Announcement of World Bank to Support Development of Mortgage Loan Market in Algeria on July 2, 2002

Algeria: World Bank to Support Development of Mortgage Loan Market Contacts: In Washington: Ala Cubukcu 473-8449 e-mail: acubukcu@worldbank.org WASHINGTON, July 2, 2002 -The World Bank last Thursday approved a US$5.5 million loan to help Algeria develop a mortgage loan market that is expected to allow up to 70 percent of households to purchase, build or renovate homes. The Mortgage Finance Technical Assistance Project will improve banking capacities as well as legal and administrative conditions surrounding the lending process, whose current shortfalls pose the main constraints to mortgage financing. These improvements include providing legal and administrative measures to enhance property rights, mortgage lien efficiency, and the property titling and registration system. "This project supports the Algerian government in its efforts to implement policy and institutional reforms and shift the provision of housing from publicly subsidized rental units to owner-occupied housing, financed through market-based resources," said Douglas I. Graham, World Bank task manager for the project. The project will specifically focus on the following three components: · Legal and Land Titling Improvements. This component will address deficiencies in the legal framework for mortgage finance and in the property titling and registration systems, which hamper the use of real estate properties as collateral for bank loans. · Strategic Assistance. This component will provide technical assistance tailored to the needs of targeted banks and other related institutions. · Operational Training. This component will provide banks' operational staff with professional skills necessary to properly carry out tasks involved in mortgage processing, from marketing and origination of loans to their servicing, recovery and funding. The Algerian government started undertaking key financial reforms and developing a mortgage loan market several years ago in efforts to find alternative solutions for the country's growing housing needs, which the current market has been unable to satisfy. Algeria suffers from a severe housing shortage, particularly in urban areas, where public social rental housing, which dominates the market, has not been able to keep up with the demand. It is estimated that 175,000 new housing units need to be built each year during the next decade to absorb the current housing deficit and to satisfy future demand. Also, many existing housing units are in poor condition and are in need of renovation. Total project costs amount to US$8.2 million, of which US$5.5 million will be financed by a World Bank IBRD loan, with a 4.5 year grace period, to be repayable in 12 years. For more information about this project, go to < BR>http://www4.worldbank.org/sprojects/Project.asp?pid=P064983