by Chris Elias and Travis Ritchie
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Unmet housing demand in Latin America and the Caribbean is estimated at 30 million units. In Mexico specifically, 4.3 million households are underhoused and an additional 1.2 million households add to the demand for housing solutions every year. Poor access to finance for low income households contributes meaningfully to this deficit. Up to 40% of Mexican households have no access to the main providers of housing finance in the country.
Housing Microfinance, LLC (HMF, LLC) has raised $100 million to support housing microfinance products in an effort to address this problem across Latin America. Despite the demographic need for housing microfinance in Mexico, the absence of technical expertise in providing housing finance to low income households limits the number of Mexican lending institutions that might serve as intermediaries for these funds.
This paper assesses the opportunity to deploy the capital raised by HMF, LLC in Mexico. We considered three different types of institutions as potential intermediaries: (1) SOFOLES, (2) Microfinance Institutions ("MFIs"), and (3) construction and materials vendors offering consumer loans, and evaluated them against the following criteria:
We also made the following recommendations with respect to the broader transaction: