Contacts: In Washington: Gabriela Aguilar (202) 473 6768 gaguilar2@worldbank.org In Mexico City: Fernanda Zavaleta (52-55) 54804252 fzavaleta@worldbank.org Washington DC, November 6, 2008—The World Bank Executive Board of Directors (WB) approved today a loan of US$1,010 million for the Federal Mortgage Corporation (SHF). The objective of the project is to strengthen the SHF´s financial and technical ability so it may carry out its mission of developing the housing financing market, with an emphasis on expanding the access to housing to low income groups. “This loan supports the implementation of SHF´s Strategic Plan 2008-2012, which concentrates on expanding access to housing for lower income groups, drawing on its successful experience in expanding housing finance to middle-income families. The Bank will provide technical assistance to help the SHF develop new products designed to work with new financial intermediaries that are better positioned to provide finance to the lower income families.” expressed Axel van Trotsenburg, World Bank Director for Mexico and Colombia. The Private housing finance markets strengthening project consist of two components: - A component that would restructure the short term debt of the SHF, and
- A component that would provide technical assistance for improving the policies, processes and internal organization of SHF, so it can better facilitate access to housing finance to low income households (those that make less than 6 minimum wages).
The SHF´s mandate is to develop the private housing finance market in the country. To do so it provides long term credits to financial intermediaries that specialize in granting mortgages. The SHF issues debts secured by the Mexican Government to finance its activities in the primary and secondary housing markets, and the World Bank loan will support SHF in refinancing its debt portfolio. Refinancing the short term debt will allow the SHF to back the mortgage growth through Special Purpose Financial Companies (SOFOLES) while the turmoil prevails in the international markets. It will also provide the space to implement the medium term objective: to improve accessible mortgage options for the underprivileged sectors. To do so, the SHF is beginning to work with other financial institutions —such as savings banks—which have comparative advantages for expanding access to loans for this segment of the population. “I think this loan comes at a very opportune moment and coincides with the government’s strategy to mitigate the social and economic impact of the global financial crisis. The role of the SHF acquires greater relevance in sustaining financial flows to the housing sector during this period and generates a positive impact on the construction sector and employment,¨ added Van Trotsenburg. The financing for SHF is equivalent to approximately 40,000 housing loans (of a similar amount to the quantity the SHF offers on average); around an 8% of the general annual demand on housing, and covers nearly 4% of the annual objective proposed by the government. The amount of the loan is equivalent to 1.5 percent of the total annual investment in housing in the country. The WB has worked with the government in the housing sector and the development of its financial system since the late 1990s. The support has been diversified in various instruments, from analytical reports and technical assistance to specific investment loans. In this sense, the loan represents a natural continuation of the support the Bank has provided to Mexico over the last decade. The Project is part of the new Country Partnership Strategy that was presented to the Bank’s Board in April. This strategy is built upon the National Development Plan (2007-2012) which includes the objectives of reducing the housing deficit and expanding access to housing finance for middle and lower income families. The loan is a US Dollar, Fixed Spread Loan with a grace period of five years and a repayment period of 30 years with level repayments, and includes the option to convert into Mexican pesos. - | 
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