U.N. plan helps poor get home loans

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Renita Jablonski: About a billion people around the world are living in slums. The United Nations says that number could triple in the next 40 years. Today, the U.N. housing agency, U.N. Habitat, is meeting with governments and NGOs in Nairobi, Kenya. One of the plans on the table may make it easier for poor people to get home loans. From Johannesburg, Gretchen Wilson reports.

Gretchen Wilson: U.N. officials say, for the most part, banks don’t do business in slums. Because the risks often outweigh the returns.

U.N. Habitat is starting a new project aimed at changing bankers’ minds. It will lend up to $500,000 to local banks in six countries, including Kenya, Tanzania, and Uganda. The banks will use that money to provide loans to slum dwellers, so they can afford better houses.

Officials with U.N. Habitat say the model is a lot like early versions of U.S. mortgage companies in which small savings schemes helped move poor people out of tenements.

The U.N. agency says it will partner with local groups and oversee the loans to prevent corruption. Housing experts say they hope the new program will help banks reduce risk in low-income areas, and increase lending to the poor.

In Johannesburg, I’m Gretchen Wilson for Marketplace.

All reporting by Gretchen L. Wilson, © 2009

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