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                                                                   EXHIBIT 10.36

                           DORAL FINANCIAL CORPORATION
                           1451 F.D. Roosevelt Avenue
                        San Juan, Puerto Rico 00920-2717

                              As of January 1, 2004

Mr. Edison Velez
Doral Financial Plaza
1451 F. D. Roosevelt Avenue
San Juan, Puerto Rico 00920-2717

Dear Mr. Velez

          We are pleased to detail herein below the provisions of your new
employment agreement with Doral Financial Corporation ("DFC") and Doral Mortgage
Corporation ("DMC").

          1.   TERMS OF EMPLOYMENT

               The term of this Agreement shall be for a period commencing on to
January 1, 2004 and ending December 31, 2005, unless sooner terminated as herein
provided. This Agreement supersedes and cancels all prior employment, personal
service or similar agreements between you and DFC or DMC and their respective
subsidiaries, divisions and ventures for any period after December 31, 2003.

          2.   POSITION AND RESPONSIBILITIES

               You will serve as Executive Vice President of DFC and Chief
Executive Officer of DMC. By your acceptance of this Agreement, you undertake to
accept such employment and to devote your full time and attention to DFC, DMC
and their affiliates, and to use your best efforts, ability and fidelity in the
performance of the duties attaching to such employment. During the term of your
employment hereunder, you shall not perform any services for any other company,
which services conflict in any way with your obligations under the two preceding
sentences of this Section 2, whether or not such company is competitive with the
businesses DMC or DFC, provided, however, that nothing in this Agreement shall
preclude you from devoting reasonable periods required for

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Mr. Edison Velez
As of January 1, 2004
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                    (i)  serving as a director or member of a committee of any
organization involving no conflict or potential conflict of interest with the
interests of DMC or DFC;

                    (ii) delivering lectures, fulfilling speaking engagements,
teaching at educational institutions;

                    (iii) engaging in charitable and community activities; and

                    (iv) managing your personal and family investments, provided
that such activities do not interfere with the regular performance of your
duties and responsibilities under this Agreement.

               You shall, at all times during the term hereof, be subject to the
supervision and direction of the Chairman of the Board and Chief Executive
Officer and the President and DFC with respect to your duties, responsibilities
and the exercise of your powers.

        3.     COMPENSATION

               (a)  During the term of this Agreement you shall receive an
annual salary of $300,000 annually, payable no less often than monthly in
accordance with corporate policy.

               (b)  (i) During the term of this Agreement, you shall also be
entitled to receive an annual incentive bonus, payable as set forth in (iii)
below, equal to the lesser of (x) $300,000 and (y) 3% of the net income of DMC
over and above Three Million Dollars ($3,000,000) derived from its Mortgage
Banking Activities (as hereinafter defined) provided that such incentive bonus
shall only be payable if you have served as an executive officer of DFC or DMC
for the entire fiscal year to which such payments relate.

                    (ii) One half (-1/2) of the incentive bonus shall be payable
annually within 120 days following the end of the preceding fiscal year,
provided that such amount shall only be payable if you shall have served as an
executive officer of DFC or DMC pursuant to this Agreement for the entire fiscal
year to which such payments relate. The remaining one-half (-1/2) of the
incentive bonus (the "Deferred Bonus") shall be deferred pursuant to the
deferred compensation arrangement described in Exhibit A hereto.

                    (iii) As used in this Section 3, "Net Income" means the
annual net income by DMC and its subsidiaries after all taxes during the
calendar year preceding the payment as determined in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and as shown by DMC's audited financial statements audited by
its independent accountants (hereinafter referred to as "GAAP"). As used in this
Section 3, "Mortgage Banking Activities" shall mean the origination, purchase,
receipt of


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Mr. Edison Velez
As of January 1, 2004
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interest, servicing and sale of mortgages or pools of mortgages on homes in
Puerto Rico and the purchase and sale of interests in pools of mortgages but
shall not include the receipt of the interest on investment securities. Until
you have been given notice to the contrary, all activities of DMC shall be
deemed to be Mortgage Banking Activities, and all expenses of DMC (including all
taxes) shall be deemed to be related to its Mortgage Banking Activities.

               (c)  You shall be entitled to receive stock options to acquire
100,000 shares of DFC's Common Stock subject to the terms and conditions of
DFC's 1997 Employee Stock Option Plan and the stock option awards granted as of
January 2, 2004 by DFC's Compensation Committee.

               (d)  You shall be entitled to participate in the other benefit
plans of DFC upon the terms and conditions on which such benefits are made
available to other officers of DFC and DMC. Nothing herein shall obligate DFC or
DMC to continue any existing benefit plan or to establish any replacement
benefit plan.

               (e)  You shall be entitled to reimbursement for reasonable travel
and entertainment expenses incurred in connection with the rendering of your
services hereunder. Nothing contained herein shall authorize you to make any
political contributions, including but not limited to payments for dinners and
advertising in any political party program or any other payment to any person
which might be deemed a bribe, kickback or otherwise and improper payment under
corporate policy or practice and no portion of the compensation payable
hereunder is for any such purpose.

               (f)  Payments under this Agreement shall be subject to reduction
by the amount of any applicable federal, Commonwealth, state or municipal
income, withholding, social security, state disability insurance, or similar or
other taxes or other items which may be required or authorized to be deducted by
law or custom.

               (g)  No additional compensation shall be due to you for services
performed or offices held in any subsidiary, division, affiliate, or venture of
DFC or DMC.

          4.   MISCELLANEOUS PROVISIONS RELATING TO THE BONUS AND OTHER MATTERS

               (a)  Your acceptance of this Agreement will confirm that you
understand and agree that the granting of the incentive compensation referred to
in Section 3(b) (the "incentive compensation"), and any action thereunder, does
not involve any statement or representation of any kind by DFC or DMC as to
their business, affairs, earnings or assets, or as to the tax status of the
incentive compensation or the tax consequences of any payment thereof, or
otherwise. You further agree that any action at any time taken by or on behalf
of DFC or DMC or by their directors or any committee thereof, which might or
shall at any time adversely affect you or the

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Mr. Edison Velez
As of January 1, 2004
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incentive compensation, may be freely taken notwithstanding any such adverse
effect without your being thereby or otherwise entitled to any right or claim
against DFC, DMC, or any other person or party by reason thereof.

               (b)  The incentive compensation is personal to you and, except as
provided as contemplated in Section 3(b) above, in the event of your death or
incapacity, is not transferable or assignable either by your act or by operation
of law, and no assignee, trustee in bankruptcy, receiver or other party
whosoever shall have any right to demand any incentive compensation or any other
right with respect to it. If, in the event of your death or incapacity, your
legal representative shall be entitled to demand the incentive compensation
under any of the provisions hereof then, unless otherwise indicated by the
context or otherwise required by any term hereof, references to "you" shall
apply to said representative.

               (c)  If and when questions arise from time to time as to the
intent, meaning or application of any one or more of the provisions hereof such
questions will be decided by the Compensation Committee of the Board of
Directors of DFC or any other Committee appointed to consider such matters, or,
in the event DFC is merged into or consolidated with any other corporation, by
the Board of Directors (or a Committee appointed by it) of the surviving or
resulting corporation, and the decision of such Board of Directors or Committee,
as the case may be, as to what is a fair and equitable settlement of each such
question or as to what is a fair and proper interpretation of any provision
hereof or thereof, whatever the effect of such a decision may be, beneficial or
adverse, upon the incentive compensation, shall be conclusive and binding and
you hereby agree that the incentive compensation is granted to and accepted by
you subject to such condition and understanding. You understand that the
incentive compensation is not held or set aside in trust and (1) DFC or DMC may
seek to retain, offset, attach or similarly place a lien on such funds in
circumstances where you have been discharged for cause and shall be entitled to
do so for (x) malfeasance damaging to DFC or DMC, (y) conversion to you of
opportunity of DFC or DMC, or (z) a violation of DFC's Code of Business Conduct
and Ethics, in each case as determined in the sole discretion of the
Compensation Committee of the Board of Directors, and (2) in the event DFC is
unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of DFC or DMC and may be entitled to no priority under
applicable law with respect to such payments.

          5.   RESTRICTIONS ON COMPETITION

               During the term of this Agreement and for a period of one year
after you cease to be an employee of DFC or an affiliate of DFC or DMC, you will
not, without the prior written consent DFC or DMC, (a) accept employment or
render service to any person, firm or corporation, directly or indirectly, in
competition with DFC or DMC, or any affiliate thereof for any purpose which
would be competitive with the mortgage banking business (the "Restricted
Business") within the Commonwealth of Puerto Rico (the "Restricted Area") or (b)
directly or

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Mr. Edison Velez
As of January 1, 2004
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indirectly, enter into or in any manner take part in or lend your name, counsel
or assistance to any venture, enterprise, business or endeavor, whether as
proprietor, principal, investor, partner, director, officer, employee,
consultant, adviser, agent, independent contractor or in any other capacity
whatsoever for any purpose which would be competitive with the Restricted
Business in the Restricted Area. An investment not exceeding 5% of the
outstanding stock in any corporation regularly traded on any national securities
exchange or in the over-the-counter market shall not be deemed to violate this
provision, provided that you shall not render any services for such corporation.

          6.   TERMINATION OF EMPLOYMENT

               (a)  Your employment hereunder may be terminated for dishonesty,
death, incapacity, or inability to perform the duties of your employment on a
daily basis, resulting from physical or mental disability caused by illness,
accident or otherwise or refusal to perform the duties and responsibilities of
you employment hereunder, or breach of fidelity to DFC or DMC.

               (b)  At any time following a "Change in Control" of DFC, this
Agreement may be terminated by DFC or you on 30 days' written notice to you or
DFC, as the case may be, such termination to be effective as of the end of the
calendar year during which such notice is given. As used herein, a "Change in
Control" shall be deemed to have occurred at such time as any person other than
DFC or an entity controlled by or under common control with DFC ceases to be the
owner of at least 51% of the outstanding voting securities of DMC.

               (c)  If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of DFC hereunder shall cease, provided that in any
termination pursuant to subsection (b) of this Section 6 you shall be entitled
to receive all compensation due to pursuant to Section 3 hereof for the calendar
year in which such date of termination occurs.

          You agree that this Section 6 shall create no additional rights in you
to direct the operations of DFC or DMC.

          7.   WAIVERS AND MODIFICATIONS

               No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between the
parties, but only by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.

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Mr. Edison Velez
As of January 1, 2004
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          8.   SEVERABILITY

               Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the event
that any provision, or any portion of any provision, of this Agreement shall be
held to be void and unenforceable, the remaining provisions of this Agreement,
and the remaining portion of any provision found void or unenforceable in part
only, shall continue in full force and effect.

          9.   ARBITRATION

               Any dispute arising under this Agreement shall be submitted to
arbitration in San Juan, Puerto Rico under the rules of the American Arbitration
Association.

10.        NOTICES

               Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in a
similar manner. Any notice or communication intended for DFC or DMC shall be
addressed to the attention of the Chairman of the Compensation Committee of
DFC's Board of Directors.

          11.  GOVERNING LAW

               This Agreement shall be construed in accordance with the laws of
the Commonwealth of Puerto Rico.

          12.  MISCELLANEOUS

               This Agreement shall be binding upon the successors and assigns
of DFC and DMC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.

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Mr. Edison Velez
As of January 1, 2004
Page 7


               If the foregoing terms and conditions correctly embody your
mutual understanding with DFC and DMC, kindly endorse your acceptance and
agreement therewith in the space below provided, whereupon this shall become a
binding agreement.

                                     Very truly yours,

                                     DORAL FINANCIAL CORPORATION

                                     By:  /s/ Salomon Levis
                                        ---------------------------------------
                                     Name:  Salomon Levis
                                     Title: Chairman of the Board and
                                            Chief Executive Officer

                                     DORAL MORTGAGE CORPORATION

                                     By:  /s/ Salomon Levis
                                        ---------------------------------------
                                     Name:  Salomon Levis
                                     Title: Chairman of the Board

Accepted and Agreed to as of the
date first above set forth:

        /s/ Edison Velez
---------------------------------
           Edison Velez

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                                                                       EXHIBIT A

                              DEFERRED ARRANGEMENT

         1.       Creation of Accounts by DMC.

                  (a)      DMC shall create and maintain in its records a
Deferred Bonus Account for you with respect to the Deferred Bonus, if any,
earned by you under the Agreement. To that Account shall be credited the
Deferred Bonus and all interest earned thereon.

                  (b)      DMC shall not segregate the amounts credited to you
but may utilize such amounts for such purposes as it deems appropriate,
including working capital.

                  (c)      The Account shall bear interest (calculated on the
basis of a 360 day year consisting of twelve 30 day months) at the rate of
interest publicly announced by the JP Morgan Chase Bank, New York, New York as
its "Reference Rate" on the first day of each calendar quarter less one
percentage point, which amount shall be credited to each Account as of the end
of each quarter in each year and such interest shall thereafter become a part of
the Account.

                  (d)      DMC may withhold from the amount payable with respect
to the Deferred Bonus account, any amount which it deems necessary to withhold
by reason of applicable federal, state, Puerto Rican or municipal income,
withholding, social security, state disability insurance or similar or other
taxes or other items which may be required or authorized to be deducted by law
or custom.

         2.       Termination of Right to Deferred Bonus.

                  (a)      Your right to any Deferred Bonus Account hereunder
may be terminated for dishonesty or if you otherwise breach the provisions of
your employment agreement with DMC, including the provisions of Section 5
thereof.

                  (b)      On your death or legally determined incapacity, your
Deferred Bonus Account shall be deemed to have been transferred to your legal
representative who may within twelve months after your death or legally
determined incapacity demand payment of all your Deferred Bonus Account whether
or not five years shall have elapsed since the accrual of the Deferred Bonus
giving rise to the Deferred Bonus Account.

         3.       Management and Statutory Creditor.

               You acknowledge that you have no right to restrict or in any way
affect the management policies or decisions of DMC and that you shall not obtain
any status as a creditor of DMC.

         4.       Payment of Deferred Bonus, Notice, Withholding.

                  (a)      Subject to Sections 2(a) and 2(b), you shall be
entitled to receive on demand the full amount of your Deferred Bonus Account
five (5) or more years after such Deferred Bonus was earned.

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                  (b)      Demand for payment of the Deferred Bonus Account
shall be made by written notice, addressed to the Chairman of the Board of DMC,
specifying the amount of the then receivable Deferred Bonus Account and
requesting its payment at any time during which it is then payable. Payment
shall ordinarily be made to you within 30 days after request.

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