HOUSING BANK

AUDIT COVERS THE PERIOD 1/1/75-7/31/79; AND INCLUDES A REVIEW OF PROJECT RECORDS, VISITS TO PROJECT SITES, AND DISCUSSIONS WITH USAID AND GOVERNMENT OF HONDURAS OFFICIALS. A HOUSING BANK (FINANCIERA NACIONAL DE LA VIVIENDA) WAS ESTABLISHED AND IS FUNCTIONING SUCCESSFULLY. THUS FAR, THE BANK HAS INSTITUTED A MORTGAGE INSURANCE DEPARTMENT, PROVIDED INTERIM FINANCING, PURCHASED MORTGAGES FROM SAVINGS AND LOAN ASSOCIATIONS, PERFORMED AUDITS AND SET POLICY, PROMOTED SAVINGS AND LOAN ASSOCIATIONS, AND MADE USE OF AVAILABLE TECHNICAL ASSISTANCE TO IMPROVE ITS OPERATIONS. ALL THE LOAN FUNDS ($4 MILLION) WERE RELEASED TO THE HOUSING BANK AS OF THE AMENDED TERMINAL DISBURSEMENT DATE, 3/13/79. ALTHOUGH PROJECT DOCUMENTS INDICATE THE INTENTION TO FINANCE LOW-COST HOUSING, ONLY 11 OF 383 MORTGAGES FINANCED WITH PROJECT FUNDS WERE FOR HOMES COSTING LESS THAN $7,500. LOAN IMPLEMENTATION DELAYS SET THE PROJECT BACK NEARLY 2 YEARS. NUMEROUS REPORTS WERE EITHER NOT RECEIVED OR WERE NOT ON FILE. OTHER PROBLEMS INCLUDED THE FAILURE TO ESTABLISH A SECONDARY MORTGAGE MARKET AND TO USE INTERIM FINANCING EFFECTIVELY. ONE INSTANCE OF CONFLICT OF INTEREST OCCURRED. THE CASA PROPIA SAVINGS AND LOAN ASSOCIATION ADVANCED $565,000 TO URBANIZATION CABANAS, THE PROMOTER OF A HOUSING PROJECT (LOMA LINDA) AT A TIME WHEN THE SAME INDIVIDUAL SERVED AS PRESIDENT OF BOTH ORGANIZATIONS. URBANIZATION CABANAS OBTAINED THE FINANCING BY AGREEING TO BUILD HOUSES FOR $12,000 OR LESS. HOWEVER, MUCH OF THE FUNDS WERE USED FOR PURPOSES OTHER THAN BUILDING HOUSES. AUDITORS CONCLUDE THAT THESE PROBLEMS STEMMED FROM INADEQUATE PROJECT SUPERVISION. APPARENTLY, LITTLE TIME WAS DEVOTED TO ON-SITE INSPECTIONS OR FOLLOW-UP ON INFORMATION INDICATING THAT THE PROJECT WAS NOT PROCESSING AS PLANNED.