More ABS in Mexico means higher demand for better servicing - that's the message that some market players are putting out there. There are certainly servicers striving to meet the challenge, particularly in the mortgage space, which is where growth has been fastest and where foreign investors and bankers have concentrated their energy. But there's room for improvement, and it's precisely within that room that foreign servicers might find compelling opportunities.
Here, I'll throw out a few. One is the lack of servicer advances in Mexico. Whereas in the U.S. and Europe servicers will enter into arrangements to cover delinquencies themselves, at least for a set period of time, this hasn't caught on in Mexico. "As transactions become more efficient in Mexico and the excess spread falls, the performance of the collateral and servicing proficiency becomes increasingly important," said Sergio Figueroa, an analyst for Standard & Poor's. This could be a key motivator for a servicer - local or foreign - to introduce the practice of advances.