Mainstreaming Microfinance of Housing
By and large, low/moderate-income households have access to few resources for settlement and building but a concerted, well-funded effort of donors, governments, financial NGOs, and financial institutions could be key to mainstreaming microfinance of housing.
The authors argue that the key to success of this effort lies in joining the institutions and expertise of the microenterprise finance community with that of the housing and housing finance community. An institutional infrastructure of microfinance institutions and macroeconomic stabilization (that has reduced inflation and made housing finance, in general, possible) in many countries, however, may telescope this process. The document concludes that the process will require further research and pilot projects, as well as full-blown programs:
- There is a need for best practice and in-depth case analyses displaying financial sustainability;
- Programs to help financial institutions take a mortgage lien as collateral on a small loan, as well as better informational infrastructure making risk assessment and pricing more accurate are needed;
- Centralized real estate registries, national credit bureaus and title regularization subsidy programs would also be useful;
- Experimentation with a range of institutions and support in pilot projects is essential at this stage in the development of housing microfinance;
- Best practices emerging from pilot projects can serve to develop programmes and disseminate housing microfinance widely.
