We invite you to visit our section Issues, under Issue Information where you can find a copy of each contract.
There is not a minimum investment term. Securities are purchased on the primary market through an authorized stockbroker at an auction of the Bolsa de Valores de Colombia (Stock Exchange of Colombia) or on the secondary market through any stock intermediary. Being securities, TIPS may be purchased and sold at any time.
Principal amortization of mortgage-backed securities is made on a monthly basis.
These securities are dematerialized. Thus, they are held in custody by Deceval (Central depository of securities), through an agent duly authorized to operate on the Colombian financial market. Title of ownership may change by the purchase/sale on the secondary market. Accordingly, they may be offered as guarantee.
Mortgage-backed securities bear a fixed interest rate, so interest payment is fixed, depending on the invested principal. Some TIPS issues are denominated in UVR (Actual value unit reference rate), an index that changes once a month as per the monthly inflation, which makes UVR TIPS interest fixed but may change when converted to Colombian pesos.
As any other security, an investor may call the principal invested by selling the security on the financial market. The conditions of the security sale or trading in the financial market will certainly depend on the market conditions at the time of the transaction.
The Fund of reserve and stabilization of mortgage loans (FRECH in Spanish) provides contingent coverage granted by the National Government to Borrowers, from FRECH resources, with the aim of promoting home ownership financing. It is a swap calculated on the interest rate agreed in the mortgage loans granted for new houses, under the terms and conditions set forth in the FRECH Rules.
The Adjustment of the Required Principal Balance of TIPS A/ TIPS B is aimed at guaranteeing that in all cases the Total Principal Balance of the TIPS A and the Total Principal Balance of the TIPS B are kept in balance with respect to the Total Principal Balance of the Mortgage Loans with less than 120-day delinquency. If a situation of unbalance is identified, the principal prepayment of TIPS A will be applicable.
Mortgage-backed securities are supported by a large pool of mortgage loans and there is no straight relation between a mortgage-backed security and a certain mortgage loan. The underwriting prospectus of the TIPS establishes the mechanisms for the payment of returns and principal to investors in the case of serious payment defaults to the mortgage loans. Our issues are structured to ensure payments to the investors and all the other agents involved in the issue. Furthermore, they bear credit enhancement mechanisms such as the guarantee provided by the IFC (International Finance Corporation, a World Bank subsidiary) for the whole mortgage loan portfolio and the guarantee provided by the Nation through Fogafin for securities with underlying assets consisting of the mortgage loans for social housing. These mechanisms and structures are designed for covering any default risk that may arise from the borrowers´ payment behavior. Hence, if the collection of mortgage loan receivables at a certain time is not enough to cover the payments, the credit enhancement mechanisms mentioned above will be called to fulfill such payments.
Titularizadora Colombiana does not grant mortgage loans. Specialized banks still do. Please visit mortgage banks´ web pages or visit their loan offices.