Default on Minha Casa, Minha Vida breaks record – 03/18/2023 – Market

Delinquency in track 1 of Minha Casa Minha Vida ended 2022 at a record level. In all, 45% of these contracts, which benefit from more subsidies from the federal government, have not paid installments of the financing for more than 360 days.

According to data from the Ministry of Cities, 510,000 of the 1.1 million active contracts in this range owe the monthly amount for over a year.

Minha Casa, Minha Vida was relaunched in February by the government of President Luiz Inácio Lula da Silva (PT). A provisional measure was sent to Congress making changes to the program’s rules. At first, the goal is to deliver delayed or paralyzed works.

To avoid eviction in overdue contracts, the banks that operate the financing “adopt debt renegotiation strategies. However, the measures have been ineffective, since 59% of the beneficiaries default again soon”, according to the Ministry of Cities.

The situation worries the portfolio, which is studying changes. “Due to the worsening scenario of the default framework, measures are being studied with the program’s legislation in order to modify the presented scenario”, says the ministry in a note.

Without detailing the measures under study, the folder adds that the changes will serve “to increase the financial return to the fund but, above all, to minimize the social impacts on the beneficiaries, aiming to safeguard the right to housing, given the socioeconomic profile of the families” .

The default on payments by beneficiaries increases the need for the federal government to increase its share of program costs through the Budget. As a consequence, says the ministry, there is a limitation in the expansion of the program and a reduction in the number of new families to be contemplated.

With the repeated non-payment of installments, the property owners are subject to the loss of the good. In the case of track 1 of Minha Casa, Minha Vida, this generates relevant social effects, increasing the vulnerability of families. The target audience in this range has a gross monthly family income of up to R$1,800.

“The person with the loss of the property becomes more vulnerable”, summarizes the professor of the Faculty of Architecture and Urbanism of the UnB (University of Brasilia) Cristiane Guinâncio.

The MP (provisional measure) of the new program, which needs to be voted by Congress, establishes that band 1 will start to serve families with a gross monthly income of R$ 2,640; group 2, families with income from R$ 2,640.01 to R$ 4,400; and group 3, those who receive every month from R$ 4,400.01 to R$ 8,000.

Delinquency in Minha Casa, Minha Vida has several reasons. One of them is the increase in the population’s indebtedness after the Covid-19 pandemic.

“It often happens that the beneficiary loses his job and, consequently, his income. In an emergency situation, people will not stop eating, they will stop paying the installment”, explained the UnB professor.

Another reason, points out the Ministry of Cities, is the “vacation of properties by their original beneficiaries due to abandonment, informal sale or informal transfer of ownership to third parties”.

Although prohibited, there are several cases in which the owner of the property acquired through Minha Casa, Minha Vida irregularly rents or resells the house or apartment. In this situation, those who sold often fail to pay the installment.

“In an emergency situation, people need money and there is this whole irregular market, a market that is waiting for people in difficult situations to buy this property in an irregular way”, evaluated Guinâncio.

One way out that has been considered to avoid the irregular market for these properties is Minha Casa Minha Vida Entidades. In this modality, all stages of the project are coordinated by social movements linked to housing, which has lowered default rates.

Contracts overdue for more than 360 days reached 27.6% of the total at the end of 2022. For the Ministry of Cities, this happens because the participation of social movements “provides greater engagement of candidate beneficiaries from the conception of the enterprise, a circumstance that contributes to the maintenance of the commitments, on the part of the benefited families, after the delivery of the property”.

“The property ends up being produced from a joint project and therefore is very close to the characteristics of the target public, not only in expectations but also in purchasing capacity”, says Guinâncio.

In the remodeling of the program, the government announced that it should provide a subsidy of around R$ 170,000 in Minha Casa, Minha Vida homes for the 1st range. This amount will depend on the region in which the property is located.