Fondo Mi Vivienda 2

Project Description 

On June 6th 2023, the Multilateral Investment Guarantee Agency (MIGA) issued Guarantees amounting to US$427 million to JPMorgan Chase Bank N.A. of the United States covering its Non-Shareholder loans to  Fondo Mivivienda S.A. (FMV). The MIGA guarantees are issued for a period of 6.5 years and will cover the risk of Non-Honoring of Sovereign Financial Obligations of a State-Owned Enterprise (NHFO-SOE). 

The proceeds of the MIGA guaranteed loans will be used by FMV to increase access to mortgage loans for the lowest-income segments of the population and those affected by vulnerability, and to promote the development of green housing in Peru. A Gender Action Plan will also be developed by FMV to increase housing finance for women in Peru and segments of the population affected by vulnerability. FMV is a wholly owned financial institution of the Government of Peru with strategic importance in promoting and financing housing solutions in the country. It is the largest provider of affordable housing financing in Peru and plays a critical role in the government’s public policies to reduce the country’s housing shortage. 

This project builds on MIGA’s previous engagement with FMV in FY2022. The proceeds of the first MIGA-guaranteed loan were devoted to funding green housing mortgages under the Green House Program “Mivivienda Verde”, which promotes green housing mortgages for the acquisition of certified green housing properties for vulnerable medium-income households and contributed to the development of the green mortgage market by commercial financial institutions.  

Environmental Categorization 

The MIGA Project will support mortgage access to middle-income households. The E&S risks associated with mortgage loans are considered minimal and this Project has thus been categorized as FI-3 under MIGA’s Policy on Environmental and Social Sustainability (2013). There will be no E&S requirements for the lending portfolio.  As an existing client, FMV’s labor policies are in line with the labor set under Performance Standard 2: Labor and Working Conditions.  

Development Impact 

The MIGA-guaranteed loans are expected to promote increasing access to finance for social housing in Peru, aimed at reducing the country’s housing deficit while improving the quality of life of new homeowners. In particular, the Project will seek to increase access to mortgage loans for the lowest-income segments of the population and those affected by vulnerability, and to promote the development of green housing in Peru. By providing long-term commercial financing at competitive pricing, the MIGA-guaranteed loans will support FMV’s mission and will directly contribute to Peru’s green and inclusive economic recovery. Through the proposed Project, MIGA would support a public sector entity that provides social mortgages which are affordable and directed underserved segments of the population with potential spillover effects on the housing construction sector and on job creation in the country. The Project’s strong focus on increasing access to mortgages to underserved segments of the population, including to women, will help these new homeowners improve their quality of life while allowing them to build wealth. The Project is consistent with MIGA’s efforts to promote the recovery of economic activity, through knock-on effects on the housing construction sector and on job creation, under MIGA’s Fast Track COVID-19 Response Program. 

The Project is consistent with the WBG Country Partnership Framework FY23-FY27 for Peru and with the World Bank Group’s (WBG) “Green Resilient and Inclusive Development” (GRID) response, in which the WBG proposes an integrated approach to promoting a strong and durable recovery and growth through green, resilient, and inclusive development. The Project will also contribute to the WBG’s Climate Change Action Plan 2021-2025 which seeks to promote green and resource efficient buildings and highlights MIGA’s commitment to increase the use of mortgages for green housing through financial intermediaries.