Hipotecaria Nacional (HipNal or the company) is Mexico’s largest housing sofol (specialized mortgage lending institution). Based in Mexico City, HipNal started operations in 1994. Its main activity consists of originating and servicing residential mortgages financed by Sociedad Hipotecaria Nacional (SHF), a federal mortgage lending institution and the primary source of funds for sofols, to low-income individuals. As of December 31, 2003. HipNal’s total assets amounted to MXN 27 billion ($2.4 billion), while net worth amounted to MXN 1.6 billion ($150 million). It is the leader in market share based on total assets among mortgage sofols, holding almost 30% of the market. Its portfolio is divided as approximately two-thirds in mortgage loans and the balance in construction loans to residential real estate developers. It has a network of 77 branches around the country and services approximately 82,000 mortgage loans with aggregate amount outstanding of MXN $17.5 billion ($1.6 billion). HipNal has grown at a rapid pace since its inception a decade ago, given the high demand for low-income housing in Mexico. To enable it to continue to grow in step with the market and to diversify its funding source from the SHF, its strategy is to issue MBS, thus freeing up its balance sheet of assets so securitized. The purpose of IFC’s loan is to assist the company to put in place a viable structure to facilitate the planned MBS issue. IFC’s loan will be collateralized by a pool of mortgages that will satisfy IFC-stated criteria, and will be transferred to an independent Trust, in order to facilitate the planned securitization.