|Owning a home is a universal dream. An important part of OPIC’s mission is helping to expand the availability of and access to housing in developing countries. OPIC Financing is available to support low- and middle-income housing in developing countries and emerging markets.
Construction and Development Financing: Short-term funds to build houses for sale (and supports related secondary infrastructure development as well). Click here to see a sample terms of reference for this kind of OPIC financing.
Lease Purchase: The installment sales or lease purchase variation allows a developer to offer long-term financing to buyers via a conditional sale or installment sales agreement. The OPIC loan consists of a construction phase and a permanent phase which matches the term of the financing to the buyers. In addition to land, bank accounts, project completion guaranty etc. the OPIC loan is secured by the receivables. The developers must retain a subordinated share of the receivables portfolio for the life of the OPIC loan. In addition, it is necessary for the developer to partner or contract with a financial institution to provide credit analysis and loan administration services. See sample terms of reference for this kind of OPIC financing.
Mortgage Finance: This is designed to provide access to long-term funding to homebuyers through mortgages. OPIC does not fund these loans directly, but provides a loan to a borrower that purchases the mortgages from local financial institutions that originate and service the loans on behalf of the borrower. The borrower must meet OPIC’s U.S. ownership and capitalization eligibility requirements.
The borrower may be an operating company with master servicing and quality control capabilities, or it may simply be a trust that is created for the sole purpose of holding the mortgage assets on behalf of its shareholders and OPIC. The borrower may choose to hold the mortgages to term, or may hold them until a successful bond issuance, the proceeds of which will be used to replenish funds for future lending. Click here to see a sample terms of reference for this kind of OPIC financing.
Mortgage Securitization: OPIC may offer a guaranty to make bonds more attractive to U.S. institutional investors, which can help to jump start local capital market acceptance of mortgage bonds. OPIC expects that these bonds will be rated by one of the rating agencies.
An OPIC guaranty is a guaranty that has the full faith and credit of the U.S. government. It covers timely interest and ultimate principal payment. OPIC may issue a partial guaranty in which OPIC accepts a second or third loss position. The issuer must meet minimum standards for retention of a portion of the total transaction. Alternatively, OPIC can issue a guaranty of a certain percentage of the total bond issuance. See a sample terms of reference for this kind of OPIC financing.
Green Building: A green home is designed to promote sustainability and efficiency of resources. The result is a house that offers savings on energy and maintenance costs, a healthier living space, and a reduced environmental impact. Green design concepts include strategies that developers, designers and managers can implement at little or no additional cost. In some cases, green designs do increase up-front costs but these are usually offset by lower utility bills and maintenance costs as well as higher property value.
Relevancy to OPIC: Green housing is highly developmental and offers a range of social and economic benefits for the local community. For example, greater energy efficiency reduces utility bills, giving residents more financial freedom and easing rent or mortgage burdens. Green construction materials improve structural integrity and promote better indoor air quality for a healthier, safer living environment. Site design and green construction practices conserve elements of the local environment, reducing impact on the local ecosystem and raising the quality of life for residents.
OPIC will encourage developers to investigate green design concepts that either save money or add minimal or no additional cost. Because some design concepts raise up-front costs of construction and design, OPIC can provide incentives for developers to consider green construction practices.