Owning a house, having a home, is undoubtedly significant in Puerto Rican culture. From its beginnings, Popular placed great importance to this tradition. This is one of the reasons why it is a leader in the mortgage industry today.
"Yo tengo ya la casita que tanto de prometí, y llena de margaritas para ti, para mí. Será un refugio de amores, será una casa ideal y entre romances y flores formaremos nuestro hogar."
-- ("I already have the little house I promised you, filled with daisies for you and me. It will be a haven for our love, an ideal home where, among romances and flowers, we will create our dwelling.")
This excerpt from the song Ahora seremos felices (Now We Will Be Happy), written by Rafael Hernández “El Jibarito” in the mid-20th century, revolves around a theme that remains relevant today.
The history of the mortgage industry in Puerto Rico has been one of ups and downs, rooted in the economy and the various situations the island has experienced. Diverse circumstances have marked Puerto Rico and have affected its mortgage process, ranging from hurricanes and earthquakes to government shutdowns. Anything that impacts the economy, in turn, directly affects the mortgage industry.
But this has not deterred Popular. On the contrary, it has been a driving force in creating opportunities that help clients achieve their dream of homeownership.
For the Bank, it has always been fundamental to offer solutions and place the customer at the center of progress. It was a pioneer in bringing Federal Housing Administration (FHA) loans to the country, which began on the island in 1934, after Rafael Carrión Pacheco and his son, Rafael Carrión, Jr. (Papi), went to the United States Congress and lobbied to extend this benefit to Puerto Rico. Similarly, father and son financed significant projects such as the Puerto Nuevo development in 1949, the largest in the world at that time.
En el centro: Rafael Carrión Pacheco.
Popular continued to successfully provide housing for all types of people, even when the economy was not as buoyant. In the 1980s, the government and the banking sector agreed to address the needs of the most disadvantaged communities. This era, as Silvio López, division manager of deShow, indicates, experienced a "boom" in the growth of Housing and Urban Development (HUD) condominiums.
Silvio, who has been in this industry for 30 years, shares, "We have been dragging a series of crises that began in 2006 with a construction avalanche. Many projects were paused, and by 2010, we had more than 2,000 new houses built yet unsold. Today we’re seeing the opposite: high demand and low housing availability."
After the mortgage crisis of 2007 and 2008, the Consumer Financial Protection Bureau (CFPB) was created in 2010, an entity responsible for overseeing and regulating mortgages, credit cards, and student loans. "We now have stronger regulations for the mortgage industry, which have complicated mortgage financing because they establish more limitations and make it more tedious. Because of this, Popular started the social responsibility and financial education initiative Prepárate y Compra (Get Ready to Buy). These educational workshops guide the consumer by providing orientation related to everything they must do in the mortgage process, such as the score they must have, documentation they must provide, among other data that help them," López indicated.
Construction has been paralyzed in recent years. Currently, 50% of the housing inventory is over 40 years old, which means that these properties must be repaired. Moreover, two recent phenomena have shaken the country: Hurricane Maria and the earthquakes, creating the perfect storm for the mortgage industry and ultimately leading to the abandonment of many properties. In some cases, this abandonment has reached the point of becoming a public nuisance. This happens when people lack the financial capacity to fix them.
Regarding the industry's current challenges, Silvio notes that "one of the challenges is to provide dignified and safe housing in Puerto Rico where construction codes have changed and where there are different standards. If federal funds are used wisely and effectively, more can be built, and housing needs can be met. There are great opportunities, but we must work correctly. There is a great need for low-cost housing."
The island has three main banks, and Popular plays a leading role in creating homes, not as a business but due to the Bank's social commitment to the country.
As a financial entity focused on placing the customer at the center of progress, Popular has evolved and designed workshops that help prepare potential buyers.
The Bank has been vital in mortgage management for the past 130 years. As we look towards the future, there is a much more hopeful outlook, and now it is possible to be happy with that long-dreamed home.
In 1934, Banco Popular was appointed and authorized to receive applications and make loans under Title I of the Federal Housing Administration (FHA).
As part of our 130th anniversary celebrations, we present our Stories of Impact, which highlight Popular's legacy in Puerto Rico's socioeconomic development through the following lenses: innovation, small business support, housing, financial inclusion, and human capital development.
