Institutional Program 2020-2024 of Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution and Housing Credit Insurance SHF, S.A. de C.V. — SHCP — MX

DOF: 20/11/2020

INSTITUTIONAL PROGRAM 2020-2024 of Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution and Housing Credit Insurance SHF, S

A seal with the National Coat of Arms is placed at the margin, which reads: United Mexican States.- TREASURY.- Ministry of

Treasury and Public Credit.- Sociedad Hipotecaria Federal.

The General Director of Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution and Housing Credit Insurance SHF, Variable Capital Anonymous Society, based on what is established in Article 22, fraction II of the Organic Law of Sociedad Hipotecaria Federal (Organic Law); Article 22 of the Organic Regulations of Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution (Organic Regulations); Clause Nineteenth, fraction III of the Social Statutes of Housing Credit Insurance SHF, Variable Capital Anonymous Society (Social Statutes), and in compliance with the agreements adopted by the Board of Directors of Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution and the Board of Administration of Housing Credit Insurance SHF, Variable Capital Anonymous Society, in their ordinary session 100, held on October 2, 2020 and extraordinary session 20, held on October 20, 2020, respectively, through which both governing bodies approved the Institutional Program;

for the above, based on what is established in Articles 19, second paragraph, 20, fraction I Bis, of the

Organic Law; 22 of the Organic Regulations; 42, fraction IX Bis, of the Credit Institutions Law;

Clause Eighteenth, fractions XIV and XVII, section A, numeral 1, of the Social Statutes; 70, fraction

I, subsection b) of the Insurance and Surety Institutions Law; 58, fraction II of the Federal Law of Parastatal Entities, which were drafted in consideration of what is provided in Articles 17,

fractions II, V and VI, 24 and 29, third paragraph of the Planning Law; Third of the Decree approving the National Development Plan 2019-2024, published in the Official Gazette of the Federation on July 17,

2019; numeral 33 of the Criteria to assess, approve and follow up on programs derived from the National Development Plan 2019-2024; Articles 47, 48, 50 and 59, fraction II of the Federal Law of Parastatal Entities; 31 of the Credit Institutions Law; 22, fraction II Bis and 28 of the

Organic Law and Clause Nineteenth, fraction IV of the Social Statutes, which were approved by

the Ministry of Treasury and Public Credit, has seen fit to publish the following:

INSTITUTIONAL PROGRAM

DERIVED FROM THE NATIONAL DEVELOPMENT PLAN

2020-2024

Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution

1.-

Index

2.-

Legal basis for the preparation of the program

3.-

Acronyms and abbreviations

4.-

Origin of resources for the implementation of the Program

5.-

Analysis of the current state

6.-

Priority objectives

6.1.-

Priority objectives of the SHF Institutional Program 2020-2024

6.2.-

Relevance of Priority Objective 1: Improve access and coverage to housing solutions nationwide.

6.3.-

Relevance of Priority Objective 2: Boost housing availability in the country.

6.4.-

Relevance of Priority Objective 3: Contribute financial solutions to reduce the housing backlog of the population.

6.5.-

Relevance of Priority Objective 4: Contribute to urban development and sustainable housing.

6.6.-

Relevance of Priority Objective 5: Guarantee the operational and financial solidity of

the

SHF.

6.7.-

Institutional alignment with PRONAFIDE.

7.-

Priority strategies and Specific actions

8.-

Welfare goals and Parameters

9.-

Epilogue: Vision towards the future

2.- Legal basis for the preparation of the program

Sociedad Hipotecaria Federal, National Credit Society, Development Banking Institution, has as its purpose to promote the development of the primary and secondary housing credit markets, through the granting of credit and guarantees destined for the construction, acquisition and improvement of housing, preferably of social interest in the terms of its organic law, as well as for the increase in productive capacity and technological development, related to housing; in this sense, in its capacity as a parastatal entity sectorized to Administrative Branch 06 Treasury and Public Credit, it is subject to the provisions in matters of development planning of the Federal Public Administration.

Regarding this, Article 26, section A, of the Political Constitution of the United Mexican States,

states that the State will organize a democratic system of national development planning that imparts

solidity, dynamism, competitiveness, permanence and equity to the growth of the economy for the

independence and political, social and cultural democratization of the nation; and likewise, states that the programs

of the Federal Public Administration will be subject to the National Development Plan.

In accordance with Article 1 of the Housing Law, housing is a priority area for national development and the State will promote and organize the activities inherent to the matter, with the participation of the social and private sectors, in accordance with the applicable provisions.

Additionally, in terms of the Housing Law, national housing policy and programs, as well

as the set of instruments and support, will guide the development and promotion of the activities of the

dependencies and entities of the Federal Public Administration in matters of housing, its coordination with

the governments of the federal entities and municipalities, and the concertation with the social and private sectors, to

lay the foundations to aspire to a more equitable national development, which integrates among themselves the most developed population centers with the productive development centers, also considering those of

less development, to correct regional disparities and social inequities derived from a

disordered growth of urban areas.

Therefore, Articles 2° and 4° of the Planning Law, provide that planning must be carried out

as a means for the effective performance of the State's responsibility for the comprehensive and

sustainable development of the country and must tend to the achievement of the political, social, cultural and

economic ends and objectives contained in the Political Constitution of the United Mexican States.

Regarding this and in accordance with what is stated by Articles 17, 22 and 24 of the Planning Law, the

parastatal entities of the Federal Public Administration, must prepare their institutional programs,

in the terms provided by said Law, the Federal Law of Parastatal Entities, and in accordance with

the provisions that regulate their organization and functioning, attending to the provisions contained in the

corresponding sectoral program, observing in what is pertinent the respective environmental, economic,

social and cultural variables.

For its part, the Federal Law of Parastatal Entities, in its Article 47, provides for the obligation incumbent on

these, to subject their operation to the Planning Law, to the National Development Plan, to the

sectoral programs derived from it and to the authorized spending and financing allocations, and

within those guidelines, the entities will formulate their institutional programs in the short, medium and long

term. In this order of ideas, and in accordance with what is stated by Articles 48 and 49 of said Law, the Institutional Program constitutes the assumption of commitments in terms of goals and results that the respective parastatal entity must reach and will be prepared in accordance with Article 22 of the Planning Law.

In the case of development banking institutions, Article 31 of the Credit Institutions Law

disposes that the programs of development banking institutions must be formulated in accordance with the guidelines and objectives of the National Development Plan (NND), the National Development Financing Program (PRONAFIDE) and the other sectoral programs of the NND; likewise, it is stated that the

institutional programs of development banking institutions will contain a section relative to the

way in which they will coordinate with the other development banking institutions.

Consequently, within the framework of the NND 2019-2024, the SHF Institutional Program 2020-2024 attends,

mainly, to the following guiding principles: "No to rich government with poor people" and "Leave no one

behind, leave no one out"; and the following axes: Axis 2. Social Policy and Axis 3. Economy.

The SHF Institutional Program 2020-2024 is aligned with the National Development Financing Program

(PRONAFIDE); likewise, it considers actions provided for in the Sectoral Program of Agrarian, Territorial and Urban Development (PSEDATU) and in matters of National Housing Policy to the National Housing Program (PRONAVI) and to the National Infrastructure Program (NIP).

Likewise, it considers the legal provisions derived from the Credit Institutions Law, from the

Organic Law of Sociedad Hipotecaria Federal, from the Federal Law of Parastatal Entities and other

applicable legislation.

3.- Acronyms and abbreviations

APF

Federal Public Administration

APVS

Housing Producing Agencies

IDB

Inter-American Development Bank

CNBV

National Banking and Securities Commission

CONAVI

National Housing Commission

ENIGH

National Survey of Income and Expenditure of Households

IMF

International Monetary Fund

FOVISSSTE

Housing Fund of the Institute for Social Security and Services for State Workers

ICAP

Capitalization Index

Financial Intermediaries

IMOR

Delinquency Index

IMSS

Mexican Institute of Social Security

INFONAVIT

Institute of the National Housing Fund for Workers

INEGI

National Institute of Statistics and Geography

LAIF

Latin American Investment Fund of the European Commission

NAMA FACILITY

Sustainable Housing Programs

ONAVIS

National Housing Bodies

OREVIS

State Housing Bodies

GDP

Gross Domestic Product

NND

National Development Plan

NIP

National Infrastructure Program

PRONAFIDE

National Development Financing Program 2020-2024

PRONAVI

National Housing Program

PSEDATU

Sectoral Program of Agrarian, Territorial and Urban Development 2019-2024

Housing Backlog

RUV

Unique Housing Registry

SCV

Housing Credit Insurance

SNIIV

National Housing Information and Indicators System

SSH

Mortgage Sofomes and Sofoles

SFP

Secretariat of Public Function

SHCP

Ministry of Treasury and Public Credit

SHF

Sociedad Hipotecaria Federal

SOCAPS

Savings and Loan Cooperative Societies

SOFIPOS

Popular Financial Societies

SOFOLES

Limited Purpose Financial Societies

SOFOMES

Multiple Purpose Financial Societies

4.- Origin of resources for the implementation of the Program

All the actions considered in this Program, including those corresponding to

its Priority Objectives, Priority Strategies and Specific Actions, as well as the coordination work

interinstitutional for the implementation or operation of said actions and the follow-up and reporting of the

same, will be charged to the approved budget, while it is in force.

5.- Analysis of the current state

The housing sector is fundamental in job creation, the generation of economic spillover, and the

impulse to growth and development of the country. With a population of 129 million inhabitants and a GDP per

capita of 17,336 (USD) in 2017, in Mexico the percentage of the Mexican population living in conditions

of poverty is 43.6 percent and 7.6 percent living in extreme poverty (1) . With

a housing backlog of more than 9.4 million homes in 2018, the housing challenges in Mexico are

diverse and, therefore, represent an important challenge.

UN-Habitat estimates that at least 38.4% of Mexico's population lives in inadequate housing;

that is, in conditions of overcrowding, or made without durable materials, or that lacks improved

water and sanitation services. (2)

Furthermore, significant challenges of social inclusion, economic growth,

environmental protection and interinstitutional coordination related to the housing sector remain in the country:

Inadequate location of affordable housing and lack of affordability of intra-urban housing for

all.

Prevalence of housing backlog among vulnerable groups and lack of correspondence between the

predominant housing solutions and the characteristics of the backlog.

Limited promotion of a national social housing rental policy, to the detriment of solutions of

housing for vulnerable groups.

Absence of actions for the regeneration and consolidation of existing urban fabrics,

particularly of precarious settlements.

Severe environmental impacts generated by the accelerated urban expansion of cities on

agricultural soils and of high environmental value, a situation that increases exposure and vulnerability

against climate disasters.

Inefficient consumption of resources throughout the life cycle of housing, a situation that generates

elevated greenhouse gas (GHG) emissions thrown into the atmosphere.

The current administration also faces a new economic paradigm: the construction sector does not grow at the same speed as in recent years, showing signs of deceleration

(construction GDP -5% and Building -3% in 2019); housing registrations decreased in the last year, from

262 thousand in 2018 to 189 thousand in 2019; there is a change in focus in housing policy oriented to

attend the needs of the social segment; the main trigger of affordable and social housing disappeared: the federal subsidy; throughout 2019 a slower pace of sales displacement is manifested:

residential housing most affected and affordable with the lowest absolute and relative availability.

Evolution of GDP 2013 2019 at constant prices.

(Annual percentage variation)

Source: Prepared by SHF with information from INEGI.

*Variation of 2019 is to the accumulated third quarter against the same period of 2018.

Participation in national GDP.

(Percentage)

Year

Construction

7.4%

7.3%

7.4%

7.5%

7.6%

Housing Construction

4.9%

4.8%

4.9%

5.1%

5.2%

Housing

5.7%

5.8%

5.9%

6.0%

Source: Prepared by SHF with information from INEGI.

Mexican families, particularly those with the least, must have access to a housing that

resolves their needs, promotes the development of all its members and the community of which

they are part. A comprehensive housing in the social, economic, environmental and cultural spheres; designed

as part of a city and a sustainable environment. Housing built with materials that generate a

smaller environmental footprint and that respect the customs, idiosyncrasy and culture of the regions, while at the same time

creates economic value, strengthens the social fabric, and generates patrimony and community appropriation.

Likewise, it is essential to create conditions for these schemes to be accessible to the population and

improve conditions either through targeted savings mechanisms or through government support.

Without this support, it will hardly be possible to guarantee access to a large part of the population with low levels of

income.

In order to attend a greater number of families with these modalities, it is indispensable

strengthen the ecosystem of social housing production composed of: financial intermediaries, agencies

housing promoters, construction executing bodies, verifiers, correspondents, collection centers,

among others. This, with the purpose of bringing comprehensive solutions to all populations of the country.

To address the problem described above, the Institution has designed five Priority Objectives

through which it will provide attention seeking a positive impact through specific solutions:

To improve access and coverage to housing solutions nationwide, it will be sought to attend to the

unaffiliated population to improve their access to housing financing; return to the granting of

individual credit through Financial Intermediaries; promote technical training and financial advice

to the different financial intermediaries and APVs, with which greater support will be achieved for the

lagging sectors of the population and greater dynamism in the sector thanks to technical training to strengthen the spaces of social banking.

To boost housing availability in the country, productive capacity will be increased

through construction financing to strengthen the housing sector; trigger induced credit

through the granting of credit guarantees for construction to the different

financial intermediaries and developers to increase the housing supply; promote

financial markets between the participants in the housing sector and the capital market to

increase access to alternative financing, with which the strengthening of the housing sector will be achieved, benefiting the development of the country thanks to the availability of housing solutions that offer greater supply, reaching a more inclusive and dynamic market.

To contribute with financial solutions and reduce the housing backlog of the population, it will be sought to

attend to the non-affiliated and lower-income sectors through Social Banking to focus on

this population the support of the institution; give breadth to assisted self-production schemes,

improvement and self-production to reduce the housing backlog; strengthen the ecosystem of

social housing production to promote a more integrated housing sector; promote

coordination with other dependencies and entities that participate in inter-institutional programs

to generate joint efforts and greater impact on the population, with which a

significant decrease in the housing backlog in the sectors of the population historically

unprotected.

To contribute to urban and sustainable housing development, new schemes

sustainable and finance programs that contemplate the principles of territorial planning,

sustainable urbanization and infrastructure, with which climate change will be combated and

improve the quality of life and well-being of the population.

Finally, to guarantee the operational and financial solidity of the SHF, levels will be ensured

of performance that allow the sustainability of the institution; redesign the operational process of the

SHF, to improve the customer experience and improve internal control with an approach of efficiency

and compliance; clean up the legacy portfolio of SHF; promote the comprehensive development of public servants;

always monitoring the financial strength of an institution.

Entity Profile

As defined by the Organic Law of Sociedad Hipotecaria Federal, in its Article 2nd.- Sociedad

Hipotecaria Federal, National Credit Society, will have as its purpose to promote the development of the

primary and secondary housing credit markets, through the granting of credit and guarantees destined for the

construction, acquisition and improvement of housing, preferably of social interest in the terms of this Law, as well as for the increase in productive capacity and technological development, related to housing.

Since its creation in 2001, SHF has actively participated in the development of social housing in

Mexico, being a key actor both in periods of expansion, as well as in periods of contraction of the market:

It has supported the development of financial intermediaries and the financing of credit for thousands of

families.

Created the foundations for the development of the primary mortgage market and promoted the emergence of the

secondary market.

It has been an active and relevant institution in the granting of bridge credits for developers

and the granting of guarantees for syndicated credits and housing credit insurance in

joint with the Banking.

This evolution brought with it challenges in the administration of its credit portfolio. They stand out, those that are

result of the impacts derived from the 2008-2009 mortgage crisis, as well as from the difficulties in the

housing construction activity in 2013.

Sociedad Hipotecaria Federal remains the main promoter of direct and induced bridge credit for

the construction of houses and homes, which complements the programs offered by the national bodies

of housing, playing a very relevant role not only among development banking institutions, but also

within the Mexican banking system itself.

Target Population

As defined in the Organic Law of SHF. - Credit and guarantee programs of Sociedad

Hipotecaria Federal, S.N.C. promote the adequate conditions for Mexican families, from zones

urban or rural, to have access to mortgage credit and acquire adequate housing, as well as for

remodel, expand or improve the current one, considering the new urban, social and technological trends.

Potential Clients

According to the Organic Law of SHF our potential clients are Regulated and Non-Regulated Financial Entities

such as: Multiple Banking Institutions, Development Banking Institutions,

Insurance Institutions, Limited Purpose Financial Societies (SOFOLES), Multiple Purpose Financial

Societies (SOFOMES), Financial Leasing Companies, Factoring Companies, Credit Unions,

Savings and Loan Cooperative Societies (SOCAP'S), Popular Financial Societies

(SOFIPOS), Developers and Housing Constructors, Users through Financial Intermediaries.

During 2019, through the EcoCasa program, the financial intermediaries that supported the

reduction of the effects of climate change granted $429.33 million pesos of credit in 2,050

sustainable homes, which impacted the reduction of CO2 emissions fostering the inclusion of

eco-technologies in homes. The total emission reduction by the life of the home (tCO2e) in

average was 1,964.16 tCO2e.

Geographic Coverage

Sociedad Hipotecaria Federal, through its network of Financial Intermediaries, has presence in the 32 Federal Entities of the Republic, and its financing penetration is as follows:

Strategic Sectors for Attention

The main sectors susceptible to support are the following: Regulated and Non-Regulated Financial Intermediaries such as Multiple Banking Institutions, Development Banking Institutions, SMEs, Insurance Institutions, Multiple-Object Financial Societies, Financial Leasing Companies, Financial Factoring Companies, Credit Unions, Savings and Loan Cooperative Societies, Popular Financial Societies, Investment Promoting Anonymous Societies, as well as Savings and Loan Societies, among others.

Network of Financial Intermediaries with which it operates

Regulated and non-regulated Financial Entities, for example: Banks, SOCAPs, SOFIPOS, SOFOMES (Multiple-Object Financial Societies), SOFINCOS, Credit Unions, Savings and Loan Cooperative Societies and Investment Promoting Anonymous Societies, among others.

Financial Intermediaries

Private Financial Intermediaries with which Development Banking operates

Number	Products
Commercial Banking	16	Individual portfolio matching; Traditional and Syndicated Bridge Credit; Guarantee in Step and Measure for Bridge and Linked-to-construction Credits; Housing Credit Insurance; First Loss Guarantee for Improvement Credits
Sofomes	24	16 of Microfinance; 5 of Bridge Credit; 3 of Traditional and Syndicated Bridge Credit, Individual portfolio matching, Warehousing
Credit Unions	4	Traditional and Syndicated Bridge Credit
Popular Financial Societies	3	Microfinance
Savings and Loan Cooperative Societies	1	Microfinance
Total	48

Internal and International Funding Mechanisms

SHF, interested in promoting the construction of adequate housing in the country and in particular housing with sustainability criteria, works hand in hand with international financial organisms with the objective of leveraging its financial resources and offering better conditions to the market by expanding the supply of specific products that meet sustainability criteria.

Funding Mechanisms

Internal and External Funding	Number	Products
IDB	4	Financing for SHF's sustainable housing and urbanization operation
KFW	5	Financing for SHF's sustainable housing and urbanization operation
Total	9

Linkage of the Priority Objectives of the SHF Institutional Program 2020-2024 with PRONAFIDE 2020-2024

The Institutional Program is duly aligned with the guiding principles established by the NDP related to, "Leave no one behind, leave no one out" and "No to a rich government with a poor people". Likewise, it is aligned with the axes of "Social Policy" and "Economy".

For its part, the Priority Objectives of the Institutional Program are aligned with Priority Objective 6 of PRONAFIDE "Expand and strengthen the financing and planning of development banking and other financing vehicles of the Federal Public Administration, as well as foster greater financial inclusion of target sectors and greater participation of the private sector, to contribute to the sustained economic development of the country and social welfare".

It is important to highlight that the alignment with PRONAFIDE will also be reflected in the strengthening of SHF's role as a risk mitigation instrument. There are monetary resources to attend to its action plan and its financial programs, especially when its markets of attention are affected or violated in economic terms by phenomena, such as climatic, financial, health, among others, external to its operation. Development banking, as the financial arm of the Federal Government, has the authority to provide the necessary support, through the creation and application of financing programs and products, under preferential conditions, which allow mitigating the negative effects generated, thus contributing to boosting and/or reactivating the activity and income of affected companies or sectors.

As an exception, in the DOF on January 10, 2014, authorities were added to Development Banking in order to maintain the operation of the national productive plant, to be able to attend to cases where immediate attention is required, which is summarized as follows:

"Development banking institutions may grant financing for the fulfillment of assumed obligations and, in those cases where immediate attention is required, they may grant credits considering entirely only the viability of the credit with the adequate and sufficient guarantees, in both cases, with prior authorization of the Board of Directors of the institution."

Likewise, the Institutional Program of the Sociedad Hipotecaria Federal (PI-SHF) 2020-2024 is aligned with the guidelines, objectives, strategies and goals of the NDP considering two basic axes (Axis 2: Social Policy and Axis 3: Economy), three sectoral programs (PRONAFIDE, PSEDATU and PNI), as well as a special program (PRONAVI). Additionally, SHF, within the scope of its attributes, considers the actions provided for in the Institutional Sectoral Program for Agrarian, Territorial and Urban Development 2019-2024, which correspond to the National Housing Policy, in terms of the Housing Law.

6.- Priority Objectives

The Institutional Program 2020-2024 of SHF will focus on ensuring that Mexican families, especially those with the least, have social housing solutions sufficient to their needs, as well as being an effective catalyst for the development of ordered and sustainable urbanization for the creation of the cities the country requires. For this, SHF will work within the scope of its attributes, in coordination with public housing institutions, and through concerted actions with the social and private sectors.

SHF has the tools to generate innovative initiatives. Coordination actions will be carried out with SEDATU and other public housing institutions, as well as with the private sector, to advance in the reduction of housing backlog and offer Mexicans housing solutions that meet national development objectives.

Likewise, the challenges derived from climate change and geological phenomena will be respected, working with competent instances in the delimitation of risk areas, the protection of natural reserves, the perfection of construction and supervision standards, as well as in schemes for prevention and effective attention to natural disasters.

With the objective of offering integral solutions to all populations of the country, work will be done to strengthen the social housing production ecosystem composed of financial intermediaries, housing promoting agencies, construction executing organisms, verifiers, correspondents, collection centers, among others.

The creation of conditions will be fostered so that SHF's credit schemes related to housing supply are accessible to the population. A primary task of SHF will be to strengthen the presence of efficient financial intermediaries to disperse credit and achieve greater financial inclusion, robust its operation and collection through guarantees that allow reducing risk and incentivizing the supply of credit alternatives.

Together with commercial banking, a financial scheme for the mixed economy will be developed, which will be the first step to attend to families that receive income both formally and through other unregistered schemes, which prevents them from proving their total income to access higher credits for obtaining housing.

In this way, SHF redesigns its strategy to adapt to the objectives of the NDP 2019-2024, the sectoral programs and PRONAVI, defining a new institutional mission and vision.

Mission

To boost the development of the housing market under a social, economic and sustainable approach, offering financial solutions that facilitate its access and availability.

Vision

To be an innovative Development Bank, recognized for its activities in promoting housing and the development of the country.

6.1.- Priority Objectives of the SHF Institutional Program 2020-2024

To achieve the expected results, SHF developed 5 Priority Objectives that are duly aligned with the scope indicated in the NDP 2019-2024 and with the common goal established in PRONAFIDE 2020-2024:

Improve access and coverage to housing solutions nationwide.
Boost the availability of housing in the country.
Contribute with financial solutions to reduce the housing backlog of the population.
Contribute to sustainable urban development and housing.
Guarantee the operational and financial solidity of SHF.

6.2.- Relevance of Priority Objective 1: Improve access and coverage to housing solutions nationwide.

Access to housing solutions has several facets, first the needs for future housing are reflected, subsequently what have been the actions and amounts of housing: improvement, mortgage credits, self-production and subsidies in the last two years. It also talks about the payment capacity of households according to the information from ENIGH 2018 and finally presents the evolution of housing prices that directly impact its affordability.

Housing Needs

According to the National Survey of Income and Expenses in Households (ENIGH) 2018, in Mexico there are 34.1 million homes in which 125 million people live, giving an average of 3.7 people per home.

To address housing needs in the country, it is necessary to consider that:

The size of households decreased from 2016 to 2018 from 3.73 people to 3.67, which implies that the needs for certain types of housing may change, reducing the necessary space of each one.
It is estimated that the population in 2030 will be approximately 138 million (10.3% more than in 2018), which implies that new housing supply will be needed in the coming years.
It is estimated that the population will grow by more than 20.0% from 2018 to 2030 in Querétaro (26.0%), Campeche (21.1%) and Quintana Roo (20.4%).
The aging of the population and greater life expectancy indicate that equipment for older adults inside and outside the home will be necessary.
Other types of ownership must be promoted according to the needs and preferences of households such as exclusive rental housing, reverse mortgages and mortgage mobility, among others.

Housing Financing

In 2019, the total of financed actions for ONAVIS were (-) 5.2% less than in 2018 for acquisition; while improvement actions decreased by -1.3 percent.

Housing Financing 2018 - 2019 (actions).

(Number of homes)

Organism	2018 Acquisition	2018 Improvement	2019 Acquisition	2019 Improvement
ONAVIS	414,086	418,951	392,579	413,649
FOVISSSTE	49,103	22,699	48,912	23,962
INFONAVIT	359,000	330,470	335,084	334,749
SHF	5,983	65,782	8,583	54,938
Financial Entities	120,426	216,919	137,281	202,336
BANKING	119,682	216,525	136,754	202,019
BANJERCITO	744	394	527	317
Federal Subsidies	94,618	157,243	17,177	19,590
CONAVI	90,532	27,126	17,177	19,590
FONHAPO	4,086	130,117
Other organisms	5,849	5,660	5,022	3,365
ISSFAM	2,050	1	1,189	1
CFE	2,520	1898	2,781	2054
PEMEX	2,171	677
HABITAT MEXICO	1,279	1590	1052	633

Source: Prepared by SHF with information from SNIIV.

The actions most affected in 2019 were those financed by federal subsidies, as these are -81.8% and -87.5% smaller for acquisition and improvement respectively.

In 2019, INFONAVIT granted 154 billion pesos for acquisition and 2.5 billion for improvement. In the case of commercial banking, the financed amount amounted to 162.7 billion pesos for acquisition and 8.9 for improvements.

Housing Financing 2018 - 2019 (amount).

(Billions of pesos)

Organism	2018 Acquisition	2018 Improvement	2019 Acquisition	2019 Improvement
ONAVIS	176.27	3.92	189.03	3.83
FOVISSSTE	33.97	0.02	34.92	0.01
INFONAVIT	142.16	2.22	154.11	2.54
SHF	0.14	1.68	1.28
Financial Entities	144.27	7.33	163.37	8.95
BANKING	143.51	7.33	162.74	8.95
BANJERCITO	0.76	0.64
Federal Subsidies	5.61	2.92	0.87	0.37
CONAVI	5.27	0.42	0.87	0.37
FONHAPO	0.34	2.50	0.00	0.00
Other organisms	3.36	0.62	3.22	0.47
ISSFAM	1.10	0.64
CFE	2.22	0.30	2.53	0.36
PEMEX	0.27	0.09
HABITAT MEXICO	0.05	0.05	0.04	0.02

Source: Prepared by SHF with information from SNIIV.

Data as of December 2019

Household Payment Capacity

Despite the economic growth of recent years, income concentration persists as the Gini coefficient (3) went from 0.481 in 2012 to 0.475 in 2018.

In 2018, based on the results of ENIGH 2018, 10% of households (first decile) have an average annual income of 22,494 pesos, that is, 0.7 annual minimum wages (AMW); while, the tenth decile of income presents an average income of 577,923 pesos (18.87 AMW).

Average income per decile in households during 2018.

(Pesos and annual minimum wages)

Decile	Average Income	AMW
I	22,494	0.70
II	45,220	1.40
III	63,429	1.96
IV	81,522	2.52
V	100,921	3.12
VI	123,817	3.83
VII	153,005	4.73
VIII	193,126	5.97
IX	262,271	8.11
X	577,923	17.87

Source: Prepared by SHF with information from INEGI.

Considering the average income per decile and that households dedicate 30% of their income to acquire a home (mortgage payments), it is found that in the first three deciles there are no homes in the market whose monthly mortgage payment can cover the price of the cheapest homes in the market.

Housing Prices

In the fourth quarter of 2019, the SHF Housing Price Index (homes with mortgage credit), increased 7.7%, maintaining an upward trend, accumulating a growth of 8.6% in 2019.

SHF Housing Price Index 2012 - 2019

(Annual percentage variation)

Source: Prepared by SHF with information from its own, INEGI and Bank of Mexico

The expansion of prices in the housing market occurs in a macroeconomic environment with a real decrease in GDP of (-) 0.5% in the fourth quarter, lower inflation than in 2018 of 2.83%, an increase of 1.9% in the number of insured in the IMSS and stable mortgage interest rates (10.4%).

A change is observed in the housing market leaning towards more transactions of used housing (54.9% participation) than new housing (45.1% participation) while there are homes of higher value since the average price was 1 million 87 thousand pesos and 50% of the transactions were for at least 629 thousand pesos which corresponds to a traditional home.

To address this problem, this objective has three priority strategies and six specific actions.

6.3.- Relevance of Priority Objective 2: Boost the availability of housing in the country.

To boost the availability of adequate housing in the country, it is necessary to guarantee the production of new housing of all classes (economic, social, medium and residential) and its financing.

Registration and Production of Housing

Since 2015, a sustained decline has been observed in the registration of new housing in RUV (4) in the annual cumulative. Except for 2018, when an annual growth of 5.2% was presented. In the rest of the years, the decrease in registration has been (-)15.1% in 2015, (-)13.1% in 2016, (-)18.1% in 2017 and (-)28.1% in 2019. This reduction is also related to the increase in transactions of used housing.

The housing registered in the RUV in 2019 accumulated 189,042 homes, with an average monthly of 15 thousand 754 homes.

Registered Housing 2015 - 2019.

Number of homes
Annual percentage variation
Source: Prepared by SHF with information from RUV.

In the production of housing, a lengthening of construction times (which include land preparation and obtaining licenses, construction and sale) is observed as they went from 264 days in 2015 to 350 in 2019, that is, 86 days more.

Likewise, by type of housing, there is a change in composition since in 2015 57.9% of the housing in production was economic-popular while this percentage in 2019 is 48.2%. Medium and residential housing have gained ground, going from 11.8% in 2015 to 17.8% in 2019.

Between December 2015 and December 2019, the largest developers decreased the number of homes in production by (-)45%. Large and medium developers decreased the homes in production by (-)12.7% and (-)8.9% respectively. Small developers increased their production by 12 percent.

Since the exit of the large housing developers in 2013, the sector was reconfigured, compensating with a greater participation of large companies. New companies were integrated mainly small with little access to financing for construction.

Number of active homes by type of developer.

(Number of homes)

Type of Developer	Number of Developers 2015	Number of Developers 2019	Variation	Homes Produced 2015	Homes Produced 2019	Variation	Structure 2015	Structure 2019
Very large	+ 2,600	41	26	327,940	180,205	-45.0%	50.4%	36.8%
Large	601 - 2,600	130	113	139,464	121,779	-12.7%	21.4%	24.9%
Medium	201 - 600	264	239	86,396	78,730	-8.9%	13.3%	16.1%
Small	10 - 200	1,929	2,283	96,805	108,393	12.0%	14.9%	22.2%
Total	2,364	2,661		650,605	489,107	-24.8%	100.0%	100.0%

Source: Prepared by SHF with information from RUV.

From 2015, SHF increased its placement levels in order to guarantee liquidity in the market, strengthen the reactivation of the sector and strengthen the housing supply.

Bridge Credit (5)

The balance of commercial banking bridge credit was $74.8 billion pesos in December 2019 (6.3% more than the previous year); while SHF's bridge credit reached $25.4 billion pesos (0.1% more than in 2018).

However, the bridge credit balance shows from June 2019 a slowdown in the growth rate both in commercial banking (from 16% to 5%) and in SHF (from 26.5% in May to 0.1% in December).

Even with these figures, SHF has 25.4% of the market followed by BBVA 17.3%, Santander with 16.0% and Banregio with 14.1 percent.

Bridge Credit Balance 2013 - 2019.

Source: Prepared by SHF with information from CNBV.

To address this problem, this objective has three priority strategies and five specific actions.

6.4.- Relevance of Priority Objective 3: Contribute with financial solutions to reduce the housing backlog of the population.

In the current administration, SHF works on the necessary adjustments in its product offer to promote the reduction of the housing backlog in the country, and especially in the regions where it is most needed, considering that in 2018 the homes in housing backlog (6) (homes with precarious construction materials, overcrowding and/or lack of toilet) totaled 9.41 million, that is, 2.0% more than in 2016. In the same period, the number of inhabited private homes increased by 1.3 million, which is a variation of 3.9%.

Characteristics of housing backlog in Mexico:

By type of backlog, it is found that 7.5 million homes (80% of the backlog) are built with precarious materials (7), 1.7 million are in overcrowding (17.9%) while those that do not have a functional W.C. contribute 2.0% of the backlog. As the backlog survey was carried out in 2018, the effects of the 2017 earthquakes are already observed.
By location of the homes, 46.0% (4.3 million) is in rural areas (8), 18.0% in transition localities and 36.0% in urban localities.
74% of households living in backlog homes do not have affiliation to social security and total 6.9 million, while 26% have affiliation and group 2.4 million homes.
By income level, the following table is presented:

Income	Times Minimum Wage	Homes (millions)
From 0 to 2	4.21	45%
From 2 to 4	3.03	32%
From 4 to 6	1.20	13%
From 6 to 8	0.47	5%
From 8 to 10	0.21	2%
More than 10	0.29	3%

90% of the households living in backlog homes have incomes less than 6 MW.

The survey of the Socioeconomic Conditions Module was carried out between August and November 2018, so the effects of the 2017 earthquakes are already included and could explain the increase in absolute numbers of the Housing Backlog.

In 18 federal entities, the percentage of homes in backlog with respect to the total of the entity showed a decrease from 2016 to 2018. In contrast, in 14 entities an increase was registered in the proportion of homes in backlog within the entity.

The federal entities with more than 40% of their homes in backlog do not show improvement, even show deterioration, stand out Baja California, Veracruz, Chiapas and Oaxaca.

The number of homes in absolute terms - in extended backlog grew 2.1% with respect to 2016. In relative terms, with respect to the total of the homes, the extended housing backlog shows a downward trend, reducing between 2008 and 2018 (-) 5.3 percentage points.

Historic Extended Housing Backlog, 2008-2018.

(Millions of homes and percentage)
Source: Prepared by SHF with information from INEGI.

To address this problem, this objective has four priority strategies and seven specific actions.

6.5.- Relevance of Priority Objective 4: Contribute to urban development and sustainable housing.

The object of SHF as Development Bank is to boost with a sustainable vision the housing credit markets, with a fundamental role in the promotion of financing alternatives that positively influence economic and social well-being, prioritizing attention to the most vulnerable population. Since 2013, its commitment to the environment stands out to operate the housing portfolio driven by the EcoCasa Program, which has generated a market for low-income families of energy-efficient houses with lower CO2 emissions. This, aligned with various sustainable commitments of an international and national nature such as:

The 2030 Agenda for Sustainable Development adopted in 2015 by various countries, including Mexico, establishes 17 Sustainable Development Goals (SDGs), highlighting Objective 11 "Achieve inclusive, safe, resilient and sustainable cities and human settlements".
The New Urban Agenda (NUA) of UN-Habitat, establishes an action plan in which the

municipalities commit to achieving sustainable urban development where human settlements will have elements of inclusivity, resilience, prosperity, and environmental sustainability, as proposed in the Sustainable Development Goals - SDG 11.

The Paris Agreement in 2015 to reduce greenhouse gas emissions by 22% by 2030 and black carbon emissions by 51%. Particularly, for the residential sector, a reduction target of 18% was set.
The Ecuador Principles (EP) establish criteria with which the financial sector analyzes the viability of a project and its impact on the environment. The benefits of adhering to these Principles and with the Environmental and Social Risk Management System (SARAS) are to have a broad panorama of international financing sources, and to be able to count on a better interest rate and prevent problems of default, among others.
The National Development Plan 2019-2024 of Mexico and the new Housing Policy, aligning with the above, promote a sustainable vision of adequate housing, which considers elements such as tenure security, availability of services and infrastructure, affordability, habitability, accessibility, location, and cultural adequacy.

SHF's sustainable housing, in addition to helping combat climate change, improves the quality of life and well-being of the population. SHF will give special attention to programs that meet sustainability criteria, are energy efficient, and have CO2 emission reductions between 20% and 40%.

Programs such as EcoCasa, aimed at low-income families and operated by SHF since 2013 in coordination with the Inter-American Development Bank (IDB) and the German Development Bank KfW, will be prioritized to contribute to urban development and sustainable housing in our country.

Potential Products to Develop

Environmental:

Increase in energy and water efficiency of housing with the mitigation of GHG emissions, improvement in air quality and in the use of natural resources.

Incentivize low-carbon housing through the analysis of the life cycle of materials.

Improvement in the quality of the housing environment and road mobility, promoting the use of public transport, walking, and bicycle use.

Improvement in the quality of the indoor environment and housing comfort.

Economic

Increase in financial viability for affordable housing with a mix of typologies for different incomes.

Economic generation through productive activities.

Increase in tax revenues for local infrastructure and equipment.

Social

Urban regeneration projects through housing as a guiding axis.

Development of inclusive communities and intra-urban housing affordability.

Social integration through the mix of typologies in developments.

Financing schemes that promote the development of economic housing with special attention to Non-Affiliated and Mixed Economy.

To address this problem, this objective has two priority strategies and four specific actions.

6.6.- Relevance of Priority Objective 5: Guarantee the operational and financial solidity of SHF.

In addition to complying with the goals established in its priority objectives, SHF will guarantee its operational and financial solidity by maintaining adequate levels of capitalization, as well as the recovery and adequate management of non-strategic assets. An example of this are the actions that have been carried out since 2019 with austerity measures and savings of 511 million pesos.

Compliance with austerity measures instructed by the Presidency and the Ministry of Finance and Public Credit (SHCP):

No foreign commissions in 2019.
50% reduction in cellular telephone, consulting, per diems, and international travel,
congresses and exhibitions.
30% reduction in office materials, fuel, studies, social communication,
domestic travel and per diems.
No vehicles or drivers assigned to officials.
Adjustment of salaries and benefits according to the Federal Expenditure Budget (PEF) and the Federal Law of Remuneration of Public Servants.
Reduction of external spending and trusts by 55%.

Consolidated Purchases:

The consolidated purchasing policy of the SHCP is attended regarding:

Rental of utility vehicles.

Cleaning and fumigation.

Fuel.

Stationery and cafeteria (digital store).

Organizational Restructuring:

The organic structure and the General Organization Manual were modified, in order to strengthen the credit process in an integral way.

Portfolio Administration:

In alignment with austerity measures, the contractual scheme of Primary Administrators was modified, focusing it on reducing their administration costs and monetizing assets, this will allow reducing portfolio administration expenses of assets given in dacion in 352 million pesos, both of commissions (137 million pesos) as well as administration expenses of said trusts (215 million pesos), achieving a savings of almost 50%. Likewise, the scheme shortens the administration times of the portfolio (2 to 4 years) instead of its administration oriented to finish with the last payment of the mortgage of the borrower (more than 15 years).

To address this problem, this objective has four priority strategies and seven specific actions.

6.7.- Institutional Alignment with PRONAFIDE.

The priority objectives of SHF's institutional program are aligned with the sixth priority objective of the National Development Financing Program 2020-2024:

Priority Objectives of the
Institutional Program of SHF 2020-2024

Priority Objectives of the
National Program of
Development Financing 2020-2024

1.- Improve access and coverage to housing solutions at the national level.

Priority Objective 6.- Expand and strengthen the financing and planning of development banking and other financing vehicles of the Federal Public Administration, as well as foster greater financial inclusion of target sectors and greater participation of the private sector, to contribute to the sustained economic development of the country and to social well-being.

2.- Promote the availability of housing in the country.

3.- Contribute with financial solutions to reduce the housing backlog of the population.

4.- Contribute to urban development and sustainable housing.

5.- Guarantee the operational and financial solidity of the SHF.

7.- Priority Strategies and Specific Actions

Derived from the new vision in the work of SHF and with the priority focus of contributing to the reduction of the housing backlog, work will be done to strengthen the role of the institution in the generation of housing supply and to support initiatives that foster demand.

Inter-institutional coordination among sector peers (SEDATU, CONAVI, INFONAVIT, FOVISSSTE, FONHAPO, INSUS) will be strengthened, in order to meet the goals of the current administration in terms of urban development and housing to offer access to housing solutions to sectors that have historically been less favored.

For this, the Priority Strategies and Specific Actions associated with the objectives of this Institutional Program are established as follows.

7.1.- Priority Objective 1.- Improve access and coverage to housing solutions at the national level

Priority Strategy 1.1.- Improve access to financing for the well-being of the non-affiliated population

Specific Action

1.1.1.- Promote schemes for the mixed economy, through SCV.

1.1.2.- Generate schemes for the non-affiliated population through directed savings schemes.

Priority Strategy 1.2.- Return to the granting of individual credit through Financial Intermediaries.

Specific Action

1.2.1.- Facilitate and diversify the entry of more and new actors in the sector that strengthen supply and demand.

1.2.2.- Seek to standardize conditions, operational processes through an operational platform for Financial Intermediaries.

Priority Strategy 1.3.- Foster technical training and financial advice to different financial intermediaries and APVs.

Specific Action

1.3.1.- Establish an orientation and follow-up program both for IF and APVs so that they strengthen their technical-administrative capacities to work with SHF.

1.3.2.- Promote online courses for local training (universities and colleges).

7.2.- Priority Objective 2.- Promote the availability of housing in the country.

Priority Strategy 2.1.- Increase productive capacity through financing for construction in order to strengthen the housing sector.

Specific Action

2.1.1.- Increase financing through credit modalities.

2.1.2.- Incentivize the supply of economic housing with housing developers.

Priority Strategy 2.2.- Detonate induced credit through the granting of credit guarantees for construction to different financial intermediaries and developers to increase the supply of housing.

Specific Action

2.2.1.- Facilitate guarantee schemes that stimulate the construction of housing through financial intermediaries.

Priority Strategy 2.3.- Foster financial markets between participants in the housing sector and the capital market to increase access to alternative financing.

Specific Action

2.3.1.- Support access to financial markets for developers and financial intermediaries.

2.3.2.- Promote the secondary mortgage market (securitization of portfolios).

7.3.- Priority Objective 3.- Contribute with financial solutions to reduce the housing backlog of the population.

Priority Strategy 3.1.- Attend to non-affiliated and lower-income sectors through Social Banking to focus on this population the support of the institution.

Specific Action

3.1.1.- Expand coverage including new financial intermediaries.

3.1.2.- Access new non-affiliated markets.

Priority Strategy 3.2.- Give breadth to assisted self-production, improvement, and self-production schemes to reduce the housing backlog.

Specific Action

3.2.1.- Generate and promote products to reduce the backlog (acquisition of lots with services, improvement, self-production, and construction of Housing on Own Lot).

3.2.2.- Focus the operation of credits through financial intermediaries.

Priority Strategy 3.3.- Strengthen the social housing production ecosystem to promote a more integrated housing sector.

Specific Action

3.3.1.- Generate greater participation in social housing production including: financial intermediaries, housing promotion agencies, construction executing bodies, verifiers, collection correspondents.

Priority Strategy 3.4.- Promote coordination with other dependencies and entities that participate in inter-institutional programs to generate joint efforts and greater impact on the population.

Specific Action

3.4.1.- Promote the development of pilot programs to reduce the housing backlog.

3.4.2.- Participate in programs with ONAVIS-OREVIS and CONAVI in order to support actions of reduction of housing backlog.

7.4.- Priority Objective 4.- Contribute to urban development and sustainable housing.

Priority Strategy 4.1.- Develop new sustainable schemes.

Specific Action

4.1.1.- Favor the incorporation of housing solutions with local and international sustainable standards.

4.1.2.- Promote the ECOCASA, LAIF, and NAMA Programs with the object of reducing the environmental footprint and CO2 emissions.

Priority Strategy 4.2.- Finance programs that contemplate the principles of territorial planning, urbanization, and sustainable infrastructure.

Specific Action

4.2.1.- Support initiatives of planning and policies of territorial use and urban development.

4.2.2.- Develop financing programs linked Banobras-SHF.

7.5.- Priority Objective 5.- Guarantee the operational and financial solidity of SHF.

Priority Strategy 5.1.- Ensure levels of performance that allow the sustainability of the institution.

Specific Action

5.1.1.- Consider a cross strategy that allows lower prices for some products or customers through higher prices for others.

5.1.2.- Maintain SHF's participation in profitable projects that strengthen its financial capabilities and promotional activities.

Priority Strategy 5.2.- Redesign the operational process of SHF, to improve the customer experience and improve internal control with a focus on efficiency and compliance.

Specific Action

5.2.1.- Redesign processes adhering to best practices focused on the customer.

5.2.2.- Foster a culture of compliance and service with a focus on operational efficiency, quality, and timeliness.

Priority Strategy 5.3.- Clean up SHF's legacy portfolio.

Specific Action

5.3.1.- Update solution products and improve the performance of portfolio administrators, in order to reduce the costs of recovering overdue credits.

5.3.2.- Generate schemes for portfolio cleanup and stabilization.

Priority Strategy 5.4.- Promote the integral development of public servants.

Specific Action

5.4.1.- Promote an integral development of SHF public servants through the development of knowledge, skills, and attitudes to improve the work climate, teamwork, and productivity.

8.- Goals for Well-being and Parameters

The SHF Institutional Program 2020-2024 contemplates goals and parameters established according to the compliance of its proposed strategy for the current administration, which are divided according to their sectoral alignment, but also to the priority objectives established in this document, in this way, the institutional commitment is reiterated to establish as a base the great sectoral priorities aimed at seeking the well-being of the population and the development of the country.

Priority
Objective

Goals for Well-being

PRONAFIDE 2020-2024

Parameters

1.1

Growth in Financial Inclusion of the Sector by housing actions.

1.2

Inclusion of non-affiliated population to social security services.

1.3

Financial Inclusion by Gender and
Youth.

2.1

Growth of the balance of direct credit and promoted to the private sector.

2.2

Growth in Direct Credit Origination and promoted to the Private Sector by Federal Entity.

2.3

Growth in the Balance of Housing
Credit Insurance.

3.1

Inclusion in Housing Backlog.

3.2

Growth of financing in
Housing Backlog.

3.3

Growth of the credit balance in
Housing Backlog.

4.1

Growth in the financing of sustainable housing.

4.2

Offerors Developers with projects of construction and housing actions sustainable.

4.3

Financing to Developers for the generation of sustainable housing actions.

5.1

Capitalization Index (ICAP).

5.2

Proportion of overdue assets and adjudicated properties that have deincorporated from the portfolio received in dacion.

5.2

Return on Capital (ROE)

Priority
Objective

Monitoring Indicators of the SHF Institutional Program 2020-2024

1.4

Growth in the amount by granting of Housing Credit Insurance (Flow)

1.5

Financial Inclusion of the Sector by Federal Entity in housing actions

1.6

Growth of housing financing to non-affiliated population to services of social security

1.7

Inclusion of new borrowers by stratum of housing actions

1.8

Financing by Gender and Youth (18-29 years)

1.9

Inclusion in Housing Credit Insurance

2.4

Financing of new borrowers

3.4

Inclusion in Housing Backlog (by federal entity)

4.4

Housing actions granted with sustainable criteria and with eco-technologies

4.5

Financing of housing actions with sustainable criteria and with eco-technology.

Goal for Well-being of Priority Objective 1

GOAL OR PARAMETER ELEMENTS

Name

Growth in Financial Inclusion of the Sector by housing actions

Priority
Objective

Improve access and coverage to housing solutions at the national level

Definition or description

Measures the growth in financial inclusion of the number of housing actions with financing

Level of disaggregation

National

Periodicity or frequency of measurement

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Housing actions

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the immediate subsequent year

Expected trend

Ascending

Unit responsible for reporting progress

DGA of Business Promotion

Calculation method

Number of housing actions with financing at the end of each year

Observations

APPLICATION OF THE CALCULATION METHOD FOR THE OBTENTION OF THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable

Average number of housing actions with financing of the year subject to comparison

Value

variable 1

215,836

Source of information

variable 1

Information from reports issued by the
DGA of Finance of SHF

Name

variable

Value

variable 2

Source of information

variable 2

Substitution in calculation method

The variables of the calculation method must be substituted with the corresponding values to the baseline. The result of the application of the calculation method will be the value of the baseline of the Goal for well-being or Parameter.

BASELINE VALUE AND GOALS

Baseline

Note on the baseline

Value

215,836

Total number of housing actions (includes Direct Credit and Induced Credit)

Year

Goal 2024

Note on the 2024 goal

1,488,688

It is important to mention that an average annual number of housing actions greater than 240 thousand is intended from 2021, considering the placement of 2018 it would reach 1,704,524, in the 2018-2024 period.

HISTORICAL SERIES OF THE GOAL FOR WELL-BEING OR PARAMETER

Values corresponding to the frequency of measurement of the Goal for well-being or Parameter must be registered.

309,253

439,265

403,997

424,500

237,549

215,836

GOALS

Only applies to Goals for well-being.

You can register NA when a goal does not apply for that year, according to the frequency of measurement.

171,621

190,508

249,294

269,045

289,169

319,051

Parameter 1 of Priority Objective 1

PARAMETER ELEMENTS FOR WELL-BEING

Name

Inclusion of non-affiliated population to social security services

Priority
Objective

Improve access and coverage to housing solutions at the national level

Definition or description

SHF Social Banking product credits: Improvements, Self-production, Lots with Services, and Acquisition of Social Interest Housing with directed savings.

Level of disaggregation

National

Periodicity or frequency of measurement

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Number of people

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the immediate subsequent year

Expected trend

Ascending

Unit responsible for reporting progress

DGA of Business Promotion

Calculation method

Total number of beneficiaries non-affiliated to social security services

Observations

Newly created product

HISTORICAL SERIES OF THE PARAMETER

Parameter 2 of Priority Objective 1

PARAMETER ELEMENTS FOR WELL-BEING

Name

Financial Inclusion by Gender and Youth

Priority
Objective

Improve access and coverage to housing solutions at the national level

Definition or description

Measures the growth in financial inclusion of the number of actions for women and young people between 18 and 29 years old.

Level of disaggregation

National

Periodicity or frequency of measurement

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Number of actions

Data collection period

January-December

Dimension

Effectiveness

Information availability

Annual

Expected trend

Ascending

Unit responsible for reporting progress

DGA of Planning

Calculation method

Sum of the total of actions destined to women and young people between 18 and 29 years old

Observations

Microfinancing, Self-production, and Mortgage are contemplated

HISTORICAL SERIES OF THE PARAMETER

126,750

108,099

81,042

89,393

32,647

53,116

Goal for Well-being of Priority Objective 2

GOAL OR PARAMETER ELEMENTS

Name

Growth in the Balance of Direct and Promoted Credit to the Private Sector

Priority
Objective

Promote the availability of housing in the country

Definition or description

Measures the nominal growth in the Balance of Direct and Induced Credit to the Private Sector

Level of disaggregation

Balance of Direct Credit

Balance of Induced Credit

Periodicity or frequency of measurement

Annual

Type

Strategic

Accumulated or periodic

Accumulated

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the immediate subsequent year

Expected trend

Ascending

Unit responsible for reporting progress

DGA of Business Promotion together with the DGA of Finance

Calculation method

Total amount of the Balance of Direct and Induced Credit to the Private Sector observed at the end of each year

Observations

APPLICATION OF THE CALCULATION METHOD FOR THE OBTENTION OF THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable 1

Balance of Direct and Induced Credit to the Private Sector observed at the end of each year

Value variable

332,105

Source of information

variable 1

Information from reports issued by the
DGA of Finance of SHF

Name

variable 2

Value variable

Source of information

variable 2

Substitution in calculation method

BASELINE VALUE AND GOALS

Baseline

Note on the baseline

Value

332,105

Total direct and induced credit balance

Year

2024 Target

378,607

This is the total direct and induced credit balance that will be reflected at the end of

332,105

TARGETS

338,223

340,021

339,919

352,743

362,516

378,607

Parameter 1 of Priority Objective 2

WELL-BEING PARAMETER ELEMENTS

Name

Growth in Originations of Direct and Induced Credit to the Private Sector by Federal Entity

Priority
Objective

Promote the availability of housing in the country

Definition or description

Measures the growth of direct and induced credit financing of SHF

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Planeación

Calculation method

Sum of the principal amount of direct and induced credit

Observations

HISTORICAL SERIES OF THE PARAMETER

10,234

58,067

84,722

95,542

100,477

93,187

96,828

Parameter 2 of Priority Objective 2

WELL-BEING PARAMETER ELEMENTS

Name

Growth in Balance of Housing Credit Insurance

Priority
Objective

Promote the availability of housing in the country

Definition or description

Measures the growth of the housing credit insurance portfolio balance

Level of disaggregation

Housing Credit Insurance
Balance

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Accumulated

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Responsible unit for reporting progress

DGA de Finanzas

Calculation method

The sum of the "outstanding balance plus overdue ordinary interest" of the unfunded SCV policies.

Observations

Only in case of having observations

HISTORICAL SERIES OF THE PARAMETER

59,504

76,879

88,746

106,927

126,672

124,611

124,863

Well-being Target of Priority Objective 3

WELL-BEING TARGET OR PARAMETER ELEMENTS

Name

Inclusion in Housing Backlog

Priority
Objective

Contribute with financial solutions to reduce the population's housing backlog.

Definition or description

Measures the number of housing solutions aimed at addressing needs in Housing Backlog

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Housing actions

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Promoción de Negocios

Calculation method

Total number of housing solutions in addressing Housing Backlog

Observations

APPLICATION OF THE CALCULATION METHOD TO OBTAIN THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable 1

Total number housing solutions for addressing needs in Housing Backlog through improvement, self-production and acquisition

Value

variable 1

56,670

Source of information

variable 1

Information from reports issued by the DGA de Finanzas of SHF

Substitution in calculation method

The variables of the calculation method must be substituted with the values corresponding to the baseline. The result of the application of the calculation method will be the value of the baseline of the Well-being Target or Parameter.

BASELINE VALUE AND TARGETS

Baseline

Note on the baseline

Value

56,670

Total number of housing actions aimed at addressing needs in Housing Backlog

Year

2024 Target

662,123

The objective of the established target is counted from the 2019-2024 cumulative

192,838

118,007

51,650

34,417

42,040

56,670

TARGETS

Only applies to Well-being Targets

You can register NA when a target does not apply for that year, according to the measurement frequency

58,420

68,872

111,184

124,602

138,021

161,024

Parameter 1 of Priority Objective 3

WELL-BEING PARAMETER ELEMENTS

Name

Growth of financing in Housing Backlog.

Priority
Objective

Contribute with financial solutions to reduce the population's housing backlog

Definition or description

Measures the growth of financing aimed at reducing housing backlog

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Planeación

Calculation method

Sum of amounts originated in Social Banking

Observations

HISTORICAL SERIES OF THE PARAMETER

1,415

4,070

4,239

1,156

1,386

1,556

Parameter 2 of Priority Objective 3

WELL-BEING TARGET OR PARAMETER ELEMENTS

Name

Growth of credit balance in Housing Backlog

Priority
Objective

Contribute with financial solutions to reduce the country's housing backlog-

Definition or description

Measures nominal growth in the credit balance aimed at housing solutions in Housing Backlog

Level of disaggregation

Balance in Social Banking

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Promoción de Negocios together with the DGA de Finanzas

Calculation method

Direct and Induced Credit Balance aimed at reducing housing backlog

Observations

APPLICATION OF THE CALCULATION METHOD TO OBTAIN THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable 1

Credit balance in addressing Housing
Backlog of housing through improvement, self-production and acquisition

Value

variable 1

2,270

Source of information

variable 1

Information from reports issued by the DGA de Finanzas of SHF

Name

variable 2

Value

variable 2

Source of information

variable 2

Substitution in calculation method

BASELINE VALUE AND TARGETS

Baseline

Note on the baseline

Value

2,270

Credit balance in addressing Housing Backlog of housing through improvement, self-production and acquisition

Year

2024 Target

5,362

This is the balance in addressing Housing Backlog of housing through improvement, self-production and acquisition that will be reflected at the end of

2,270

TARGETS

2,249

2,403

3,261

4,104

4,660

5,362

Well-being Target of Priority Objective 4

WELL-BEING TARGET OR PARAMETER ELEMENTS

Name

Growth in sustainable housing financing.

Priority
Objective

Contribute to urban development and sustainable housing.

Definition or description

Measures the number of sustainable housing units benefited by SHF financing.

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Accumulated

Unit of measure

Number of housing units

Data collection period

Period from January to December

Dimension

Effectiveness:

Information availability

February of the year immediately following

Expected trend

Parameter: ascending.

Responsible unit for reporting progress

DGA de Promoción de Negocios

Calculation method

Sum of financed housing units

Observations

APPLICATION OF THE CALCULATION METHOD TO OBTAIN THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable

Total, Sustainable
Housing
Benefited by
SHF financing

Value

variable

Number of Sustainable
Housing units
Benefited by
SHF financing

Source of information

variable 1

Database of housing benefited

Name

variable

Value

variable

Source of information

variable 2

Name

variable

...

Value

variable

...

Source of information

variable ...

Name

variable

Value

variable

Source of information

variable n

Substitution in calculation method

BASELINE VALUE AND TARGETS

Baseline

Note on the baseline

Value

54,047

Year

2024 Target

82,000

It is considered that the LAIF program will cease to operate in 2020 and NAMA in 2021, with only the ECOCASA program continuing to account for the targets.

3,322

11,500

17,745

33,815

45,538

54,047

TARGETS

57,799

66,0000

72,500

75,500

78,500

82,000

Parameter 1 of Priority Objective 4

WELL-BEING PARAMETER ELEMENTS

Name

Offering Developers with building projects and sustainable housing actions

Priority
Objective

Contribute to urban development and sustainable housing

Definition or description

Measures the number of Developers benefited in at least one of SHF's sustainable housing programs.

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Number of developers

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Promoción de Negocios

Calculation method

Sum of Housing Developers with financed projects.

Observations

From 2013 to 2019, participating developers in the EcoCasa Program are considered, as the financing of the NAMA and LAIF programs began in 2019

HISTORICAL SERIES OF THE PARAMETER

Parameter 2 of Priority Objective 4

WELL-BEING PARAMETER ELEMENTS

Name

Financing to Developers for the generation of sustainable housing actions

Priority
Objective

Contribute to urban development and sustainable housing

Definition or description

Measures the financing granted to developers for the generation of sustainable housing actions.

Level of disaggregation

National

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Millions of pesos

Data collection period

January-December

Dimension

Effectiveness

Information availability

February of the year immediately following

Expected trend

Ascending

Responsible unit for reporting progress

DGA de Promoción de Negocios

Calculation method

Sum of financing granted to developers for the generation of sustainable housing actions.

Observations

Only financing from the EcoCasa program is considered

HISTORICAL SERIES OF THE PARAMETER

1,534

1,449

3,984

2,880

2,915

1,303

Well-being Target of Priority Objective 5

WELL-BEING TARGET OR PARAMETER ELEMENTS

Name

Capitalization Index (ICAP)

Priority
Objective

Guarantee the operational and financial solidity of SHF

Definition or description

Measures the level of solvency and sustainability of the institution

Level of disaggregation

Guarantee the operational and financial solidity of SHF.

Measurement periodicity or frequency

Quarterly.

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Percentage

Data collection period

Information as of the last day of each month,

Dimension

Effectiveness

Information availability

15 business days after the close of each month.

Expected trend

SHF ICAP>= 12

Responsible unit for reporting progress

Directorate of Financial and Non-Discretionary Risk Management

Calculation method

ICAP = Net Capital / Total assets weighted by risk.

Observations

In accordance with the methodology established in Title One BIS of the Single Banking Circular

APPLICATION OF THE CALCULATION METHOD TO OBTAIN THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable 1

Net Capital

Value variable 1

19,825.00

Source of information

variable 1

Information calculated in accordance with Title One BIS of the CUB, which is reported to the Bank of Mexico

Name

variable 2

Total Assets
Subject to Risks

Value variable 2

135,162.67

Source of information

variable 2

Information calculated in accordance with Title One BIS of the CUB, which is reported to the Bank of Mexico

Name

variable ...

Capitalization
Index:
ICAP= Net
Capital / Total
Assets Subject to
Risks

Value variable ...

14.67%

Source of information

variable ...

Information calculated in accordance with Title One BIS of the CUB, which is reported to the Bank of Mexico

Substitution in calculation method

The target is the ICAP objective approved by the SHF Board of Directors, which is greater than or equal to 12%

BASELINE VALUE AND TARGETS

Baseline

Note on the baseline

Value

14.67%

The target is the ICAP objective approved by the SHF Board of Directors, the which is greater than or equal to 12%, so in 2018 it exceeded this target.

Year

2024 Target

The target is the ICAP objective approved by the Board of Directors of SHF, which is greater than or equal to 12%

In October of each year, the
ICAP objective is submitted to the Board of Directors within the SHF Desired Risk Profile

12.48%

13.04%

11.00%

14.13%

14.04%

14.21%

14.67%

TARGETS

12%

Parameter 1 of Priority Objective 5

WELL-BEING TARGET OR PARAMETER ELEMENTS

Name

Proportion of overdue assets and adjudicated real estate that have been disincorporated from the portfolio received in transfer.

Priority
Objective

Guarantee the operational and financial solidity of SHF.

Definition or description

Measures the proportion of the total of overdue assets and adjudicated real estate received in transfer that have been sold or liquidated in a given period.

Level of disaggregation

Asset type: Overdue assets with more than
7 days past due and adjudicated real estate.

Measurement periodicity or frequency

Annual

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Percentage

Data collection period

January December

Dimension

Effectiveness

Information availability

January, after the close of the calendar year

Expected trend

Constant

Responsible unit for reporting progress

Deputy General Directorate of
Administration and Portfolio Recovery

Calculation method

Observations

As an overdue asset, all those assets with 4 days past due or more are considered.

APPLICATION OF THE CALCULATION METHOD TO OBTAIN THE BASELINE

The baseline must correspond to a definitive value for the 2018 cycle or prior, it cannot be a preliminary or estimated value.

Name

variable 1

Number of overdue assets

Value variable 1

18,565

Source of information

variable 1

Reports
Administrators

Name

variable 2

Number of adjudicated real estate

Value variable 2

8,399

Source of information

variable 2

Reports
Administrators

Name

variable 3

Number of overdue assets liquidated

Value variable 3

3,000

Source of information

variable 3

Reports
Administrators

Name

variable 4

Number of adjudicated real estate sold

Value variable 4

Source of information

variable 4

Reports
Administrators

Substitution in calculation method

BASELINE VALUE AND TARGETS

Baseline

Note on the baseline

Value

12.8%

If considered, a note can be established corresponding to the baseline.

Year

2024 Target

12%

12.8%

TARGETS

12%

Parameter 2 of Priority Objective 5

WELL-BEING PARAMETER ELEMENTS

Name

Return on Equity (ROE)

Priority
Objective

Guarantee the operational and financial solidity of SHF

Definition or description

Measures the nominal return on invested capital

Level of disaggregation

Guarantee the operational and financial solidity of SHF

Measurement periodicity or frequency

Quarterly

Type

Strategic

Accumulated or periodic

Periodic

Unit of measure

Percentage

Data collection period

Information as of the last day of each quarter

Dimension

Effectiveness

Information availability

20th business day after the close of each quarter

Expected trend

ROE>=0%

Responsible unit for reporting progress

DGA de Finanzas

Calculation method

ROE = Accumulated Net Result 12 months / Average 12 months Equity Capital

Observations

HISTORICAL SERIES OF THE PARAMETER

3.86%

-13.74%

-4.94%

-10.26%

1.22%

8.15%

6.54%

4.13%

9.- Epilogue: Vision towards the future

By 2024, effective solutions will have been found to reduce housing backlog at the national and regional level, thanks to innovative initiatives generated between Sociedad Hipotecaria Federal and other sector participants, both public and private.

A social sector with incomes in the mixed economy (formal and informal) will be attended to with financing schemes in which private banking and SHF participate through Housing Credit Insurance (SCV).

Likewise, attention schemes will be generated for the informal sector through savings programs prior, together with the Bank of Well-being and other financial institutions to formalize their income and, in time, obtain financing for the acquisition of their housing.

Thanks to a concerted participation of actors such as INSUS, SEDATU, CONAVI and the three government levels, a solution to the price of land suitable for social housing will be reached.

In addition, SHF, together with other development banks, contributes to the solution of the backlog of the sector through the strengthening of productive activities in local economies, through projects integral that include infrastructure, equipment, mobility components, technologies that reduce environmental impact (water, energy, waste management) and the design of sustainable housing, considering passive schemes and bioclimatic orientation.

Technical and social assistance will be strengthened and sustainable awareness will be reached so that housing becomes part of a new circular economy with programs such as the existing ones such as ECOCASA, LAIF and NAMA.

Spaces requiring urban rehabilitation of city centers are identified to take advantage of existing infrastructure and access transportation systems, thereby improving the quality of life for families and increasing social value, a concept consistent with the social policy objectives outlined in the NDP 2019-2024.

In the long term, SHF seeks to be an innovative Development Bank, recognized for its activities promoting housing and national development under a social, economic, and sustainable approach, offering financial solutions that facilitate access and availability.

Mexico City, October 30, 2020. - The General Director of Sociedad Hipotecaria Federal, Sociedad Nacional de Crédito, Development Banking Institution, and General Director of Housing Credit Insurance SHF, S.A. de C.V., Jorge Alberto Mendoza Sánchez. - Signature.

Coneval 2018.

Housing at the center of the SDGs in Mexico. UN-Habitat

The Gini coefficient is a measure of income concentration: with values between zero and one. If it approaches one, it indicates higher income concentration; conversely, when it approaches zero, income concentration is lower. Source: INEGI. National Survey of Household Income and Expenditure 2012 and 2018.

RUV: Unique Housing Registry. The RUV is a registration and consultation system that integrates on a single technological platform all information regarding providers and new housing available throughout the country that require some financial support for their individualization. It captures information from the provider (general data of the developer); from the supply of developments-housing (location, typology, construction characteristics such as materials, construction area, etc.); and from construction verifiers, who are responsible for validating the characteristics of the housing.

National Banking and Securities Commission, report 040_2D_R1 for banking information. Prepared with SHF's own information.

Data obtained from the Socioeconomic Conditions Module, 2018 of INEGI

In walls: waste material, cardboard sheet, cane, bamboo, palm, adobe, wattle and daub, metal or asbestos sheet, and wood; In roofs: waste material, cardboard sheet, palm, straw, metal or asbestos sheet, wood or tejamanil, and tile; In floors: earth.

Rural localities are those with fewer than 2,500 inhabitants. Transition localities have between 2,500 and 15,000 inhabitants. Urban localities have more than 15,000 inhabitants.

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