Millions on earth do not earn enough to afford a house. Housing prices have spiraled up, and would continue to do so as pressure of population and nuclearisation of families continues. As there is a humanitarian angle to affordable housing finance, this topic is very dear to me, and I wish to do much more work in this field. Here is a modest beginning.
Housing finance systems:
"Housing finance system" consists of several elements, mainly:
- Primary mortgage lending institutions
- Secondary markets in mortgages
- Capital market investors in mortgage securities
- Supportive agencies, such as servicers, rating agencies, due diligence agencies, etc.
The word "mortgage" is used here in broad sense encompassing all those possible funding devices whereby people using finance to buy or lease-in their houses. Of course, short-term rental option is not intended to be included in this term.
This refers to the market for origination of mortgages. Typically, mortgages are originated by retail banks, specialized housing finance entities, building societies, etc. In most countries, mortgages are originated through a network of branches of the originators, as well as mortgage brokers or direct selling agents. Brokers originate mortgages and then place them with a housing finance entity.
The term "secondary mortgage market" consists of the system through which primary mortgage institutions refinance themselves. Broadly speaking, primary mortgage institutions may rely on the following sources for refinancing themselves:
- Traditional sources such as deposits, loans.
- On-balance sheet capital market sources such as bonds, covered bonds, etc.
In addition, mortgage originators may use one or more devices of risk transfer, such as synthetic securitization, mortgage insurance, etc.
- We are currently engaged in developing a toolkit for IFC and NHB titled "India Toolkit for Low Income Housing Finance - A Practitioner's Guide" along with Habitat for Humanity.
- We have developed a Global Housing Microfinance Toolkit and build capacity of Microfinance Institutions/NBFCs/Technical Service Providers using the Housing Microfinance Toolkit for International Finance Corporation and National Housing Bank (India).
- Affordable Housing Project of IFC (as a consultant to ICRA Management Consulting Services Limited)
- We developed a model for securitisation of low cost housing projects for an investment banking company called Musa Capital, South Africa.
- Royal Initiative on Housing, Jordan - we suggested a funding method that neutralizes the subsidy burden on the government, while making housing extremely affordable. Executive summary of our report
- Mr. Vinod Kothari has been retained by National Housing Bank for assisting them in promoting Covered Bonds in India.
- Mr. Kothari was a part of Working Committee formulated by National Housing Bank for promoting capital market instruments such as RMBS and Covered Bonds for the housing sector in India.
We, from time to time, organise workshops on housing finance. We also organised the first affordable housing finance summit in 2013.
For updates regarding our upcoming and past housing finance workshops, please see our workshop calender.
- A page on Green Mortgages Lending
- Several Guides and Resources
- IUHF website, for various resources
- A site/journal dedicated to Affordable Housing Finance
- Articles on Housing Finance