Originating home loans on both sides of the U.S.-Mexico border
April 18, 2023 8:04 AM
Cross-border banking under a common brand (for example, Canada's TD Bank ) is a familiar sight to U.S. consumers.
But it's unusual for nonbank mortgage originations. Guzzo & Co., with separate entities under the same moniker in the U.S. and Mexico, looks to bring the same experience to borrowers in both countries.
Founder Mauro Guzzo grew up in Italy, in a family involved in the financial services business. For many years they were looking to get into consumer finance in Europe but were not able to complete a deal to become partners in a bank.
In 2004 he came to the United States to attend college and after approximately 10 years in private equity, a random opportunity came for him to enter consumer finance from the mortgage side. In 2019, he founded Guzzo & Co., a mortgage brokerage with its initial offices in North Carolina.
But his background also had him looking at cross-border opportunities and in 2022, he created a business in Mexico, also named Guzzo & Co.
His long-term goals include moving into mortgage banking and then consumer banking.
The following is from a question and answer session, edited for length and clarity.
But it's unusual for nonbank mortgage originations. Guzzo & Co., with separate entities under the same moniker in the U.S. and Mexico, looks to bring the same experience to borrowers in both countries.
Founder Mauro Guzzo grew up in Italy, in a family involved in the financial services business. For many years they were looking to get into consumer finance in Europe but were not able to complete a deal to become partners in a bank.
In 2004 he came to the United States to attend college and after approximately 10 years in private equity, a random opportunity came for him to enter consumer finance from the mortgage side. In 2019, he founded Guzzo & Co., a mortgage brokerage with its initial offices in North Carolina.
But his background also had him looking at cross-border opportunities and in 2022, he created a business in Mexico, also named Guzzo & Co.
His long-term goals include moving into mortgage banking and then consumer banking.
The following is from a question and answer session, edited for length and clarity.
What was it that you saw as an opportunity in doing mortgages on both sides of the border?
I first had to learn pretty much everything about mortgage. At the time [I started Guzzo & Co.] I didn't know the difference between a mortgage banker or mortgage broker. To me, it was sort of the same thing at first, and then I started to understand how it works in the U.S. But then I saw a gap between U.S. lending and the Mexican side.
What I've seen specificallyin border towns , for instance in San Diego — I'm sure those things happen also in Texas, they have the same problems — we have loan originators who are dual citizens so sometimes they live on this side of the border or they live on the other side of the border. They conduct business as a mortgage loan originator under two different companies, one in Mexico, one in the U.S. What I've seen is that lending was really lacking something that could have brought all those people under the same roof.
What I've seen specifically
Do you have a separate Mexican subsidiary?
Of course we are two separate companies. We have the U.S. corporation and we have a Mexican corporation. But we are under the same name. My idea was how can we make it easier for loan originators to originate across the border, follow the law and help them to get more clients because they can assist them on both sides.
But also for the clients to ensure that they have the same quality, the same respect of the law, the same security by working with us here in the U.S. as well as in Mexico. My goal was to create the same kind of atmosphere, the same setting that we have in the U.S., and export it into the Mexican side.
This is something that I want to do eventually in many other countries. We're already in talks for Europe, and possibly Canada. Because the idea is very simple. We want it to be a recognizable brand that is across borders where clients know that they can find the same quality anywhere and everywhere we are.
But also for the clients to ensure that they have the same quality, the same respect of the law, the same security by working with us here in the U.S. as well as in Mexico. My goal was to create the same kind of atmosphere, the same setting that we have in the U.S., and export it into the Mexican side.
This is something that I want to do eventually in many other countries. We're already in talks for Europe, and possibly Canada. Because the idea is very simple. We want it to be a recognizable brand that is across borders where clients know that they can find the same quality anywhere and everywhere we are.
But the regulatory scheme and mortgage products in Mexico are probably different from what the mortgage products are in the U.S., right?
Definitely the products are completely different. In the U.S. we use American money, in Mexico we use Mexican money, and we don't mix. So in Mexico, we use their institutions, we use Mexican money so we follow their structure, their laws, the products that they have. Now moving forward, there's a lot of new products coming out. Of course in the U.S. there are a lot more products. Sometimes consumers feel like the products there are in the United States are the same products anywhere around the world. So often they come to us and they're VA for instance. Now there is no such thing as VA in Mexico. Not even for the active duty military in the Mexican army. But some American clients come to us asking for a VA loan in Mexico. We try to explain as much as we can there are less products and the rate is different, they're not as competitive as in the U.S. for sure.
But also the home price, the starting point in Mexico is much more affordable compared to the U.S. So it's very, very different. As far as right now in Mexico, there are specific products for U.S. and Canadian borrowers. Also, there's other ways for a banking institution to qualify a person. In Mexico, just like in Europe, it's very important [for banks to ask], "how long have you had that job?" There isn't self-employment and all the other things but definitely they look more for a corporate job. You kept your job for this many years. That's what gives the bank trust in the borrower. In Mexico, the bank holds your title. It's all owned by the bank or financial institution or investor or hedge fund. They don't have a secondary market where they sell those things. So if they make a mistake, it doesn't get shared in terms of risk. The risk is fully on them. Of course they do a lot of research before funding a loan.
So in Mexico, just like in the U.S., we connected with institutions. It wasn't that easy as a cookie cutter in the U.S. where you signed the broker package and the lenders approved you or the bank approved you or you showed your financials. It's completely different. In Mexico, you have to be in a sense recommended. You have to be introduced.
In Mexico, it's all about time. So what I mean by time is, time that the banks take to trust you. They wanted to see how you perform. They want to see how you act because they want to make sure that you're sending them the best possible client, the best possible scenario, otherwise they will simply cut you off. A lot of things are very similar to Italian banking, which I'm more used to than American banking. I understand a lot of those aspects and what they expect from us as a company that partners with them. So we tried to do all that and to really give them clients they truly wanted to build themselves an asset in Mexico. That's how we've been doing business so far in Mexico. We keep adding more and we keep growing just like in the U.S.
But also the home price, the starting point in Mexico is much more affordable compared to the U.S. So it's very, very different. As far as right now in Mexico, there are specific products for U.S. and Canadian borrowers. Also, there's other ways for a banking institution to qualify a person. In Mexico, just like in Europe, it's very important [for banks to ask], "how long have you had that job?" There isn't self-employment and all the other things but definitely they look more for a corporate job. You kept your job for this many years. That's what gives the bank trust in the borrower. In Mexico, the bank holds your title. It's all owned by the bank or financial institution or investor or hedge fund. They don't have a secondary market where they sell those things. So if they make a mistake, it doesn't get shared in terms of risk. The risk is fully on them. Of course they do a lot of research before funding a loan.
So in Mexico, just like in the U.S., we connected with institutions. It wasn't that easy as a cookie cutter in the U.S. where you signed the broker package and the lenders approved you or the bank approved you or you showed your financials. It's completely different. In Mexico, you have to be in a sense recommended. You have to be introduced.
In Mexico, it's all about time. So what I mean by time is, time that the banks take to trust you. They wanted to see how you perform. They want to see how you act because they want to make sure that you're sending them the best possible client, the best possible scenario, otherwise they will simply cut you off. A lot of things are very similar to Italian banking, which I'm more used to than American banking. I understand a lot of those aspects and what they expect from us as a company that partners with them. So we tried to do all that and to really give them clients they truly wanted to build themselves an asset in Mexico. That's how we've been doing business so far in Mexico. We keep adding more and we keep growing just like in the U.S.
Do get a lot of foreign nationals as well?
Yes. They hear from other people that we do business on both sides of the border. Automatically they feel more like they can talk to us. We have loan officers that speak fluent Spanish, fluent English. Some of them have double citizenship so they understand a foreigner's requests, myself included.
When I bought my first house in the U.S., I was as lost as you can be. I was 22 and I had no idea what anything meant. I had no idea what a title was. I had no idea what a mortgage was. I was just completely lost. I had to have an advisor that took care of all that. I put myself in their shoes, they're coming here they want to buy. They hear about all the good things about investing in the U.S.
So our goal, especially for those foreign buyers, is to really explain to them every step of the way. We try to let them understand how this works compared to how they're used to. We provide all the marketing material, anything that we do, we have it in any language that we get a request from. That way, the borrower or potential borrowers, have the ability to read everythingin their native language , so they don't have to get confused or potentially lost.
We translate everything... it's massive work but it's also very rewarding because those people spread the word in the community first of all, and then they start referring business to us because they know that we try to help them in their native language.
When I bought my first house in the U.S., I was as lost as you can be. I was 22 and I had no idea what anything meant. I had no idea what a title was. I had no idea what a mortgage was. I was just completely lost. I had to have an advisor that took care of all that. I put myself in their shoes, they're coming here they want to buy. They hear about all the good things about investing in the U.S.
So our goal, especially for those foreign buyers, is to really explain to them every step of the way. We try to let them understand how this works compared to how they're used to. We provide all the marketing material, anything that we do, we have it in any language that we get a request from. That way, the borrower or potential borrowers, have the ability to read everything
We translate everything... it's massive work but it's also very rewarding because those people spread the word in the community first of all, and then they start referring business to us because they know that we try to help them in their native language.
How many U.S. states are you licensed in?
So we're licensed currently in seven states [primarily as a mortgage broker]. We do business in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas. We started with the border states, but we also are very focused on the southeast, that's where I started the business, especially in North Carolina and also I believe it's a really good market right now personally.
My goal of course is to expand nationwide. No limitations, Alaska as well. It will take some time. I don't doubt that. But we're looking for people that want to do business that are good and I actively myself recruit but I always look out for people that have certain integrity in doing business.
My goal of course is to expand nationwide. No limitations, Alaska as well. It will take some time. I don't doubt that. But we're looking for people that want to do business that are good and I actively myself recruit but I always look out for people that have certain integrity in doing business.
You started in 2019 and almost right away the pandemic started. How did being on both sides of the border help your business maintain this level of growth?
Well, to be honest with you. It was never easy when I started. It was actually everything but easy. The time that I signed my lease for the office was the same week that the North Carolina governor decided to shut down any activity so nobody could go back into an office. It was not a very lucky start. Then we had the other issue as soon as we started that everybody was busy. Everybody was absolutely so busy that no one was looking to move or looking for a new opportunity. So we were very short on staff because yes, the whole country was on a refinance boom and everybody was surfing that wave. People were like "I can't leave my pipeline."
In Mexico, we didn't really get into until recently, in 2022. The U.S. market was dying down a little bit. I started looking to Mexico in 2021. I was called a complete idiot for even looking at it and focusing on Mexico while the market was so great in the U.S.
But as we all know, anything that goes up at some point must come down. I was like, I'd rather be prepared for a new opportunity rather than be caught off guard once this market dies down.
In Mexico, we didn't really get into until recently, in 2022. The U.S. market was dying down a little bit. I started looking to Mexico in 2021. I was called a complete idiot for even looking at it and focusing on Mexico while the market was so great in the U.S.
But as we all know, anything that goes up at some point must come down. I was like, I'd rather be prepared for a new opportunity rather than be caught off guard once this market dies down.
