UPDATE ON OPIC MORTGAGE FINANCE FACILITY

UNCLAS JERUSALEM 001362 SIPDIS NEA/IPA FOR GOLDBERGER/SACHAR; EEB/IFD/OIA FOR CULLINANE; R FOR MCDANIEL; TREASURY FOR ROSE; DEPT PLEASE PASS TO OPIC FOR ROBERT DRUMHELLER E.O. 12958: N/A TAGS: ECON EFIN KWBG SUBJECT: UPDATE ON OPIC MORTGAGE FINANCE FACILITY REF: JERUSALEM 350 ¶1. (U) Summary: Representatives of the Overseas Private Investment Corporation (OPIC) visited Jerusalem and Ramallah July 18-23 to further OPIC,s affordable mortgage finance initiative, launched by PA President Abbas and OPIC CEO Mosbacher on April 14. OPIC VP Drumheller discussed timing and implementation of the program with PA and Palestinian bank officials, with the goal of operationalizing the program by early 2009. OPIC also discussed the feasibility of a project in the health sector with the PA Minister of Health and followed up on a rental apartment project under development in conjunction with the Anglican Church. End summary. Housing and Mortgage Facility -------------- ¶2. (U) Following up on the April 14, 2008 announcement of a 500 million dollar mortgage finance facility, OPIC Vice President Robert Drumheller and Investment Analyst Maria Goravanchi visited Ramallah and Jerusalem July 18-23 to review the status of the project with its partners, the International Finance Corporation (IFC),the Palestine Investment Fund (PIF),Bank of Palestine and the UK's DFID. The program is designed to provide long-term housing loans to low- and middle- income Palestinians through the Affordable Mortgage and Loan Corporation (AMAL). AMAL will work with a select group of local financial institutions, who will originate and service the loans, and serve as the public face to the customers. Discussions with six Palestinian banks are ongoing regarding fees, risk sharing agreements, and reporting requirements. Presently the Bank of Palestine, Cairo Amman Bank, and Arab Islamic bank seem the most interested and able to participate in this project. ¶3. (U) The program is designed to become operational in early 2009, in conjunction with large housing projects undertaken by PIF and Bayti Real Estate Development -- projects that would likely flounder in the absence of affordable mortgages for low-income buyers (reftel). The Bayti development (Rawabi) was the signature project of the Palestine Investment Conference held in Bethlehem in May. Bayti's CEO, Bashar al-Masri, has repeatedly stressed to ConGenOffs that his project will not succeed absent affordable mortgages for Palestinians. Potential Projects -------------- ¶4. (U) Separately, Drumheller met with PA Minster of Health Fathi Abu Moghli to discuss possible OPIC involvement in the health sector. The MoH estimates it spends approximately $50 million annually to send patients to Jordan, Israel, and Egypt for treatment due to the lack of specialized facilities in the Palestinian Territories. OPIC will explore the feasibility of funding specialized clinics in conjunction with the MoH, which would serve patients in the West Bank and ultimately become self-sufficient. (Note: A similar project in Gaza was explored in early 2006, but was suspended once the Hamas government took power.) ¶5. (U) Drumheller also continued discussions with the Anglican Church about financing the construction of an apartment building in Jerusalem, proceeds from which would support health clinics and schools run by the Church in the West Bank. ¶6. (U) OPIC cleared this message. WALLES