International Housing Finance

HFHI has been engaged in housing finance for the poor since its inception through mortgage lending to its beneficiary families. The financial service of a mortgage to households is central to the complementary roles HFH plays in community development, volunteer mobilization, and advocacy.

For the first 25 years, HFHI promoted a very specific and well-defined program model and organizational structure, resulting in rapid expansion via replication, but with limited capacity for adaptability, sustainability and national scale. In recent years HFHI has sought to manage its loans more effectively and begun to seek ways to leverage its mortgage portfolio of over $1.4 billion ($107 million outside the USA). Where appropriate in developing world economies, HFHI began applying best practices learned in the microfinance industry to their housing products through new methodologies. One example is HFH’s Save and Build Program, in which group savings are matched by HFHI funds to build houses for group members. Another approach is the HFH Building in Stages approach, in which houses are built progressively with small loans that must be paid off before the next stage is built. Increasingly, these more suitable demand driven products are designed through partnerships with financial sector players – which depending on the context can be MFIs, cooperatives, and banks.

HFH’s Role
Alliances currently exist between MFIs and HFHI programs in all four regions of the world (Africa/Middle East, Asia, Europe, and Latin America/Caribbean), whereby HFHI participates in a variety of roles: (1) program design assistance – provided by HFH to an MFI seeking to establish a housing loan product; (2) technical assistance – including construction services and linkage services with government land/infrastructure/subsidy provided by a Habitat national program to families/clients financed by an MFI; (3) direct investor – such as grants (for pilots of research) or loans (for product rollout) transferred by HFHI to the MFIs; (4) investment “broker” role – involvement in negotiations that encourage public and private investment in MFIs to expand housing finance; and (5) outsourcing of credit servicing – HFHI loan funds that are managed by MFIs to serve HFHI targeted families, clients and beneficiaries. HFHI also currently serves as the coordinator and Secretariat of the Consultative Group to Assist the Poor’s (CGAP) Working Group on Housing Finance for the Poor (see sidebar for link or be able to link here).

Financing Needs
Housing Products are still very new for MFIs. To date, it has been a relatively mono-product industry. MFIs will need to become more sophisticated and provide a more diversified offering of services to fulfill their role as financial service retailer to the poor. HFH seeks partners for grants to help institutions do the market research, product development, and development of institutional systems to do housing products. Secondly HFH seeks investors to help leverage our contributions to MFIs to help them achieve scale in their provision of housing finance products.