An investigation into the effectiveness of using securitization as a means of financing low-cost housing
Date
2008-05-20T10:32:49Z
Authors
Dube, Lloyd
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Abstract
This dissertation offers an in-depth study of the use of mortgage-backed securitization
to finance low-cost housing. Although mortgage-backed securitization has been used
successfully to finance residential property in the higher end of the market, private
investors have shown little or no interest in exploiting the R68 billion low-cost housing
market through securitization.
The descriptive survey method was used. This included a literature review of the
changes that need to be made in the legal and institutional framework in order to attract
private investors into the low-cost housing securitization market.
The survey indicated that for securitization to succeed in the low-cost housing sector,
the government needs to form low-cost housing development partnerships with banks
and developers. In addition to the partnerships, the government needs to minimize
credit risk by guaranteeing low-cost housing securities and to develop economic
infrastructure in the townships that will result in the creation of jobs. Most institutions
favored incentives such as tax breaks and higher returns on the securities issued by low-cost housing special purpose vehicles.