Low cost housing finance

The Jordan Housing Bank (JHB) will implement the project, which will encourage private developers to build low-cost housing and will increase the supply of affordable long-term mortgage credit. First and foremost, the project will induce private developers to build housing affordable by families at or below the median urban income. The JHB will promote the financing of privately developed housing (both for construction and long-term mortgages), actively advertise the project and seek out developers to participate, and help developers put together housing projects in which all or some units meet HG guidelines. Half of HG funds will be used to finance mortgages on homes purchased directly from private developers. This component will be experimental in nature. One large developer, Real Estate Finance Company, Ltd (REFCO), is expected to take the lead in constructing low-cost housing, in effect playing a demonstration role. The second half of the HG funds will be used to expand the JHB"s Individual Loan Program (ILP), which is targeted at low-income home buyers, by increasing the resources available to it and by raising the mortgage limit. Other steps to encourage low-cost housing will include: providing credit for land as well as housing costs for beneficiaries purchasing lots under a complementary World Bank project in Amman Municipality; promoting smaller homes among consumers; and encouraging changes in design and construction standards. In all some 1,459 units will be financed. HG funds will be disbursed in two tranches, the second dependent upon a mid-term evaluation of the project"s success in encouraging private sector participation. HG funds will be supplemented by JHB contributions and private developer payments (25%) for construction financing and by beneficiary downpayments. About 20 person-months of short- and medium-term TA will be funded under the Technical Support Funds Service project. Advisors will: help set up a JHB unit to work with private developers; directly assist developers with housing project design and marketing; and conduct shelter sector studies as necessary.