Shining A Light On OPIC

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TME-PHhallFor too many years, the federal government has been doing more harm than good when it comes to the U.S. housing finance market. Strangely, Washington has been much less obvious when it comes to providing aid to housing markets in other parts of the world – thanks, in large part, to a somewhat obscure agency that rarely receives media attention.

Established in 1971, the Overseas Private Investment Corp. (OPIC) defines itself as the development finance institution of the U.S. government, with a mission that mobilizes “private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy.”

Housing and real estate finance is among the priorities that OPIC pursues. Last month, the agency announced that it was sending money overseas to assist in a number of endeavors: Up to $75 million in financing to First City Monument Bank to expand access to real estate development and infrastructure finance in Nigeria; up to $56 million in financing to Delaware-based La Hipotecaria Panamanian Mortgage Trust to expand affordable housing mortgage lending in Panama; up to $80 million to International Housing Solutions Fund II, which will invest in affordable housing across Sub-Saharan Africa, and up to $50 million to Peninsula Investments Group Fund III, to focus on investing in middle-income housing in Colombia, Peru, Panama, Uruguay and Mexico.

OPIC is intentionally vague on the exact nature of its financing, but one might assume that there are tight requirements attached – there is nothing in its literature to suggest this is no-strings-attached grant money. The agency’s website claims that it “operates on a self-sustaining basis at no net cost to American taxpayers,” so one can assume that OPIC is getting (and receiving) something in return for its outreach.

Many of areas targeted by OPIC have significant political and economic problems. For example, in November 2011, OPIC announced plans to finance a $100 million project to establish Guatemala’s first multi-bank, market-wide mortgage platform that involved both origination and securitization. At the time of the announcement, Guatemala had a housing shortage of more than one million homes.

In June 2010, OPIC provided nearly half of the funding for a $500 million mortgage finance program designed to double the number of families who are able to purchase homes in the Palestinian Territories. In May 2012, OPIC announced an agreement to provide $30 million in financing to a private equity fund designed to invest in Palestinian companies.

In regard to the Guatemalan and Palestinian projects, OPIC has not offered any public updates on how its money has been spent or what kind of results have been generated. Indeed, that is one of the more troubling aspects of OPIC – we have no idea what (if anything) the agency has accomplished.

On occasion, OPIC makes a public relations blunder – most egregiously in February 2013 when it teamed up with the U.S. Agency for International Development and the Clinton Bush Haiti Fund to launch a mortgage finance program in Haiti. This endeavor was announced while ignoring the sad fact that many Haitians were still homeless as a result of the devastating 2010 earthquake – the very last thing that the Haitian people needed at that time were home loans.

OPIC also seems to have its own Middle Eastern policy: in its press materials, OPIC refers to this part of the world as “Palestine” even though the U.S. State Department uses “Palestinian Territories.” Go figure!

And while U.S. taxpayer money is reportedly not being spent on housing finance in far-flung corners of the globe, I still cannot overcome the confusion of why a federal agency is spending its time and energy in building mortgage platforms in other countries. After all, these countries have governments – and I don’t recall ever seeing a developing country leader who lives in poverty and struggles for food and shelter. And I can’t see how these efforts improve U.S. foreign policy – really, do the Palestinian and Guatemalan people love the U.S. more because it is helping to finance a local mortgage program?

Perhaps the OPIC executives would like to take some time and present an overview of what they have accomplished recently, especially in regard to improving the quantity and quality of affordable housing around the world? The agency’s goals are noble, but their results are somehow missing from the spotlight.

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