A/67/286 household equity, economic resilience and housing affordability. As is often the case in sub-prime mortgage lending, housing microfinance clients have been penalized for their “low profitability” by being forced to pay higher prices for access to housing finance. 57. The small scale and the nature of most housing microfinance programmes, in particular their focus on profitability, prevent them from addressing the issues of tenure security, location, infrastructure and availability of services. Whereas the provision of financial services for incremental housing construction or improvement constitutes a relatively straightforward, manageable undertaking, participation in the process of acquiring land and delivering infrastructure is legally, financially and politically complex, requiring extensive institutional and financial capacities and legal powers typically available only to national and local Government agencies. The incremental approach may, in some cases, promote the habitability aspect of the right to adequate housing by assisting slum dwellers to improve existing homes, but it does little to promote the broader aspects of tenure, location, availability of services and infrastructure. Whether housing microfinance increases housing affordability is also questionable: housing microfinance borrowers increase their housing expenditure substantially, but even after the improvements their dwellings tend to remain segregated from health and education services and employment opportunities and, without secure tenure, they may eventually find themselves evicted (without compensation or relocation) from their improved homes. 58. There is also growing awareness of the failure of the housing microfinance industry to reach the poorest. Many housing microfinance programmes, being financially oriented, appear to target the higher-income urban poor (i.e., those with incomes above 50 per cent of the national poverty line) and near poor (a household income of up to 120 or 150 per cent of the national poverty line), 104 the “economically active poor”, sometimes those with formal employment and often those with diversified household livelihood strategies. The ultra-poor, i.e., those who are below the fifteenth percentile in the income distribution, often dispersed in rural areas which are costly to serve with credit or physical infrastructure, are not addressed by these programmes. 105 The requirement of secure tenure may further define the client group as being the relatively “better off” poor. 59. A more recent form of housing microfinance, developed mainly in Africa and Asia, are community funds. These funds work with group loans and/or savings in order to assist communities to finance land regularization and acquisition, infrastructure and service provision, and home improvements. Community funds provide financial and technical support for the purchase of land parcels and communal infrastructure (roads, drainage, water distribution and connection, etc.). This process typically involves negotiations with other stakeholders such as the original owners of the parcel and Government. 106 Some organizations (e.g. the National Housing Cooperative in Kenya) provide both individual housing microfinance loans and community group loans. 107 International umbrella organizations have been created to enable and assist the operations of local __________________ 104 105 106 107 12-45918 Housing Finance in Emerging Markets, pp. 36-37. Center for Urban Development Studies, p. 24. Nilsson, p. 19. Erlend Sigvaldsen, Key Issues in Housing Microfinance (Oslo, Nordic Consulting Group, 2010), pp. 16-17. 19