A typical conversation went like this:

“Excuse me, do you offer home mortgages?”

“Well, yes.” She seems startled.

“What sort of customers borrow from your bank?”

“People who have no other choice.”

On April 25, 2001, the Tijuana daily La Frontera published a 54-page insert on the city’s construction industry. Among articles boasting the city’s strong economy were fretful titles like “Industry Leaders Agree: We Need More Credit for Houses” and “Bank Loans Aren’t Very Attractive.” Mexico, these articles stated, needed at least six million new homes, and Tijuana, the nation’s fastest-growing city, was especially short on housing.

“It’s kind of surreal,” said Gustavo del Angel last year on the chilly spring afternoon we met to talk about Mexican real estate. Del Angel, a Mexico City native and Stanford graduate, is the only academic in North America who specializes in the history of Mexican banking, and it happened that he was doing some research at UCSD’s Center for U.S.-Mexican Studies. Del Angel showed me a printout of mortgages, or hipotecas, then offered by six of Mexico’s largest banks. The loans really weren’t attractive. On average the banks required a 40 percent down payment and offered a 24 percent annual rate for a maximum of 15 years. (Under those terms the monthly payment on a $100,000 loan would be a little more than $2000.) Beside each loan and its terms was printed the word fija.

“Now, fija means ‘fixed,’ right?” I asked del Angel. “Just like in English. It means the interest rate won’t change. It means it’s a fixed-rate mortgage.”

“Well, no,” said del Angel. He sighed. “Well, yes. Of course. Fija does mean ‘fixed.’ Just like in English. Something that’s fixed is something that can’t or won’t move. ‘Fixed’ means the same thing in Spanish as it does in English. Except in this case. I mean, the banks say it’s a fixed-rate mortgage. But it really isn’t. The rate is actually linked to increases in the minimum wage, and a few other things. There’s really no such thing as a fixed-rate mortgage in Mexico.”

“So ‘fixed’ doesn’t really mean ‘fixed?’ ”

“Yes. You’ve got it. You have to understand, only in the past year or so have Mexican banks again started to offer mortgages. They really don’t have much experience in it. In 1982, President López Portillo nationalized all the banks, which was an enormous disaster for Mexico. While the rest of Latin America was moving ahead economically, the Mexican banking industry virtually went to sleep for ten years. Bank employees were suddenly state employees. Bank managers had no incentive to be competitive or to worry about things like profitability. And since they were state employees, their jobs were basically political, and so they were vulnerable to corruption, like giving loans to their friends. This went on for ten years. Mexico, which up to 1982 really had no significant tradition of credit, became even less familiar with it. When the banks were reprivatized in 1992, Mexican banks really had no experience in lending in a normal way. Suddenly, they were offering mortgages again, and they didn’t know what they were doing. They made a lot of bad loans. Things got out of control and in 1994 the entire system collapsed.

“The peso lost 138 percent of its value. Interest rates reached 150 percent. No one had a fixed-rate mortgage. So all across Mexico, you had thousands and thousands of people with mortgages who from one day to the next owed far more than their homes were worth. Their monthly mortgage payments were impossibly large. People were devastated. There were suicides. For Americans, such a situation can be difficult to understand. The American economy is very stable. No one expects any great fluctuations in the dollar’s worth. That’s why American banks can offer fixed-rate mortgages for 15, 30, as many as 40 years. American banks are confident that the economy isn’t going to change dramatically. Could Americans even imagine a 150 percent interest rate?”

Del Angel paused to let the information sink in. The implications were remarkable. Not long before Mexico’s collapse in 1994, Mexican banks were offering 15-year mortgages at around 38 percent. At that rate, the monthly payment on a $100,000 loan would have been around $3200. When interest rates jumped to 150 percent, the monthly payment on the same $100,000 loan would have soared to $13,000.

“In 1992, when the Mexican banks were reprivatized, the Mexican banking system and Mexican finance laws weren’t very sophisticated. There were people who figured out that they could, for a small amount of money, legally create a corporation and through it borrow money from a bank. Once the money had all been used for the corporation’s ‘expenses,’ the corporation would fold and the bank had no legal means of getting its loan back. The corruption was enormous. People made millions. It was like your savings and loan crisis in the United States, but the consequences were much greater. The whole system collapsed. Interest rates skyrocketed. The majority of people in Mexico’s small but growing middle class were in danger of losing their homes. If you’ll remember when Clinton agreed to loan Mexico $16 billion, that money went to restructure those loans. And now the citizens of Mexico will have to pay that $16 billion debt.

“I think the best way for Americans to understand some of the basic differences between the two economies would be to go to a lower-class, or even middle-class, neighborhood in Tijuana. Wherever you look, you see what appear to be half-built homes, or homes that seem to be in a continuous state of construction. This is a direct result of the inability of Mexican banks to give affordable loans. In Mexico, people save up their money and they buy a little piece of land. They save up a little more and they build a small home on it. Maybe a kitchen and a living room. Little by little, as they save money, they add another room and another. You know, pay as you go.”

This reminded me of a friend in Tijuana who’d told me, with some excitement, that he, his two children, and his mother were moving into his brother’s “new house” east of Tijuana. How large was this house? “A kitchen and a bathroom. My brother’s building a bedroom next month.” My friend and his family have little money, but even if you drive through Tijuana’s middle-class neighborhoods you see, as del Angel described, homes in a constant state of construction. The materials used in rich and poor neighborhoods are invariably cement block, rebar, and plaster.

“Mexican banks won’t loan for anything made of wood,” said Franco Magdaleno with a bitter laugh. “That’s why almost everything you see in Mexico is made of cement. It’s not that Mexicans love cement block. It’s not that we think it’s the most beautiful building material in the world. It’s not aesthetics; it’s finance. It would be easier and cheaper to build with wood, but the banks won’t listen.

“I’m an engineer. I know what I’m talking about. I even developed a building material, using both cement and wood, for building homes. I developed it in conjunction with an American company in Georgia. It was cheaper and lighter than cement block. You could build a home with it more quickly than if you used cement block. It was an excellent product. And you would think that Mexico, which has an enormous housing crisis, would be interested, would need, a building material like that. I developed it especially for the Mexican market. But no. Mexican banks would not loan money for anything made with wood.

“Maybe they think that if people built houses with wood, they’d just burn them down for the insurance money. I don’t know.”

Magdaleno stared into his cup of coffee. “I hate banks.”

Last year, Magdaleno and I met one morning for coffee in the lobby of Hotel Pueblo Amigo, a popular spot with Tijuana entrepreneurs. Somewhere in the lobby, a caged parrot occasionally screamed like a human. People flinched. They started from their chairs. They chuckled. Kidnappings were and still are common among Tijuana’s middle and upper classes. Armed bodyguards stood at the hotel’s entrance. At the table next to ours, where a baby shower was in progress, several matrons, despite the early hour, ordered brandies. Magdaleno ordered coffee, black.

He is a serious, deliberate man, a civil engineer whose passion is the design, construction, and maintenance of pipelines. (He had in his coat pocket a brochure for a conference he planned to attend in Norway on “The Design and Installation Aspects of High-Strength Steel for Deep & Ultra-Deepwater Pipelines.”) Some years back Magdaleno participated in the construction of such a pipeline in Rosarito, and he spoke of the project as one of the best times in his life. As often as he can, he travels from Tijuana to pipeline conferences in Europe, Asia, South America, for “intellectual stimulation.”

Since the late 1960s Magdaleno has also dabbled in Tijuana real estate and is currently a member of Tijuana’s Association of Real Estate Agents, which has 50 members. (The San Diego Board of Realtors estimates that 12,000 real estate agents work in San Diego. But the comparison is unfair. In Mexico, real estate agents aren’t licensed, and so no one knows how many real estate agents practice in Tijuana.)

“Here, the majority of private homes,” said Magdaleno, “are sold by the owner directly to the buyer. Which is of course risky because you have to get the paperwork right. In Mexico, real estate transactions are handled through notaries, who are much more important than notaries in the United States. Mexican notaries check property registries to make sure that the house you’re buying truly belongs to the seller, that no one else has a claim on it. In America, when you buy a home you buy title insurance. There’s no title insurance in Mexico, so the notary’s work is very important. Most people, if they know what they’re doing, also hire an attorney to double-check what the notary does to make sure everything’s been handled properly.

“The process of selling real estate, however, really isn’t the problem. The problem is with the banks. Big developers who build big developments for the upper middle class and the wealthy can afford to offer their own financing. And their interest rates are usually much better than those offered by banks. But for other developers, those who can’t afford to carry large debt, the situation is impossible. They can build homes, but the loans offered by banks are too expensive. So there are actually people who own land, or who buy land, in the hopes that squatters will take it over. I’m sure you’ve heard of squatters here in Tijuana. People come from the Mexican interior to find work. There’s no housing for them. So they squat on undeveloped land.

“What happens next is that the landowner starts complaining to the government that there are squatters on his land. He wants the government to kick them out. So, maybe the police come, tell the people to leave. Then the squatters start protesting. Maybe the landowner even encourages the squatters to protest. Politics gets involved. And what the landowner hopes is that the government will give in to the squatters, buy the land from him, and give it to the squatters. It sounds complicated. But it’s one way of ‘developing’ land when it’s impossible to borrow money from a bank to build homes on it.

“I’ve always worked on a much smaller scale, building only a few homes at a time. There are ways of getting around the banks. The answer, I’ve found, is autofinanciamiento.”

I’d heard the term autofinanciamiento, “self-finance,” used by a number of people in Tijuana. I’d asked for an explanation but hadn’t understood what was said. In fact, I’d understood each individual word of what was said but couldn’t make sense of the whole scheme, the entire process of autofinanciamiento. It was too foreign. Not long after I spoke with Magdaleno, I went to the offices of Habiplan, one of three autofinanciamiento companies operating in Tijuana. Habiplan’s offices are in a part of Zona Rio where it’s difficult to buy a taco but easy to find sushi. A clothing store to the left of Habiplan sold Versace, Prada, Dolce Gabana, and Fendi. To the right, in an Internet cafe, young people in black clothes typed madly on a dozen or so brand-new PCs. In Habiplan’s gray-and-green lobby, large framed posters showed towheaded children hugging puppies or skipping through fields of flowers.

Omar Ramírez, a handsome gentleman in his late 30s, greeted me. He took me to his office and pulled out a fat three-ring binder. He proceeded to give me an autofinanciamiento overview.

“Usually, this explanation takes around 90 minutes,” he said in a soft, low voice. “But I’ll try to make it faster.”

On the office stereo Rick James began to sing “Super Freak.” Ramírez opened the blue binder to page one. Pointing to a diagram of many boxes and arrows, he said, “First, let me explain the government agencies that regulate us.” Two hours later Gloria Gaynor was singing “I Will Survive” and autofinanciamiento was only a little clearer in my mind. Still, I had a general idea of how the process worked:

Since Mexican banks had for some time been unable to offer reasonable loans, lenders like Habiplan stepped in to meet this need. Headquartered in Mexicali, with offices throughout Mexico, Habiplan is regulated by a half-dozen government agencies. What Habiplan does is amass groups of 500 clients who want 15-year loans of between $35,000 and $60,000. Once a group is formed, the clients begin depositing the equivalent of their monthly mortgage payments, calculated at a 6 percent annual rate, into a trust account held by a major Mexican bank. Clients may obtain their loans in two ways. They must earn 2000 “payment points” in a system that awards points for on-time and early payments (60 points for an on-time payment, 75 points for a payment three days early, etc.), or their name is drawn in a lottery Habiplan holds every quarter for each client group. If a client regularly pays early or on time, it takes around three years for him to obtain his loan. On the other hand, the chances of winning the “loan lottery” would be 1 out of 500 the first time, 1 out of 499 the second time, and so on.

I asked Mr. Ramírez, “Given the unpredictability of the Mexican economy, how many clients drop out of the program?”

“Around 30 percent.”

Any penalties?

“They forfeit 25 percent of the money they have in the trust account.”

How else did Habiplan turn a profit?

“Well, we charge a 6 percent annual rate on the mortgage,” he said, reaching for the blue binder. He flipped to a page that contrasted the benefits of borrowing from Habiplan to those of borrowing from other lenders. “Banks, well, you know how high their interest rates are.”

At the very bottom of this page listing the lenders with which Habiplan compared itself, I noticed the word prestamista — a nice way of saying usurero, or “loan shark.” Ramírez must have seen my eyes widen. I explained that American lenders did not, as a rule, compare their services to those of loan sharks.

“As you can see,” he said, “prestamistas charge 6 percent compounded monthly, and in general their loans are only for four years.”

And who borrows from prestamistas?

“People who have no other choice.”

A 6 percent monthly compounded rate is the same as a 101 percent annual rate. In other words, the monthly payment on a $35,000, 4-year prestamista loan would be around $3000. The monthly payment on a $35,000 15-year Habiplan loan would be $295. Other disadvantages of borrowing from a loan shark went without saying.

Still, a 101 percent annual rate looked good when compared to the 150 percent rate Mexican banks charged eight years ago, which is likely why Habiplan lists prestamistas among its competitors — Mexicans remember the ’94 collapse and still mistrust banks. Mexicans also mistrust American journalists trying to find out how Mexicans finance their homes. Last year, a Tijuana realtor gave me the name and phone number of a young woman, a doctor, who was in the process of buying a $250,000 house. I called and left a message on the doctor’s voice mail, and the next afternoon she called me back.

Dispensing with the customary “Buenas tardes,” she asked, “How did you get my name and phone number?”

I explained that her realtor had given me her name and phone number.

“She didn’t tell me that she was going to do that. Who are you and what do you want?”

I said I wanted to talk with Tijuana home buyers about how they financed their homes.

“Look,” the doctor said. “I’m going to have to talk to my husband about this. I’ll call you back.”

She never did.

“The American system is entirely transparent,” said John Osslund, vice president of West Coast Mortgage, a “typical midsize” mortgage brokerage in Mira Mesa. “The process of buying a home, financing the purchase, has been so streamlined and standardized that everyone involved in the transaction knows exactly what’s going on. Everyone knows who the buyer’s borrowing money from, what the terms of the loan are. There are no secrets, no surprises.”

Osslund has worked as a mortgage broker in San Diego for 21 years. He’s known around town as a reasonable guy. Last year, when I spoke with him about American real estate, Osslund was evangelistic.

“In America the home-buying process is efficient because the government promotes homeownership. The government provides tax incentives for homeowners and promotes low-cost loans for first-time buyers. The government does this, in part, because it encourages social stability. For example, it’s now taken for granted that if you want to clean up a neighborhood, decrease crime, foster civic responsibility, you increase the number of homeowners in that neighborhood.

“The reason we can have a culture of homeownership is because the American economy is relatively stable. Banks can offer, for example, 7 percent 30-year mortgages because they’re confident that there won’t be any huge changes in the economy. Inflation plays an important role in their confidence. Lenders want to see a 5 percent return on their investment, so mortgages usually run 5 percent higher than the rate of inflation. So if you say that Mexican banks are offering 24 percent on a 15-year loan, you can pretty much figure that the actual rate of inflation in Mexico, despite the government’s official figure of 9 percent, is significantly higher and that banks aren’t confident in their country’s long-term economic performance.

“Back in 1979, 1980, at the end of the Carter administration, America had high inflation. The prime lending rate was at 24 percent, home mortgages were at 17 percent. I don’t think it would be accurate to say what happened was disastrous, but a lot of people, a lot of builders were wiped out. The real estate market was at a standstill, but ultimately, we recovered. The economy was resilient. So you can get an idea of what inflation and high interest rates can do to a more vulnerable economy like Mexico’s.

“Because of America’s stability, because our home-buying process is so thorough and streamlined, we have a situation in which it’s easier and cheaper for Mexican nationals to buy a home here than in Mexico. Even if we have difficulty verifying their income, we can look at their assets and, to some extent, their credit history. We can usually offer them a 30-year loan, with 20 or 30 percent down, at around 8 percent.”

Low interest rates weren’t the only reason Tijuana residents were buying homes in San Diego. Monique Fuzet, a Prudential agent in Bonita, estimated that over the past three years, in the South Bay at least, sales to Mexican clients increased 60 to 70 percent.

When I spoke with Fuzet last spring, she told me, “Just about everyone in Tijuana who can afford it, which means people with money, is buying a home here. Bonita, EastLake, Rancho del Rey. The reason is simple: kidnappings. When the kidnappings in Tijuana started to increase, so did our number of Mexican clients. Every real estate office down here has Spanish-speaking personnel. I don’t know the exact numbers, but I do know that the Wells Fargo mortgage office down here processes a lot of mortgages for Mexican nationals. These are people buying homes in the $300,000 to $1 million range. They can live here without worrying that someone’s going to kidnap them or their children, and they can still be close to their businesses in Tijuana. I personally have around four Mexican clients a month. Multiply that by the many agents in this area, and you can see that there’s quite an influx.”

Fuzet was born and raised near Lyons, France, “which has some of the finest food in the world. Incredible food. I sell real estate now, but what I’d love to do is write about food.” She taught French in Germany before making her way to Mexico City, where she fell in love with the country.

“I still love Mexico. The people, the culture, the food, the language. I hate to speak ill of Mexico. I love the country but am not so fond of the government, which I think treats the people very badly. They deserve a better government. With Fox, I have some hope. But his term lasts only six years. What can one man accomplish in six years? Maybe there will be some changes. We shall see.

“I lived in Mexico City from 1975 to 1982, and I learned to sell real estate there. Now, you’re saying, ‘Why would a French woman sell real estate in Mexico City?’ Well, unlike in France and the United States, where you have to study to become a real estate agent, anyone can sell real estate in Mexico. In France and the United States, people sometimes have a low opinion of real estate agents. In Mexico, their opinion is often lower.

“Fortunately, I never got involved with anything dishonest. I had friends, however, who had problems. One sold time-shares for a condominium development that, in the end, never really existed. The developer ran off with all the money. Another friend sold a home, but it turned out the seller never really owned the home in the first place. Stories like that were common. It was a difficult environment to work in.

“Here, of course, it’s much easier. The rules are clear. We have easy access to information. For example, most Mexicans with money have at least an American Express card, or some other major credit card. Through American credit bureaus, American lenders are able to get some credit history on a Mexican client. In Mexico, however, the whole idea of a credit bureau is new.”

In the United States, lenders scrutinize income, employment, and credit histories when evaluating mortgage applicants. Credit history is essential for handicapping the risk a potential borrower presents. Until four years ago, Mexico had no credit bureau that banks could turn to when evaluating borrowers. Credit information was diffuse, hard to get.

(“It’s still very difficult to obtain basic financial information from banks,” del Angel told me on the chilly afternoon we met at UCSD. “As an academic studying the history of Mexican banking, getting simple data is my greatest challenge. Mexico isn’t, yet, an information society.”)

For as rudimentary as it is — del Angel said that not all Mexican banks were enthusiastic about reporting to it — the Buró Nacional de Crédito is starting to change Mexico.

Guadalupe Loaeza, a chic, husky-voiced blonde, comes from a well-known intellectual family in Mexico City. (Her brother, Enrique, is one of the country’s most respected diplomats.) Loaeza grew up and lives among Mexico City’s rich.

“For a middle-class or wealthy Mexican, to be reported to the Credit Bureau as someone who doesn’t pay bills, or pays bills late, is one of the most frightening things. This is entirely new to us.”

Loaeza is something of a spy. For the past eight years, as a columnist for the Mexican daily Reforma, she’s written about how Mexico’s wealthy think and live. Two years ago she published Debo, Luego Sufro (I Owe, Then Suffer), a best-seller in Mexico and Argentina. Debo was Loaeza’s critique of Mexico’s growing “consumerist culture,” of her countrymen’s “compulsive shopping” and their heavy reliance on credit.

In her book, Loaeza makes her arguments through several fictional case studies, one of which follows Sofia, a stand-in for Loaeza herself. In Chapter One, “The Worst Debtor,” Sofia tells her psychoanalyst about a “terrible nightmare.” Shopping at one of Mexico City’s finest stores, Sofia hands her American Express card to a clerk. But the card won’t go through.

“The clerk tells me, ‘I’m sorry, but your card’s been declined.’ And like a crazy woman, I say, ‘Declined? Deeeeeeeeeeclined?’ I told her to try my card again. And again.

“And the worst thing, Doctor, was that behind me was an endless line of people waiting to pay. I told the cashier, ‘Try it again.’ But my card still didn’t go through. So the clerk calls American Express to see what’s wrong, and she screams my name and card number into the phone — awful, horrifying screams. Everyone was staring at me. I wanted to die. Everyone around me started yelling, ‘Declined! Can’t you see that your card’s been declined? Declined! Declined! Declined!’

“Then they all started to laugh at me. Even the clerk. She laughed in my face and screamed, ‘Declined! Declined!’ And I just stood there, everyone dying of laughter, and I kept muttering, ‘But my card is good. It is! It is!’ All the while sobbing like Mary Magdalene.”

I contacted Loaeza last year at her home in Lomas de Chapultepec, one of the capital’s choicest neighborhoods. Hilly. Private driveways. Bougainvillea and copa de oro spill over high white security walls. I asked Loaeza why she’d written Debo, Luego Sufro.

“I noticed what had happened in my own life, and in the lives of my friends. This need to have material things, and have them immediately. The endless cycle of debt. It seemed to me an almost spiritual hunger. And so I asked myself, ‘How did we come to this? What happened in our country, in our society, that made us this way?’ Mexicans used to be excellent borrowers. They borrowed for only what they truly needed, and they were careful to pay back on time. Twenty years of economic crisis changed all that.

“And to me it was interesting how economics can influence national character. For example, if you lived in a country where there was tremendous inflation, where your money, from one day to the next, or maybe from one hour to the next, was worth less and less, you naturally developed a certain way of thinking about the future. Why wait? Why save up for anything? Why not buy it right now? If you lived in a country where the government was corrupt and its economic policies were bad, you developed a certain attitude toward responsibility. Why pay taxes when they’ll be used to send some politician’s wife on trips? Why pay taxes when you definitely know the money will be misused? No one paid taxes.

“And so, for the longest time, we lived in a kind of unreality. Interest rates on Mexican credit cards are incredibly high, sometimes as high as 50 percent. But the high interest didn’t stop people from using credit cards. There was a kind of ‘live for the moment’ mentality. And there was also a kind of inferiority complex. American was always better. And America did stand for many of the things we wanted for our own country. It was completely common for people to go on vacation to San Diego, to go shopping there, and buy things, I don’t know, like Clinique cosmetics, or Gabriel García Márquez’s latest novel — things that you could of course buy in Mexico City. But the fact that you bought them in the U.S. made them somehow better, more special.

“The situation has started to change. We have a new president and a sense of hope. There is more of a sense of structure and order. The Credit Bureau, for example, has created a sense of accountability. There’s no walking away from what you owe. You see this in other areas as well. Wealthy Mexicans are starting to contribute more to Mexican charities — not in huge numbers, but it’s a start. This feeling of responsibility is new. People are also making fewer trips to the U.S.

“But there remains a tremendous gap between the wealthy and even the middle class. The wealthy have access to cash, which, for example, is a great advantage when you buy a home. Everyone I know paid for their home in cash. No one has a mortgage. I’m really not sure how middle-class people manage to buy homes. It has to be difficult.”

Last year, when you read through real estate ads in Tijuana newspapers, you came across sales situations which, to an American, seemed puzzling. The owner of a $160,000 home, for example, offers it for 40 percent down and is willing to carry the balance for two years at 12 percent. What sort of person has $70,000 on hand but wants to pay the $90,000 balance over two years?

“Some possible scenarios come to mind,” said Ricardo, a Tijuana university professor who comes from an upper-middle-class family. “You might have a person, and he’d have to be fairly wealthy, who thinks, ‘OK, I’ll put down $70,000 on the house and I’ll leave the balance in investments and be able to make a little money.’ Or maybe he has investments that he hopes will pay him $90,000 over the course of two years. The Mexican economy is of course volatile. If his investments fail, he’s in trouble.

“The most likely scenario is that the buyer hopes he’ll somehow be able to come up with $90,000. The important thing is to first move into the home. In Mexico, real estate transactions can sometimes take a long time. When my wife and I bought our home, it took nearly one year. So you actually have a little more time to come up with the balance. You make the $70,000 down payment, and while you’re waiting for the transaction to go through, you start working on borrowing money. Usually, you would try to borrow from your family. Because banks have been so unreliable in Mexico, there’s a whole tradition of family loans. Everyone gets together and pools their money, and people take turns borrowing. It’s sort of like autofinanciamiento.

“Then there’s the scenario in which the buyer has no idea how he’s going to find the remaining $90,000. He makes the down payment, he moves in, and he makes the monthly payments as best as he can. When the buyer runs out of resources, he hopes the seller will work with him. If the seller isn’t flexible, then the buyer will have to go to a bank, or, worse, to a prestamista.”

Ricardo and his family travel often in the United States. He spends his sabbaticals here. He lectures at the big-name universities.

“I’m completely comfortable in America. There’s a lot about America that’s very attractive. And on the one hand I’m a professor, and I give graduate seminars on subjects like ‘Writing Journalistic Prose in Spanish.’ But on the other hand I’m a Mexican citizen living in Mexico, and there’s a great deal I would have a difficult time explaining to my American students. My sister lost her home in the ’94 crisis. It was horrible. Within three months, her mortgage payments were huge. Finally, she somehow sold her home. She had to get rid of it.

“My sister was very good about saving money, so a year ago she was able to buy another home. She now keeps a stash of dollars to pay the mortgage in case something goes wrong. I don’t know where the dollars are — under a tile in her living room floor, at the bottom of a closet, in a hole behind the toilet. I don’t know. She won’t even tell me. My sister, an upper-middle-class, college-educated professional, keeps thousands of American dollars buried somewhere in her home. In Mexico, this isn’t strange, neurotic behavior. Many people, maybe most people, keep stashes of dollars in their homes. Just in case there’s another crisis.”

María del Carmen Díaz remembered the ’94 crisis. She owns and operates Lorimar Real Estate on Paseo Ensenada in Playas de Tijuana.

“Everything came to a halt. No one was selling. No one was buying. I just sort of sat around the office, waiting for the phone to ring. It never rang.

“So, I had to be creative. I started acting more like a rental agency. People always need to rent apartments. And there are a lot of students, more than you would imagine, who rent apartments here and attend university in San Diego. There are also businessmen who need apartments. I was able to make a living until the market started to recover.

“If I lived in the United States and worked as hard as I work in Tijuana, I’d be a millionaire already.”

On the afternoon I visited her last year, files of sales in progress, calculators, calendars cluttered her desk. Her phone rang constantly. Three or four other phones in the office rang constantly. Her agents interrupted her every few minutes with questions about contracts, of which an endless series rattled forth from a dot matrix printer by her desk.

“Here in Mexico we have to be more inventive when it comes to closing a deal. People often buy their home with money borrowed from several different sources. The buyer has to be assured that all the money’s there. It can be tricky.”

I told Díaz that earlier in the day I’d visited a branch of Banamex, Mexico’s largest bank, and spoken to a loan officer who told me that, in a good month, she processed only six loans.

“Yes,” Díaz said, thumbing through a file. “It’s rare. But some people do go to banks for mortgages.” As proof, she hands me a copy of a client’s mortgage agreement. The client borrowed $46,000 from Banamex for 15 years at 24 percent.

“Interest rates aren’t our only problem. Our entire legal system needs to be reformed. Our laws favor renters and homeowners. If someone doesn’t pay their rent, or stops paying their mortgage, it can take forever to get the property back. It can take up to two years to foreclose on a house. So you have a situation in which people are afraid to rent out property, or develop rental property, and banks are very cautious about giving home loans.

“As a result, buying a home is difficult, even for the upper middle class. I’ll give you an example. Right now I’m dealing with a property here in Playas. A $149,000 home. Three bedrooms. Two and a half baths. Central heat and air conditioning. A very nice, very comfortable home. Now, to an American, $149,000 sounds cheap for a home near the ocean. But wait. The seller wants 35 percent down and will carry the balance for five years at 12 percent. That means the buyer has to put down $52,000 and be able to make monthly payments of around $2100 for five years. In Mexico, a $149,000 home isn’t so inexpensive.

“In comparison, American banks are offering 30-year mortgages at around 7 percent.” Díaz tapped a few numbers into her calculator. “So in America, under those terms, for $2100 a month, you could borrow $315,000.”

Díaz decided to stretch her legs. She took me outside and showed me a complex of handsome apartment buildings being constructed on the hills east of her office.

“Those are low-income apartments being built by the federal government. Two bedrooms, one bath. Small. Around $30,000. The government also subsidizes their financing. Thirty percent down. Fifteen-year loans at 15 percent. The apartments are for working-class people. Now, in Tijuana, there’s no housing for them. The government says that in a few years the city’s population is going to double. I just read that 200,000 factory workers in Tijuana need homes. I don’t know what we’re going to do.”

Díaz handed me over to one of her agents, Olga Prieto, to drive me to the border. As Prieto steered her SUV up the express road back to Tijuana, I noticed she had a Spanish translation of Marcel Proust’s Remembrance of Things Past sitting beside her.

“It’s something I’m doing for myself,” she says. “Not for a degree. Just for my own pleasure. I’m taking a university course on Proust. Selling real estate in Mexico is very stressful. It makes me crazy. So reading Proust is a pleasure, a way to relax.

“And you know, one of the big themes in Remembrance of Things Past is how difficult it is in life to know what’s really going on. You think things are one way, but they turn out to be another. Sometimes completely the opposite of what you first thought. Sometimes you can never really find out what the truth is. So this long novel about life in Paris a century ago isn’t difficult for me to understand. It’s easy to understand Proust if you sell real estate in Mexico.”

Time passed. Prieto was right. You think things are one way, but they turn out to be another. A few weeks ago I stopped by Lorimar Real Estate in Playas de Tijuana. María del Carmen Díaz had large posters for several new real estate developments hanging on her walls. She smiled at me. She took me by the hand.

“Since the beginning of 2002, mortgage rates have dropped by 10 percent,” she said. “There’s more competition between banks. We’re doing 15 percent more business than we were doing a year ago. And home prices, in some parts of Tijuana, have increased by 20 percent.

“There was a bad period right after September 11. Everything stopped. We just sat here waiting. What happened was of course horrible, terrifying. But we didn’t know what it would mean for the American economy. And what happens in the American economy affects Mexico immediately. People were afraid. They didn’t want to move. They wanted to see what would happen. After a few weeks, when everything seemed like it was going to be OK, business picked up again.”

She pressed into my palm a brochure for “Real del Mar: A Resort Where Traditions Live.”

“Homes here start at around $200,000, $250,000,” she said. “They’re selling. Not only Mexicans are buying, but Americans too. There’s even an American mortgage firm that’s selling mortgages for Real del Mar.”

The brochure described “custom homes and large lots.” Real del Mar has an “18-hole, par 72 championship golf course,” an “Equestrian Center,” a “number of lighted tennis courts,” and a spa “ready to provide the right touch of pampering to soothe your stressed-out soul.”

But what seemed to excite Díaz most was another brochure she gave me. A development called Laderas del Mar was offering two- and three-bedroom condominiums starting at $49,000.

“And banks are even offering 15- and 30-year mortgages. So many foreigners have bought Mexican banks. Citibank. Spaniards. I don’t even know what Mexican banks are still really Mexican. The result is that interest rates have dropped. You can find some mortgages as low as 14.9 percent. Lenders are still asking for 40 percent down, and the interest rates are still high compared to those in America. But even at that, a $49,000 condominium is now something that lower-middle- and middle-class families might be able to buy.”

I understood Díaz’s enthusiasm. Not less than a year ago, Mexican banks were offering 40 percent down, 15-year mortgages at 24 percent. Under those terms, the monthly payments on a $49,000 condominium would have been $605. Under the new 14.9 percent, 30-year terms, the monthly payments on the same condominium would be $369.

“So we have a sense of hope,” Díaz continued. “There doesn’t seem to be much inflation. No one’s talking about a devaluation. Maybe things will continue to be stable. I’m even thinking about buying a new car. But I’m going to wait a little while. You never know what might happen.”

After visiting Díaz, I called Omar Ramírez at Habiplan, the “self-finance” company, to see if the new hopefulness, and the new interest rates, had hurt his business.

“No,” he said. “We’re still doing as well or better than we were last year. Sure, interest rates offered by Mexican banks have gone down, but they’re still high. Too high for your average Mexican; 14.9 percent looks like an improvement, but it’s double what your banks in America are offering. Mexican rates would have to drop a lot more before they had an effect on our business.”

I wondered what Gustavo del Angel thought about the recent changes in the Mexican economy. When I called him at UCSD, I was told that he had returned to Mexico City to work at an economics research institute. When I at last got in touch with him, he said he was suffering from “culture shock.”

“I’d forgotten just how differently things are done in Mexico. The entire legal system here needs to be overhauled before business can run in a normal way. We’re talking about basic rule of law.

“On the surface, the new interest rates look good. They’re actually fixed-rate mortgages now, like fixed-rate mortgages in the United States. The impetus behind these changes really started a year ago. Foreign banks started buying Mexican banks. Smaller companies that offered only mortgages started dropping their interest rates. There was greater competition. And if lenders are offering 30-year mortgages, then there must be some sense that the chances for stability, in the long term, are good.

“But remember, mortgages are actually low-risk loans for lenders. No one wants to lose a home. You can’t steal a home. So mortgages aren’t an accurate indicator of what’s going on in the entire economy. The outlook here, short-term, isn’t very good. According to the Ministry of Finance, the official expected growth rate for the economy in 2002 is only 1.7 percent. That’s very low! And there’s even reason to believe that it will be lower. There are some bad signs. General Motors in Mexico is expected to let go a significant portion of its workers during the next few months. Four months ago, one of the country’s largest banks laid off 4000 workers.

“And of course no one knows what’s going to happen in the United States, if there’s going to be another war, how a war might affect the U.S. economy. What happens in the U.S. always has an impact on the Mexican economy.

“As far as the new interest rates are concerned, you have to remember that although they’re a lot lower, they’re still accessible to only a very small part of the Mexican population. The disparity here between rich and poor is tremendous. And we’re not talking only about money, about income, we’re talking about education as well. The government would have to spend a huge amount of money on education to start correcting this disparity. The government needs to do that. And I still see no signs of any better rule of law. Not just in terms of public security, but also in terms of criminal and civil procedure. Mortgages, you see, are just a small part of Mexico’s economy.”

The day after I spoke with del Angel, I happened to be in Tijuana and stopped by a branch of one of Mexico’s largest banks. I wanted to see for myself how things had changed.

I asked to speak with a loan officer and was immediately directed to an upbeat young woman sitting at an empty desk. Because I didn’t want a lot of information, and didn’t have the patience to explain that I was a reporter, I made up a little story about myself. I said I had married a Mexican woman who lived in Tijuana and that my wife and I were hoping to buy a home there. I said we would probably need a $100,000 mortgage.

Without hesitating the young woman told me, “We can offer you a 30-year, fixed-rate loan at 14.9 percent, which is a very, very good interest rate. Of course, we’d need to verify your and your wife’s income.”

I was startled by her quickness, her immediate willingness to offer me a mortgage, her pride in the low interest rate. Last year in Tijuana, the loan officers I spoke with, or tried to speak with, were bored and evasive. But had Mexican banking really changed? Were things as normal as they seemed?

“Just one question,” the young woman said as I rose to leave. “What does your wife do for a living?”

“She’s an attorney.”

The young woman made a sad clucking sound.

“Oh, I’m sorry,” she said. “But we don’t offer mortgages to attorneys. We don’t offer mortgages to Roman Catholic priests, airplane pilots, or attorneys.”

My head swam. I couldn’t believe that I’d heard her correctly.

“Why don’t you offer mortgages to Roman Catholic priests, airplane pilots, or attorneys?”

The young woman shrugged.

“It’s just our policy.”