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Process of GHF
Loan Securitization
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LOAN SECURITIZATION
Home Micro-Financing Program for the Working Poor
Summary:
The Global Housing Foundation (GHF) has created an innovative program to establish home ownership and provide attractive affordable long-term financing for families that are working but living in sordid or other substandard housing. This program has been organized to operate with little or no subsidy.
Targeted Families:The program is being designed to assist the working poor. These are families that earn between USD$35 - $125 per week with an average household of five people. The homes will be built for a cost of USD$4,500 - $14,000 depending on the country.
The Homes: The homes will be approximately 600 square feet (50 m2), with water, electricity, septic tank, bathroom and kitchen area with a gas cooking appliance. There will be individual rooms and the homes will be secure. Title to the home and land will be vested in the name of the female member of the family. Depending on the home cost and program design, monthly payments should range from USD$40 to $120.
Municipality Participation: GHF will require the local city or municipality to provide land to GHF at a low cost and to provide utilities and paved access to the development.
Builders: Global Housing Foundation will screen and select, with assistance from UN-HABITAT, local contractors to build the homes to established specifications at an agreed upon fee or profit. It is intended that audits will be carried out to ensure the contractors have complied with the established GHF & United Nations guidelines, fees and profits.
Local Participating Banks: Local banks are utilized in each country to perform the qualifying, origination, and servicing of the loans at agreed upon fees. These banks must successfully service each loan for an agreed upon period of time before the loan can be sold to the Global Housing Foundation's securitization partner, Merrill Lynch.
Loan Securitization: The ability of lenders to originate and sell loans under a securitization program has transformed economies and real estate markets world wide. Examples include Mexico, Costa Rica, Singapore and Australia. GHF is working with UN-HABITAT to provide the required credit enhancements. An experienced Wall Street group, headed by John C. King and Mark F. Zimmer, established our securitization program with Merrill Lynch. The initial program was launched in November 2007 and is based in Nicaragua, Panama, San Salvador and Costa Rica. The program is designed to be adaptable to most regions of the world. We plan on launching the program in Latin America, Africa and Eastern Europe.
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