Acolin, Arthur; Hoek-Smit, Marja C.; Eloy, Claudia Magalhaes. (2019). High Delinquency Rates in Brazil’s Minha Casa Minha Vida Housing Program: Possible Causes and Necessary Reforms. Habitat International, 83, 99 – 110.
Abstract
Brazil's main housing program, Minha Casa Minha Vida (MCMV), has contracted the construction of over 3 million housing units since 2009, providing access to homeownership for low and middle-income households through a combination of credit, subsidies and guarantees. In this paper, we analyze disaggregated delinquency information at the project level for the section of the program that serves households in the lowest income range (Faixa 1). Our analysis of program performance in six metropolitan regions shows an overall level of delinquency of 28% as of the end of 2015. We identify four hypotheses to explain this elevated level of delinquency: the peripheral location of the units, insufficient income to cover ongoing costs, moral hazard in the management of the program, and organized crime in some projects. Our analysis shows that in 4 of the 6 regions, low-income projects in peripheral locations exhibit substantially higher non-payment levels and that lower income households have higher levels of delinquency. Based on our analysis, we recommend modifications to program design, including the inclusion of location criteria in subsidy scaling. The findings provide evidence of the limits of MCMV Faixa l's approach to solving Brazilian low-income housing needs and contribute to an emerging body of literature pointing to the importance of location in housing programs.
Keywords
Income; Urban Growth; Housing; Home Ownership; Moral Hazard; Affordable Housing; Delinquency Rate; Housing Program; Integrated Urban Development; Programa Minha Casa Minha Vida; Social Housing; Mexico; Scale