HOUSING FINANCE WORKSHOP FOR SUB-SAHARAN AFRICA

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1 HOUSING FINANCE WORKSHOP FOR SUB-SAHARAN AFRICA THE WHARTON SCHOOL, THE UNIVERSITY OF PENNSYLVANIA INTERNATIONAL HOUSING FINANCE PROGRAM - ZELL / LURIE REAL ESTATE CENTER [APRIL 10-16, 2011] NAIROBI, KENYA SPONSORED BY [PROGRAM OBJECTIVES] The need for objective and analytical education in housing finance is growing rapidly. Sub-saharan Africa is transforming its housing finance systems and both policy makers and private practitioners need cutting-edge information on innovation in the sector. This program addresses that need by providing an intensive period of education in policy innovations and institutional, financial and managerial aspects of housing finance, focused on the African continent. [TRAINING FORMAT] The program will be held at the Kenya School of Monetary Studies (KSMS) in Nairobi, Kenya. For an Application and Further information, please contact: Ms. Uloaku Echebiri Knowledge Management Analyst Non-Bank Financial Institutions Group The World Bank Group uechebiri@worldbank.org Lectures will follow a structured lesson plan but will allow for an open dialogue between discussion leaders and participants at all times. The course blends academic principles with practical, reallife applications. Case Studies and panel discussions will be used extensively and small group discussions will complement classroom discourse. Each participant will receive a data stick with reading material and hard copies of lecture notes for all training modules. PRICE: $1.000 AUHF MEMBERS: $900 APPLICATION DEADLINE APRIL 1, 2011

2 AGENDA [SUNDAY APRIL 10] REGISTRATION COCKTAIL RECEPTION AT THE POOLSIDE [MONDAY APRIL 11] INTRODUCTION: GLOBAL TRENDS AND INNOVATIONS IN HOUSING MODULE I: HOUSING AND LAND MARKETS, HOUSING POLICY, AND HOUSING FINANCE This module explains the relationship between housing and the macroeconomy, housing and housing finance markets, and the critical role of policy in mortgage market transformation. Housing markets and the macro-economy Housing markets and government policy Land markets and land policies Expanding housing finance markets, framing the issues (the needed infrastructure including: property right systems, land registration systems, foreclosure systems, regulatory systems, alternative collateral systems for housing finance) MODULE II: THE BUSINESS OF HOUSING FINANCE FUNCTIONS AND PRODUCTS This module teaches the main functions of a housing finance system, issues in mortgage design, pricing; and managing of profitability and risk in the housing finance institutions. Regional Overview of Housing Finance Systems Key functions of a housing finance system Loan underwriting, origination, servicing, default and foreclosure administration, forbearance. Pricing and profitability features of housing loans The legal underpinnings of the mortgage loan Different loan products and amortization schedules Pension-backed home-loans Kenya School of Monetary Studies (KSMS) in Nairobi, Kenya

3 [TUESDAY APRIL 12] MODULE III: FUNDING THE MORTGAGE PORTFOLIO This module explains alternative funding models, the risks and constraints each addresses, and conditions and requirements for their development. Deposit based funding systems Key reasons and requirements for accessing capital markets for housing finance Alternative systems of accessing capital markets Liquidity facilities Mortgage bonds Securitization Mortgage insurance Country Case Studies on Funding Systems [WEDNESDAY APRIL 13] MODULE IV: VALUATION OF MORTGAGES AND MORTGAGE INSTRUMENTS This module presents the basic pricing models that underpin valuation of mortgages and financial assets in general; and touches on underwriting of primary mortgage markets. Valuing primary mortgage instruments and their risks Secondary mortgage market a financial view MODULE V: PROFITABILITY, MANAGING HOUSING FINANCE RISKS AND SAFETY, SOUNDNESS OF FINANCIAL INSTITUTIONS The balance sheet as the driver of This module discusses the different risks involved in mortgage lending and ways to manage such risks in different types of housing finance systems profitability Risks and risk management methods Operating risk Credit risk and methods to deal with it (appraisal process, credit bureaus, insurance, managing delinquencies) Liquidity risk Interest rate risk The role of rating agencies Tracking cyclical factors Controlling risks by government supervision and regulation (Basel II/III / consumer information and protection) Case: CEO of Credit Reference Bureau (CRB) of Kenya

4 [THURSDAY APRIL 13] MODULE VI: MICROFINANCE FOR HOUSING AND SLUM UPGRADING This module discusses ways to increase access to housing finance through alternative secured and non-secured lending and their strengths and weaknesses. It will discuss Upgrading. Alternative housing-finance systems and their pros and cons Ways to strengthen such finance systems The financing of slum upgrading Participant Presentations Micro Finance for Housing and Upgrading MODULE VII: CONSTRUCTION AND DEVELOPMENT FINANCE This module analysis the specific constraints experienced in the financing of residential construction and innovative ways to lower risks in construction lending Types of financing systems, risks and solutions Other developer constraints for low/middle income residential development (land assembly, registration, trust structures, subdivision standards, permitting procedures) [FRIDAY APRIL 14] MODULE VIII: EXPANDING HOUSING FINANCE TO LOWER INCOME GROUPS EVENING OUTING This module analyzes different ways to bring housing finance down-market, subsidize housing and housing finance, and provides a framework to assess the effectiveness of housing subsidies. Expanding mortgage lending and housing services down-market Reasons for government subsidies and guidelines for their design Housing finance and subsidies: a diagnostic framework Selected government incentives/subsidies for the housing finance system Selected household subsidies (international examples) Participant Presentations of the Incentives to Expand Housing Finance [SATURDAY APRIL 14] CONCLUSION Final questions and discussions Diploma Ceremony Site Visit to Nairobi Housing Developments

5 ORGANIZING INSTITUTIONS [INTERNATIONAL HOUSING FINANCE PROGRAM - THE WHARTON SCHOOL] The program is part of the Samuel Zell/Robert Lurie Real Estate Center. Initiated in 1986, the program is a comprehensive housing finance program that educates senior officials and CEOs, particularly from emerging economies, in the institutional, policy, financial, managerial, and mathematical aspects of housing finance, both at Wharton and in other countries. The program also provides assistance to emerging economies in fostering the development of education and research in housing finance and offers consulting services in housing finance and housing policy development. [CENTER FOR AFFORDABLE HOUSING FINANCE IN AFRICA] Center for Affordable Housing Finance in Africa is one of the primary sources of information and debate relating to affordable housing finance in Africa. It commissions research, disseminates it, and actively engages in debate and dialogue with key stakeholders, to identify and promote ways to make housing finance and residential property markets work for the poor throughout Africa. The Center is affiliated with FinMark Trust, an independent trust with a mission to make financial markets work for the poor. In pursuit of this objective, FinMark Trust promotes and supports policy and institutional development towards the objective of increasing access to financial services by the un- and under-banked in Africa. [THE WORLD BANK HOUSING FINANCE GROUP] The World Bank s Housing Finance Group provides operational and policy expertise to financial sector officials, regulators and practitioners about the development of strong housing finance markets. The team offers support in the form of technical assistance, advisory services, and training to address property rights, collateral and foreclosure laws, fundamentals of mortgage lending, simple forms of bond funding, and social housing policy. [INTERNATIONAL FINANCE CORPORATION] IFC is a member of the World Bank Group. IFC provides investments and advisory services to build the private sector in developing countries, including the housing and housing finance sectors. [THE AFRICAN UNION FOR HOUSING FINANCE (AUHF)] An association of mortgage banks, building societies, housing corporations and other organizations involved in the mobilization of funds for shelter and housing, on the continent of Africa.

6 FACULTY The teaching faculty participating in the program are recognized leaders in the international planning and real estate field and have extensive experience in housing finance system development and transformations. Core Lecturers are: Drs Marja Hoek-Smit, Director, International Housing Finance Program, The Wharton School; Mr. Simon Walley, Senior Economist, World Bank; Dr. Kalu Ojah, Professor of Finance, Wits Business School In addition, a number of Housing Finance Experts from the Sub-Saharan Africa region and international organizations will participate in the program. These include: Mrs. Kecia Rust, Director, Center for Affordable Housing Finance in Africa; Mr. Simon Stockley, CEO, Integer; Mr. Pierre Venter, Banker s Association of South Africa; Dr. Patricia Mbote-Kameri, Law School, University of Nairobi; Ms. Bonnie Hewson, UN-Habitat; Mr. Peter Murraya, Suraya Properties *LANGUAGE: ALL LECTURES ARE IN ENGLISH* Kenya School of Monetary Studies (KSMS) in Nairobi, Kenya

Breakout Session 1: Mortgage Lenders How can we Incentivize Lenders to Grant more Housing Loans?

Breakout Session 1: Mortgage Lenders How can we Incentivize Lenders to Grant more Housing Loans? Dr. Friedemann Roy IFC Financial Institutions Group Durban October 27, 2015 Work program for break-out session