In 2011, Colombia’s Credifamilia became a regulated financial institution aiming to demonstrate to traditional investors that the low-income housing market is a legitimate one for business, and that their model is one that had the potential to reach a significant scale. By 2014, Credifamilia was originating $3 million – $4 million in mortgages per month, with over 80% of them for low-income housing. They raised a second found of capital, doubling their initial equity, and soon became the youngest financial institution in Colombia’s history to achieve a $50 million mortgage-backed bond issuance.
Credifamilia’s model is unique in a few ways: mirco-mortgages between $3,000 and $28,5000 are issued to qualifying families; loan applications are dealt with at housing development sites so that visibility is increased while overhead is reduced; microfinance practices are incorporated for those in the informal sector; a multi-faceted credit scoring system and structured savings program reduce risk; and loan servicing is made cost-effective and accessible by utilizing popular sites like supermarkets to receive loan payments.
Source:
Inter-American Development Bank. (2014) Many Paths to a Home: Emerging Business Models for Latin America and the Caribbean’s Base of the Pyramid. Inter-American Development Bank.