Título IV. Financiamiento

The governing entity shall ensure that investments in housing matters made by the State are efficient and transparent.

Housing loans shall be granted on terms and conditions taking into account the debtors' payment capacity, depending on the term, origin and cost of the resources.

For the purposes of the preceding article, the State shall promote the conditions that encourage the participation of local and international private investors that may complement investment and public policies on housing matters. To that end, the State shall:

a)Establish the application of mechanisms that encourage investment in housing financing by banks, cooperatives, microfinance entities and other related entities and organizations.

b)Foster the conditions that attract domestic and foreign investment.

c)Establish mechanisms that foster investment in securities markets, exchange or over-the-counter, promoting the creation of attractive instruments for institutional investors and the general public.

The State shall promote the creation of the most favorable conditions for the country's financial entities to support housing financing, in accordance with the terms and payment mechanisms necessary for the different user segments. For such purpose, the State shall:

a)Promote the supply of mortgage loans for the socioeconomic segments that have limited access to housing financing.

b)Establish long-term funding mechanisms, creating the fiscal and legal incentives that promote the development of a secondary securities market and the adequate and flexible negotiation of the respective instruments.

c)Create the conditions to provide liquidity to the secondary securities market, generating dynamism in the supply and demand for securitized securities, preferably through mortgage bonds.

d)Facilitate the transfer of fiscal incentives to secondary investment securities, in order to promote greater mobility in the negotiation of mortgage bonds, bonds and other instruments resulting from housing financing.

e)Promote the institutional framework for the creation of private pension funds and other long-term funds to foster investment in the securities market, in securities derived from housing financing.

f)Stimulate the activity of mortgage portfolio administrators, to facilitate investment by entities not specialized in housing financing.

g)Promote the use of risk rating services to provide the market with instruments that offer security and transparency to the investor.

h)Encourage participation in housing financing by non-traditional financial institutions such as cooperatives, non-governmental organizations, foundations, associations and others, through the application of the mechanisms indicated in this article.

i)Enable access to credit for municipalities and municipal housing companies as established in Decree Number 16-2010 of the Congress of the Republic, Law on Alliances for the Development of Economic Infrastructure.

Medium- and long-term mortgage loans for the purchase of housing for lower-income families, mortgage bonds and any other title or documents expressing a mortgage guarantee for housing, may be guaranteed by the Instituto de Fomento de Hipotecas Aseguradas or by payment guarantee issued by legally authorized insurance or bonding companies, provided that such entities are subject to the supervision and inspection of the Superintendency of Banks. The loans, documents or titles referred to in the present article are subject to the minimum capital amount required of banking institutions, pursuant to the applicable law, and enjoy the same fiscal rights and privileges that the law confers on the credits, loans or mortgage bonds that have mortgage insurance from the Instituto de Fomento de Hipotecas Aseguradas, except for the unlimited guarantee of the State.

The transfer of housing mortgage bonds that have mortgage insurance from the Institute for the Promotion of Insured Mortgages -FHA- or surety or bond insurance issued by legally authorized insurance or bonding companies, subject to the supervision of the Superintendency of Banks, carried out by means of the bond itself or by documents, titles or securities representing total or partial ownership of such bonds, retains the same fiscal rights and privileges that this Law confers on mortgage bonds insured by the Institute for the Promotion of Insured Mortgages, except for the unlimited guarantee of the State.

The total or partial transfer of such housing mortgage bonds, as well as the securities resulting from the securitization or issuance of fiduciary certificates of such mortgage bonds, shall also retain those same fiscal rights and privileges.

The use of non-conventional financing modalities shall be promoted and incentivized, among others, lease with option to purchase, microcredits, revolving funds, joint credits.

The Fund for Housing, which may be abbreviated with the acronym FOPAVI, is hereby created as a second-tier financial institution, attached to the governing entity, for the purpose of granting direct subsidy and facilitating access to credit to families in situations of poverty and extreme poverty that lack an adequate housing solution, through approved intermediary entities.

FOPAVI has the following functions:

a)To obtain and administer financial resources in accordance with this Law and the respective regulations.

b)To create the procedures necessary for the granting of the direct subsidy.

c)To supervise and monitor the use of the resources placed in trust in the approved intermediary entities.

d)To participate in the securities market for the placement of securities based on the mortgage portfolio generated with the resources placed in trust.

e)For the adjudication and transfer of ownership, families must comply with the requirements established by FOPAVI.

f)To create procedures that promote the participation of private, national and foreign capital in housing financing.

g)To foster domestic savings, through the intermediary entities, for housing financing.

h)To promote the creation of the necessary procedures that allow the use of long-term savings.

i)To establish the instruments for the management of State funds under administration.

j)To prepare the regulations, manuals and technical standards as applicable.

k)In general, all those functions specifically attributed to it in this Law and the respective regulations.

FOPAVI is organized as follows:

a)Board of Directors;

b)Executive Directorate; and,

c)Administrative Units.

The Board of Directors has the following powers:

a)To approve the annual investment plan, the income and expenditure budget and budget execution.

b)To accept concessions, rights and gifts.

c)To establish the conditions for the resources placed in trust in the intermediary entities.

d)To appoint and remove the Executive Director.

e)To prepare the corresponding regulations.

f)To approve direct subsidy applications.

g)To approve the regulations necessary to govern the granting of direct subsidies of up to one hundred percent of the value of the housing solution or of the improvements to be made, for those families in situations of poverty or extreme poverty.

h)To authorize the trust operations necessary for compliance with the purposes of this Law, within the framework of the rules governing the establishment and administration of trusts in financial entities.

i)In general, all those functions specifically attributed to it in this Law and respective regulations.

The Board of Directors is composed of representatives of the entities indicated in this article. Each entity shall appoint a titular member and an alternate member using its own rules for the applicable election or designation. The titular memberships shall be held by the highest authority or legal representative of the entity: ministers, managers, directors, who in his or her absence shall designate the second highest-ranking officer with decision-making power, vice-ministers, assistant managers or assistant directors.

The representatives of the entities that are not part of the Executive Branch shall hold office for two years and may be reelected for similar periods.

a)The governing entity, which presides over it.

b)The Ministry of Public Finance.

c)The Secretariat for Planning and Programming of the Presidency -SEGEPLAN-.

d)The Municipal Development Institute -INFOM-.

e)Institute for the Promotion of Insured Mortgages -FHA-.

f)National Association of Housing Builders -ANACOVI-.

g)National Federation of Housing Cooperatives -FENACOVI-.

h)Federation of Organizations for the Development of the Popular Habitat -FODHAP-.

i)A representative of the legally authorized insurers that guarantee obligations related to housing.

j)Guatemalan Banking Association -ABG-.

k)Guatemalan Pobladores Movement -MGP-.

The financing sources of FOPAVI are constituted as follows:

a)The resources included in the annual budget of income and expenditures of the State, incorporated into the budget of the governing entity for such purpose.

b)The net assets from the loan portfolios administered by the Unit for the Development of Popular Housing -UDEVIPO- and the property of the Guatemalan Fund for Housing -FOGUAVI-.

c)One hundred percent of the resources from the Specific Tax on the Distribution of Cement, Decree Number 79-2000 of the Congress of the Republic, which shall be transferred monthly to FOPAVI.

d)The recoveries of the resources placed in trust in the intermediary institutions.

e)The resources from national or international loans and borrowings for housing, its territorial ordering, services and equipment.

f)Gifts from national or international financial organizations and from any other source.

g)The resources from conversion of debt for investments in housing matters, its territorial ordering, services and equipment.

h)Other sources of resources that allow financing of housing programs, its territorial ordering, services and equipment.

The operations of FOPAVI shall be subject to oversight by the Comptroller General of Accounts.

FOPAVI may carry out the following operations:

a)Carry out trust operations as trustor.

b)In general, all such operations as are necessary to achieve its purpose.

Intermediary entities must be legally constituted, reliably demonstrate responsibility and capacity, correctly apply resources in accordance with the supervision of FOPAVI and/or the Superintendency of Banks, as applicable. The intermediary entities that may administer FOPAVI resources are:

a)Banks and financial companies through trusts.

b)Cooperatives, mutuals and non-governmental organizations whose purposes are related to social interest housing.

The entities that may conduct socioeconomic studies and declarations of eligibility for FOPAVI are:

a)Banks and financial companies.

b)Cooperatives, mutuals and non-governmental organizations whose purposes are related to social interest housing.

c)Insurance and bonding companies legally constituted in the country and supervised by the Superintendency of Banks.

d)Municipal entities whose purposes are related to social interest housing, such as municipal housing companies and housing support trusts.

The intermediary entities referred to in the preceding article shall establish credit amortization programs on bases that allow adjustment of the installments during the term thereof.

The resources provided by FOPAVI, through the intermediary entities, shall be used by the beneficiary persons exclusively to finance decent, adequate and healthy housing.

For due compliance with this article, the alternatives subject to financing are as follows:

a)Acquisition of a lot with basic services.

b)Construction or acquisition of decent, adequate and healthy housing.

c)Acquisition of a housing module in horizontal property.

d)Improvement, expansion and repair of housing.

e)Introduction of basic housing support services.

f)Community production of materials for housing, services and social facilities, provided that the community is duly organized, proves its situation of poverty or extreme poverty and complies with the respective regulations to be issued.

With the object of having access to a dignified and healthy housing solution with its territorial planning, services and equipment, individual persons in a situation of poverty or extreme poverty may organize themselves into associative groups, which enjoy legal personality in accordance with this Law.

The associative groups referred to in this article may be constituted by means of a record drawn up by the municipal mayor or by notarial record and must comply with the provisions specifically attributed to them in the respective regulation.

All State institutions, in accordance with their policies, shall preferentially support the housing programs promoted by FOPAVI.

The State, through non-governmental organizations, cooperatives, mutuals, microfinance entities and other entities of the financial sector, shall promote the granting of credits and the guarantee thereof, under favorable conditions so that families in situations of poverty may acquire housing solutions, for which purpose a specific guarantee fund shall be created, of a revolving nature, with its regulations and procedures that ensure the adequate and transparent use of resources.

To that end, non-traditional systems of financing and ownership shall be implemented, such as lease with option to purchase, usufruct, use and habitation, family patrimony regime, as indicated in Article 54.

Likewise, the existing guarantee funds to promote housing shall be applied to this type of solutions.