Analysis of the process and impacts of the USAID guaranty program `national housing system'

The program's results have been notable, including structural transformation of the housing finance system in Ecuador, the generation of public policies and new financial instruments for allowing long-term housing lending, and a transformation of Ecuadorian housing institutions. Conceptually, the Government of Ecuador (GOE) has accepted its need to facilitate housing solutions through policies that motivate private initiative and help organize the actors in the sector to provide housing solutions. Both the GOE and the private sector have recognized that informal private initiative plays an important role in housing solutions. The program has fully incorporated the housing cooperatives into the housing finance system and encouraged credit unions, savings and loans, and private banks to participate. In summary, the program has enabled the GOE to define its role, to begin a secondary housing market, and to recognize the importance of housing in family and national economies. The GOE has created a new Ministry for Housing and Urban Development, incorporating existing public entities -- the National Housing Board, the Ecuadorian Housing Bank, and the Ecuadorian Institute of Sanitary Works. The GOE has redefined the roles of housing institutions, taking them out of direct production of housing and focusing their efforts on planning, coordination, and support for the sector. These government entities are now set to give private entities the responsibility for both the finance and generation of housing. The GOE has also transferred the Financial Fund for Housing (the program implementing agency), to the Ecuadorian Housing Bank, to be used to refinance mortgage portfolios. The most important program advance to date has been the diffusion of the refinancing concept which will stimulate private financial entities to have a role in housing finance. Further, the legal framework has been totally restructured to allow the issuing of mortgage-backed securities to generate increased financing for housing. Mechanisms were established to correct for interest rates and inflation.