Private sector shelter program

investors against default on loans provided to the Government of Honduras (GOH) in a project to expand private sector involvement in providing low-cost urban housing. The Federacion Nacional de la Vivienda (FINAVI) will implement the project, which will help GOH implement its Emergency Housing Plan of providing 23,000 low-cost housing units. FINAVI will contract with savings and loan associations (S&L"s) to finance construction of 6,720 units by private developers at five sites in the San Pedro Sula (4,800) and Tegucigalpa (1,800) areas. The 25-27 sq. m homes, set on plots between 65 and 102 sq. m, will sell for $4,000-$4,400; have a shower, toilet and laundry tub; and be fully serviced with water and sewer facilities. Housing purchases will be restricted to families that do not currently own their own home and with incomes below the median of $260-480 per month. To assure S&L profits, repayment will be ensured by FINAVI, interest rates will be set at 17%, and monthly mortgage payments will be limited to one-third of monthly income. At peak construction, 4,000 persons will be employed at the construction sites. As a result of the project, S&L"s will triple their operations, with loans increasing by 41% in value and by 118% in number. In addition, S&L"s operating procedures, beginning at the construction and proceeding through the secondary market stage, will be refined, and S&L experience in dealing with poor urban families will be increased. Technical assistance will be provided to developers and S&L"s to establish lending criteria and procedures and to develop a marketing strategy, and to FINAVI in the areas of information processing, accounting, and insurance and reserve requirements. Achievement of the project"s purpose will be measured by the annual increase in the real dollar value (currently at zero) of minimal cost housing produced by the private sector without incurring loss or requiring government subsidy.