International Housing Finance

Habitat for Humanity International has been engaged in housing finance for the poor since it began in 1976. Through mortgage lending to families, housing finance is central to the complementary roles Habitat plays in community development, volunteer mobilization and advocacy.

For the first 25 years, Habitat promoted a specific and well-defined program model and organizational structure, resulting in rapid expansion, but with limited capacity for adaptability, sustainability and national scale. In recent years, Habitat has sought to manage its loans more efficiently and seek ways to leverage its mortgage portfolio of over $1.4 billion ($107 million outside the USA). Where appropriate in developing world economies, Habitat applies best practices to its housing products through new methodologies. The Save and Build program, for example, is one in which group savings are matched by Habitat funds to build houses for group members. Building in Stages is also a new program—houses are built progressively with small loans that must be paid before the next stage of the house is built. These new housing methods are effective and often more suitable for low-income families. They are designed through partnerships with microfinance institutions.

Habitat’s role
Alliances currently exist between microfinance institutions and Habitat programs in all four regions of the world (Africa and Middle East, Asia, Europe and Latin America and Caribbean). Habitat participates in a variety of ways:

• Program design assistance
  Assistance provided to an MFI that seeks to establish a housing loan product.
• Technical assistance
  Assistance that includes construction services and efforts to link families or clients financed by an MFI to government land, infrastructure or subsidy provided by a Habitat national program.
• Direct investing
  Grants (for pilots of research) or loans (for product rollout) transferred by Habitat to MFIs.
• Investment brokering
  Involvement in negotiations that encourage public and private investment in MFIs to expand housing finance.
• Credit service outsourcing
  Habitat loans that are managed by MFIs to serve Habitat partner families, clients and beneficiaries.

Habitat also currently serves as the coordinator and secretariat of the CGAP Working Group on Housing Finance for the Poor.

Financing needs
Housing products are still very new for microfinance institutions. To date, it has been a relatively mono-product industry. MFIs must become more sophisticated and offer diversified services to fulfill their role as financial service retailers for people in need of decent, affordable housing. Habitat seeks partners to help institutions conduct market research, develop products and develop institutional systems to offer new housing products. Habitat also seeks investors to help leverage its contributions to MFIs to help them achieve scale in their provision of housing finance products.