REVIEW OF AID HOUSING GUARANTY PROGRAM

Evaluation covers the period 7/76-10/80 and is based on site visits and interviews with project officials. The HG program was well managed and monitored, and has provided thousands of homes for the targeted population. However, problems with sub-project (SP) implementation did arise. In project 5278009, the Housing Bank of Peru (BVP) collected excessively high surcharges, thereby accumulating an estimated $10 million since 1971. These surcharges should be limited in order to keep the price of homes and utility connections as low as possible. Under project 5278005/08, 1,899 mortgages (72% of all loans) are 3 months in arrears. This problem, along with a 60% inflation rate, threatens BVP"s viability. BVP should draft a plan to lower delinquencies and monitor repayments. Only 227 loans under the Home Improvement Loan (HIL) (5278009) project were made due to BVP"s cumbersome disbursement requirements. Participating savings and loan associations (S&L"s) were required to provide a high mortgage collateral of 125% before borrowing. In addition, HIL"s could not be used by S&L"s to secure funding, and most S&L"s had low mortgage portfolios. Approval and inscription of the loans was time consuming and costly. Finally, many beneficiaries lacked property titles and therefore could not offer property as a mortgage guarantee. USAID should provide technical assistance to BVP to develop a coherent plan for implementing the HIL program. Although progress is now being made, BVP was slow in registering mortgages and signing service sales contracts. The 446 units at PREVI-Bocanegra and El Trupal, and the service contracts for 21,000 utility connections, have not yet been registered. BVP also has no evaluating system -- reports concerning 5278005/008 and 5278009 were not done, nor was the end-of-project report for 5278005/008 prepared. BVP project management needs improvement. BVP should be assisted to meet the 7/13/80 evaluation recommendations.