Press Release
Tuesday, July 29, 2008
OPIC ANNOUNCES $250 MILLION TO EXPAND MORTGAGE LENDING IN JORDAN
AMMAN, Jordan – Robert Mosbacher, Jr., President and CEO of the Overseas Private Investment Corporation (OPIC) today announced up to $250 million in financing for new OPIC loan facilities that will enable three banks to extend long-term mortgage lending to low-income households in Jordan, helping the country fulfill its national housing initiative.
Jordanian Minister of Public Works and Housing, Sahl Majali, hosted a signing ceremony at the Ministry. At the ceremony, President Mosbacher was joined by Mr. Michel Accad, CEO of Arab Bank, Mr. Shukri Bishara, CEO of the Housing Bank for Trade and Finance, Khaled Masri, Chairman of Cairo Amman Bank and Mr. Michael Doyle, President and CEO of CHF International in signing a Memorandum of Understanding memorializing the project.
Through the facilities, OPIC will provide up to $100 million to the Arab Bank and Housing Bank for Trade and Finance each, and up to $50 million to the Cairo Amman Bank. The banks will use the OPIC financing to fund 25-year mortgages for low-income households in Jordan in connection with King Abdullah’s National Housing Initiative, by which the country aims to construct 20,000 residences annually for the next five years.
A joint venture by the Middle East Investment Initiative (MEII) and CHF International (CHF) will serve as the U.S. sponsor for the project. It will provide technical oversight to the project, reviewing mortgage credit policies and origination and servicing procedures, and conduct on-site monitoring of the banks’ performances. CHF and MEII are currently supporting OPIC’s affordable housing program in the West Bank through a mortgage lending project that was approved by the OPIC board in April.
CHF International is a U.S.-based nonprofit organization founded in 1952 that serves as a catalyst for long-lasting, positive change in low- and moderate-income communities, and currently works in more than 30 countries. MEII, also a U.S. nonprofit organization, provides loans to small and medium-sized enterprises in the West Bank.
“This OPIC loan facility will establish a ‘best practices’ approach to mortgages by insisting upon strict loan-to-value ratios, down payments and limits on note payment-to-monthly income ratios of 30-40%. This not only supports responsible home ownership, but also Jordan’s national housing initiative,” Mosbacher said.
The Jordanian banking system is considered one of the most well-regulated and transparent in the Arab world, and the country’s real estate and mortgage financing market has shown rapid growth over the past few years. Financing, business and real estate services accounted for 19 percent of Jordan’s GDP in 2007, for example.
The market remains largely untapped, however. According to a 2006 study, current mortgage finance represents only one-third of the total housing market value in Jordan. For the most part, Jordanian banks lack access to long-term funding sources for mortgage financing, which limits the ability of banks to extend long-term mortgage loans. Demand for housing units in 2006 was estimated at 55,400 units, and is expected to reach 69,000 by 2011.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 35-year history, OPIC has supported $177 billion worth of investments that have helped developing countries to generate over $13 billion in host-government revenues and create over 800,000 host-country jobs. OPIC projects have also generated $71 billion in U.S. exports and supported more than 271,000 American jobs.