from December 2004 to the end of 2005, consumer credit increased in real terms 46.5% in that same period, and housing credit did so by 32.1%. Consumer credit has sustained a notable growth in the last 69 months, in what
is its longest expansion period in modern history. In this way, consumer credit has proven to be extremely profitable, since active interest rates remain at excessive levels, to the benefit of banking, with levels above 40%, which implies a differential with respect to the average collection cost of up to 36 percentage points. In particular, credit cards are the product that has been the subject of the most aggressive promotional campaigns, since all banks grant them with minimal requirements, and in a large part of cases without adequate risk assessment, which has led to the overdue portfolio concentrating mainly in this item. Contrary to the downward trend of reference interest rates in this sexennium, which has been reflected in historical lows close to 4% in the 28-day CETES interest rate, the rates corresponding to the cards of the main credit issuers have recorded significant increases. Additionally, to interest income are added the commissions charged for the use of credit and debit cards, account management and transfers, such as the use of checks, cash withdrawal, balance inquiry, payment with card at point of sale terminals, among many others. Along with consumer credit, and largely derived from this, the collection of commissions has followed an increasing trend, which has allowed banks to finance, on average, more than 50% of their operating and promotion expenses, with cases such as BBVA-Bancomer whose commission income covers almost 70% of their operating and promotion expenses. At the end of 2005, net commission income totaled 45,101 million pesos, a real increase of 9.8% compared to 2004, mainly due to increases in commissions to affiliated businesses, credit card annual fees and account management, becoming the second source of income after the financial margin. The main banking institutions, which concentrate 90% of the total commissions charged, have recorded a significant increase in income from this item between 1998 and 2005. Thus, in that period, Banorte reported a growth of 674%, Inbursa of 347%, HSBC of 217%, BBVA Bancomer of 214%, Banamex of 161%, Santander Serfin of 158%, and Scotiabank Inverlat of 100%. The case of Bancomer and Banamex, which together concentrate almost 52% of the gross commission income charged in 2005, is also representative of the high concentration of banking services to the detriment of competition, particularly in certain relevant markets such as consumer credit and checking accounts. The Association of Banks of Mexico (ABM) has defended the increase in commissions under the argument that it is a worldwide phenomenon, and maintains that for a comparative analysis of commissions, the characteristics of the product, customer habits, regulation and market characteristics and business strategy must be considered. However, an analysis by the Economic Commission for Latin America (ECLAC) demonstrates that although it is true that the increase in commissions is an international phenomenon, in other
countries this trend has been accompanied by a significant decrease in interest income, which has not happened in Mexico. Thus, in addition to the increasing income from commissions, which constitute about 50% of the financial margin, in Mexico there persists an average differential of 30 percentage points between active and passive rates on credit cards, which invalidates the justification made by the ABM for the excessive collection of commissions. This problem has been recognized and widely debated in our country by financial authorities such as the Ministry of Finance, CONDUSEF and the Bank of Mexico, as well as by the Federal Competition Commission, which have repeatedly pointed out the disproportionate level of commissions for banking services to the detriment of the consumer. At the same time, Congress has proposed various initiatives to address the problem, which have not prospered so far. We must recognize that there have been important advances through the Law for the Transparency and Regulation of Financial Services, and the provisions issued by the Bank of Mexico regarding advertising on the costs, fees and interest rates of the different products they offer to the public. This has allowed greater competition among banks, slightly halting the escalation in commissions and interest rates, since the user now has a greater possibility of comparing the products offered by banks, so as to make a better decision on which offers better services at lower costs. However, the problem persists, due fundamentally to restrictions on competition, as COFECO has pointed out, which has even recently published a specific study on the high commissions charged by AFOREs. For all the above, in the present initiative it is proposed to reform, on the one hand, the Law for the Transparency and Regulation of Financial Services and the Bank of Mexico Law, to clearly establish that it will be the Bank of Mexico that defines the procedure for the determination of commissions for banking services. On the other hand, it is also proposed to reform the Credit Institutions Law, so that CONDUSEF can directly request that COFECO evaluate the competition conditions of the banking sector, and thus no longer have to make the request through the Bank of Mexico. The National Banking and Securities Commission is also added so that it has this same faculty. In the reform to the Credit Institutions Law, we also propose that in case COFECO determines that there are no competition conditions, the Bank of Mexico be authorized to establish the maximum permitted commissions and fees while such situation prevails. International experience shows that countries such as the United Kingdom, Australia and others in the European Union have decisively promoted regulations in this sense, obliging credit institutions to reduce commissions.

The current market conditions completely favor banking, leaving the consumer at a disadvantage; therefore, pursuant to the express mandate of the third paragraph of Article 28 of the Constitution, it is our duty to legislate to protect their legitimate interests.

Thus, for all the aforementioned reasons, I submit to the consideration of this Sovereignty the following Initiative with the project of:

EXPOSITION OF MOTIVES
(Decree of May 25, 2010)

Throughout history, the global economy has gone through periods of major financial crises. The common characteristic of all these crises is that the interest rate rose abruptly as a result of the exceptional high demand for money associated with this phase of economic crisis.

In the case of Mexico, during 1994-1995, one of the most violent economic crises in its entire history was experienced, which caused a drastic drop in GDP and even greater impoverishment of most Mexican families.

As a consequence of the bank bailout, and resulting from the Capitalization and Portfolio Purchase Programs (PCCC) and the Sanitation Programs, the Banking System became a creditor of obligations (promissory notes) held by the Federal Government, amounting to approximately 329,268 million pesos (at gross value).

As a result of the above, practically all economic indicators suffered a collapse, and interest rates skyrocketed to extremely high levels.

For example, in Mexico and Latin America, financial liberalization over the last two decades transformed the financial systems of their economies; this change in banking and financial policy has decreased state participation in determining the rates and commissions of the banking sector, and has simultaneously affected investment amounts, growth, as well as access to financing that characterized the second half of the 20th century.

Currently, banking systems in Latin America operate with non-competitive structures that favor obtaining profits from large differentials between credit rates and savings rates.

According to the World Bank, in terms of competitiveness of our financial system, private sector bank credit relative to GDP in 2005 shows that Switzerland has a proportion of 171%, the United Kingdom 160%, Spain 126%, the Republic of Korea 97%, Chile 63%, and within the NAFTA scope, Canada records 76%, the United States 48%, while our country only ranks at 13% of credit relative to GDP.

According to results from the Bank of Mexico, the main causes for not requesting financing are high interest rates, bank refusal, and economic uncertainty.

In this context, the excesses of commercial banking that has failed to self-regulate or strengthen the payment system collectively limit the capacity of monetary policy and reduce the growth capacity of the national economy.

Regarding credit cards in our country, it is of great concern that internationally Mexico ranks among the countries in Latin America with the highest credit card costs.

According to data from the National Commission for the Protection and Defense of Users of Financial Services (CONDUSEF), domestic entities apply an Annual Total Cost (CAT) ranging between 32% and 66%, while in Chile it ranges between 47% and 53% maximum. Even in Colombia, charges vary between 28% and 36%, in Peru they range from 24% to 60%, while in Venezuela they stand at 33%. The figure is even higher compared to countries like Canada, where CAT reaches between 18% and 20%; in Spain it sits between 8% and 25%, and in the United States between 8% and 16%.

The plastic with the highest CAT is Invex with the Spira Classic Visa, while the cheapest is Inbursa with 42.82%. Entities such as Scotiabank with the Traditional Classic have a CAT of 59.34%, HSBC 63.68%, Banamex with its Classic card reaches 70.27%, and BBVA-Bancomer with the Azul, 79%.

It could be affirmed that the promotion of credit card use has become a gold mine to obtain extraordinary income from this activity, reaching limits that could be considered usurious.

It is important to remember that all credit cards charge late payment interest, which is applied to the outstanding balance and practically doubles the interest rate normally charged by the respective credit card.

Aggressive campaigns for the placement of bank and commercial plastics, the expansion of credit lines without prior opinion or client request, and without an analysis of their creditworthiness, the strategy followed in recent months by some banks to attack population sectors considered higher risk and upon whom there is no prior credit information, as well as constant promotions by commerce inciting to buy now and pay in 3, 6, or more months without interest, have generated that the population has fallen into unnecessary over-indebtedness.

The overdue portfolio of credit cards grows alarmingly; such is the case that the National Commission for the Defense of Users of Financial Institutions (CONDUCEF) states that as of January of this year, more than seven million cardholders are in overdue portfolio for not having made minimum payments in the last three months, which equates to 39% of users of this type of consumer credit.

The National Banking and Securities Commission (CNBV) reported that in 2007, 25,588 million pesos were generated by charges to credit card users, and that despite modifications approved in April 2007 to the Laws of Credit Institutions, Protection and Defense of Users of Financial Services, and the National Banking and Securities Commission, with the aim of promoting competition and reducing the charging of commissions, the result is that the main foreign banks operating in Mexico, such as Citigroup, HSBC, BBVA, and Scotiabank, charge higher commissions than in their own countries of origin.

To mention some examples:

Charging of Annual Total Cost (CAT):

HSBC: in Mexico charges up to 77% on credit cards, in England charges 16%;
Scotiabank: charges Mexicans 77% and Canadians 18%;
BBVA Bancomer: in Mexico charges 80% and in Spain 25%
Banamex Citigroup: in Mexico charges 85%, in the United States it is 9%.

From the previous figures, it can be observed, for example, that the main foreign banks operating in Mexico, such as Citigroup, HSBC, BBVA, and Scotiabank, charge commissions up to eight or ten times higher than in their countries of origin.

In Mexico, one pays up to 1.7 dollars to withdraw cash from an ATM that is not part of the bank's network, while in Chile, Argentina, and Venezuela less than one dollar is paid, and the average cost of a rejected check in Mexico is around 70 dollars, whereas this charge in the United States hovers around 30 dollars.

According to information from the National Banking and Securities Commission (CNBV) and the National Commission for the Protection and Defense of Users of Financial Services (CONDUSEF), currently nearly 20 million credit, debit, savings, and other cards circulate throughout Mexico, where six thousand five hundred are delivered daily.

Regarding the interest rate added with the commissions charged to credit card users, better known as the Annual Total Cost (CAT), the average is 75%, which equates to charging more than twenty times the rate they pay.

For credit card debtors, their main inconvenience constitutes the "CAT", since according to official information, its average, from a sample of 28 cards, is 75%.

From the aforementioned, we can observe some examples in the following comparative tables:

BANK CARD CAT
AFIRME Classic 47.58%
INBURSA EFE classic 50.72
BAJÍO Visa classic 52.34%
IXE Visa classic 58.53%
SCOTIABANK Visa classic 60.40%
BANORTE Classic 65.51%
BANREGIO Classic 67.91%
HSBC Visa classic 71.11%
AMERICAN EXPRESS Green 73.96%
BANAMEX Classic 77.02%
BBVA Azul 80.76%
SANTANDER Visa classic 84.20%
INVEX Spira Classic 113.40%
Source: El financiero, with information from CONDUSEF, Infosel and BANXICO Comparative of bank card rates as of June 2008

BANK MONTHLY RATE % ANNUAL RATE CAT MINIMUM INCOMES* ANNUALITY FEE ANNUALITY FEE* AZTECA 8.40 100.28 N/D N/D free of charge free of charge SANTANDER 4.16 49.94 81.36 FROM $5,000 TO $12,000 free of charge FROM $390 TO $52,000 holder of $195 CALASICA to $1,000 additional BBVA-BANCOMER 4.00 47.94 81.30 FROM $6,000 TO $12,000 free of charge FROM $410 TO $630 holder of $205 (Classic and Gold to $315 additional BANEMEX 3.66 43.94 71.73 FROM $5,000 TO $12,000 free of charge FROM $400 TO $600 holder (Classic and Bsmart) FROM $0 $300 additional AMERICAN EXPRESS 3.66 43.94 77.36 FROM $6,000 TO $10,000 free of charge FROM $150 TO $405 USD holder (Blue and Gold Card) FROM $200 TO $325 additional HSBC 3.58 42.94 69.25 FROM $3,500 TO $12,000 free of charge FROM $310 TO $510 holder of $170 to Classic $240 additional BANORTE 3.58 42.94 69.16 FROM $6,000 TO $20,000 free of charge FROM $390 TO $504 holder of $304 to (Classic) to $348 additional SCOTIABANK INVERLAT 3.25 38.94 59.41 FROM $5,000 TO $15,000 free of charge FROM $300 TO $450 holder of $150 to (Classic) to $225 additional INBURSA 2.75 33.00 42.82 $5,000 free of charge Free of charge (EFE Classical Santander 2.42 29.00 45.00 $5,000 free of charge 270 Additional holder free of charge (Light) BANCOMER 4.00 47.94 79.02 $3,000 free of charge $200 holder (Azul) $100 additional IXE 2.12 25.44 41.25 $10,000 free of charge FROM $320 holder (Gold) FROM $160 additional FONACOT 1.63 19.50 30.32 1485* 3.00% Free of charge SOURCE: Conducef. The rates are given for the axis card of each bank maximum in contracts with the monthly minimum payment of said accounts, Data as of June 2008 *Monthly minimum wage in geographic zone C.

According to current data (August 2008), the Bank of Mexico determined to increase by 25 basis points the target for the One-Day Interbank Interest Rate, placing it at 8.25%, in order to "anchor" inflation expectations in the medium term.

In July, annual inflation reached 5.39%, the highest rate in the last four years, mainly due to the increase in prices of agricultural products and fuels.

On June 20 last year, the central bank raised for the first time in the year the funding rate by 25 basis points, from 7.50 to 7.75%, after eight months without changes, due to the increase in external pressures on local inflation.

A month later, the Bank of Mexico increased rates from 7.75 to 8.0%, in order to reinforce medium-term inflation expectations (La Jornada 15/08/08)

The National Banking and Securities Commission (CNBV) indicates that the tariffs charged by intermediaries during the first quarter of the year totaled 15 billion 431 million pesos, a figure 1.22% higher than that reported in the same period of 2007. (El Universal, August 13, 2008).

In 2007, the profits of banking in Mexico were 69 billion 533 million pesos, where it must be highlighted that net income from commissions on totals represented 27.8% and that for the first quarter of this year it rose to 35.2%.

According to economic theory which states that the active interest rate (the one a bank charges for lending money) depends on three fundamental variables: the so-called "real rate", "inflation", plus a premium for "financial intermediation" which finally represents the profit of banks for "capturing savings" and "lending resources"; evidently this financial intermediation has much to do with banking efficiency factors, among which are already included, the "risk" in which a bank incurs when lending savers' money.

Thus, the active interest rate is mathematically represented as follows:
Active Interest = real rate + inflation + financial intermediation (bank efficiency, risk).

However, the high cost of financial intermediation currently reflects a high banking inefficiency in its operation and on the other hand shows us that bankers are already including the "effect of greater risk for the recovery of their guarantees".

Without a doubt, the greatest cost is reflected in the interest rate charged, which is referenced to the interbank equilibrium interest rate maturing in 28 days (TIIE at 28 days) and that in practical terms reflects "the cost of government and bank financing; that is, it is the approximate average of the interest rates that banks and government pay to obtain money".

But while that cost varies month to month, currently standing at only 8 percent, banks add on average 40 percentage points more to obtain the interest rate they charge cardholders, with the interest they pay rising up to 40 percent.

In Mexico, around 40 percent of the total income of commercial banks is represented by commissions, a proportion above countries like Brazil, England, France, and Spain, nations in which commission income represents between 30 and 36 percent.

From the situation mentioned above, it is intended that the Bank of Mexico, as a regulatory entity, resolve all problems and situations through the issuance of "general provisions".
However, this proves excessively omitting by leaving most matters to the subsequent issuance of provisions, as it does not establish specific criteria for their issuance.

Therefore, and among other consequences, savers are losing value and purchasing power of their assets deposited in said Credit Institutions, since they generally do not perceive as yield the percentage cost of inflation, in addition to the fact that these Credit Institutions achieve a very significant differential of interest rates, which has driven up obtained profits. Hence the importance that the Bank of Mexico and the National Banking and Securities Commission, as well as other responsible authorities, regulate with full punctuality, regarding the margins of banking intermediation charged by Credit Institutions.

It is important to note that Article 24 of the Bank of Mexico Law empowers it to issue provisions that protect public interests. Said provisions must be of general application, possibly referring to one or several types of intermediaries, to certain operations, or to specific zones or plazas.
Likewise, the Law of the National Banking and Securities Commission in its Article 2 states that "The Commission shall have as its object supervising and regulating, within its competence, financial entities, in order to ensure their stability and correct functioning, as well as maintain and foster the healthy and balanced development of the financial system as a whole, in protection of public interests."

Regarding the Law of Credit Institutions, its object is to regulate the banking and credit service, the organization and functioning of credit institutions, the activities and operations that they may carry out, their healthy and balanced development, as well as guarantee the protection of public interests.

It should also be mentioned that currently in various countries regulation is being carried out regarding the charging of commissions by Banking Institutions. The topic has been addressed on other occasions in the Senate of the Republic and criticisms have been made in that sense, with exhortations to authorities and institutions. Unfortunately, the results of exhortations, criticisms, recommendations, and suggestions to authorities, institutions, banks, and cardholders have not yielded the expected results, because the problem not only persists, but has increased to levels that undoubtedly have placed users of these cards with lower incomes in our country in serious problems.

It is true that certain actions have been taken such as the elaboration of the "decalogue for the good use of the credit card", which undoubtedly has the best intentions, but it is difficult that it be the integral solution for a problem of this nature.

Statements such as those made by the Bank of Mexico which has expressed: "authorities and banks must remain alert to prevent such expansion from deriving into excessive vulnerability, both of households and of banking itself" Although the institutional design of the Mexican State prioritizes inflation control through the Bank of Mexico and supervision of the financial system in the National Banking and Securities Commission, the National Commission for the Protection of Users of Financial Services, and the Secretariat of Finance and Public Credit, in the real practice of banking policy, self-regulation by bankers prevails, even when their behavior differs from the objectives marked by the Constitution. The State must resolve the aspect of regulating banking interest rates. High commissions for banking services and low yields for savers discourage the use of banking for economic transactions. In Mexico, there is no law that regulates the application of these rates. Each bank determines the total annual amount charged based on the supply and demand they have for cards, which does not happen in other countries where there is indeed regulation and an average rate that cannot be exceeded, in addition to which replacement fees are not charged nor is fee information hidden.

Banking has fundamentally three functions in an economy: it is a savings system, channels financing for the development of productive projects, and is the core of the payment system. To precisely regulate that last function, among the responsibilities of the Bank of Mexico is established, in Article 2 of its Law:
"The Bank of Mexico shall have the purpose of providing the country's economy with national currency. In achieving this purpose, its priority objective shall be to procure the stability of the purchasing power of said currency. Other purposes of the Bank shall be to promote the healthy development of the financial system and foster the proper functioning of payment systems." Likewise, in its Article 24, it establishes:
"The Bank of Mexico may issue provisions only when they have the purpose of monetary or exchange rate regulation, the healthy development of the financial system, the proper functioning of the payment system, or the protection of public interests. When issuing provisions, the Bank must express the reasons motivating them."

On the other hand, the Law of Credit Institutions mentions in Article 48 the following:
"Interest rates, commissions, prizes, discounts, or other analogous concepts, amounts, terms, and other characteristics of active, passive, and service operations, as well as operations with gold, silver, and foreign exchange, that credit institutions carry out and the mandatory investment of their payable liabilities, shall be subject to what is provided by the Organic Law of the Bank of Mexico, with the purpose of attending needs of monetary and credit regulation."

Thus, responsibility as the Legislative Power requires us to rethink from an alternative approach, the regulation of the financial system, which adapts to national and international financial reality, protecting and shielding the economy of citizens.

For all the aforementioned reasons, I submit to the consideration of this Honorable Chamber of Senators, the present initiative with

REFERENCES
1) Reformed by Decree published in the Official Journal of the Federation on June 13, 2003.
2) Reformed by Decree published in the Official Journal of the Federation on February 7, 2005.
3) Added by Decree published in the Official Journal of the Federation on February 7, 2005.
4) Repealed by article six transitional of the Decree published in the Official Journal of the Federation on June 15, 2007.
5) Added by Decree published in the Official Journal of the Federation on May 25, 2010.
6) Reformed by article fifty-three of the Decree published in the Official Journal of the Federation on January 10, 2014.
7) Added by article fifty-three of the Decree published in the Official Journal of the Federation on January 10, 2014.

LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

INDEX

LAW ON TRANSPARENCY AND PROMOTION OF COMPETITION IN SECURED CREDIT

Title I

Chapter I

Chapter II

Title II

Chapter I

Chapter II

Chapter III

Chapter IV

Title III

Chapter I

Chapter II

Title IV

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