Housing microfinance story series: Noé Miranda
March 15, 2010
Monthly Income, gross: **US$400
Monthly Income, net: US$207
Monthly Remittances: US$200-400
Source of income: Remittances, pension, small business
Loan amount: US$1,500
Term of loan: 24 months
Monthly payment range: US$64-101
Noé’s home lies on the outskirts of town. The clucking of chickens and an occasional stray cow makes it feel more like country than city. The high ceilings and large windows make the home a cool refuge from the heat, one of the factors that attracted Noé and his wife to this area about five years ago. She was ill, and on a doctor’s recommendation they sought a refuge from the noise and dust of the city center, settling on a plot of land next to a pasture. They used the proceeds from the sale of their home in the city to fund the purchase of the land and build a new home, from ground up.
After building the house, Noé retired from his career at a local industrial facility and began to live out his retirement, benefiting from a monthly government pension of US$120. His wife passed away earlier this year. Soon after, his niece and her young son moved in to help take care of the home. Noé supplements his income with profits from a bicycle taxi he owns, which he rents to a driver and splits the profits, providing as much as US$100 a month in additional income.
Noé’s two sons, his only children, live in the United States, both in Los Angeles, California. César, 40, has been there for over 20 years, having left Nicaragua in the late eighties, fearing the growing political instability. He worked primarily in construction, and now has a job with Coca-Cola. He is divorced, and has a son who also lives in California. Noé says that César typically sends about US$80 to US$100 dollars every couple of weeks.
Noé’s second son, Alberto, migrated to the U.S. after César, counting on his brother for support to get established. Unlike his older brother, he was able to travel with a visa. His wife is of Nicaraguan descent, though is now a U.S. citizen. Her three children, Alberto’s stepchildren, live in Nicaragua with her parents. Alberto now works as an automobile mechanic in Los Angeles, drawing on his experience as a machinist and electrician in Nicaragua, but earning several times more than he would at home. Noé says that Alberto sends about the same amount of remittances as his brother, ranging from US$80-100 every two weeks.
Noé himself spent some time in the U.S. in the 1970s as a member of the Nicaraguan national baseball team, and fondly recalls playing baseball on university campuses near New York City.
Noé is no stranger to incremental construction, having spent a decade building up his previous home from a single room dwelling into a larger house that could comfortably accommodated himself, his wife and two sons in the center of town. He perpetually saved to purchase materials, and sometimes contracted masons to help expand the home, often contributing his own and his sons’ labor.
When he purchased the plot of land for his current home, Noé’s goal was to build the home as quickly as possible. With proceeds from the sale of the other home, he purchased a plot of about 800 square meters for US$4,500. He then spent another US$10,000 on the construction of the house from the ground up, using a small contracting company to supervise five masons. Noé would advance the contractor’s wages at the beginning of each week, paying a total of US$1,600 for the labor. The remainder of the US$10,000 he used to purchase the materials, buying supplies as the construction progressed. It took about one month to build the house, which has a spacious porch, two bedrooms, and a large dining and living area with high ceilings.
Noé learned about the Local Development Fund (FDL in Spanish) when a loan officer arrived at his house, promoting housing loans. Noé had already exhausted the proceeds from the sale of his previous home, and was at that point retired, making it difficult to save money to carry out the additional phases of construction. Although he initially hoped to request US$3,000 to add a room on the side of the house, he reduced his request to US$1,000 after being told he would not qualify for such a large loan. He ultimately received a loan for US$800. Noé expresses some frustration with this, saying that no one had explained to him why he did not receive the US$1,000 amount that he had requested. The loan was used to build a wall in the front of his house to protect his side yard and install a gate to access this part of the property.
After paying off the first loan, he requested his current loan in May of 2009, based partly on the remittances he received from his sons. He received US$1,500, after having requested US$2,000, and again felt that he was offered no explanation for the lower loan amount. He expected that he would receive his request for this second loan, explaining that he had paid on time and should be identified as trustworthy by the FDL. He has not yet begun to spend the capital from the second loan, which he plans to use to paint the interior and exterior of the house and finish various small jobs.
Noé had received technical assistance from FDL, but the assistance was directed toward the construction of an additional room, the original loan use. He was late once during the four months that he has been paying on the loan, explaining to the loan officer that depression from the death of his wife led him to travel to the U.S. to see his sons, putting off his loan payment.
Noé has plans to eventually build a room onto the side of the house so that his sons have a place to stay when they visit Nicaragua. He hopes to qualify for a loan large enough to build a six by six meter room all at once, and says that he no longer has the energy to build progressively. Although he would like to spend more time with his sons, he remarks that he doesn’t believe that they will ever return to live in Nicaragua. When they come to visit, he would like them to have a place to stay in the home that they helped him to build.
Key points from Noé’s story
- Noé would have been unlikely to receive as high a loan amount as he did for his second loan if remittances were not included as a source of income.
- Noé received technical assistance with his loan, but was not ultimately able to employ this advice since he used the loan for another purpose. In this case, the technical assistance did not play a part in the final construction outcome, although it may be employed in the future if he constructs the side room.
- In this case, the housing microloan served as a mechanism to improve a home that was built using the client’s own funds from the sale of a former home. Although Noé built his new home all at once, he needed additional capital to continue to make progressive improvements. This shows how progressive loans can serve to complement construction that occurs in a non-progressive manner.
• Story and photos courtesy of Habitat for Humanity consultant, Brendan McBride.
*The names of the families have been changes to protect their identity.
**Gross income is the total of all income sources, whereas net income reflects the number of family members that are supported by that income. The calculation is made by subtracting from the gross income an estimate of the minimum cost of living (including food, transportation and education) for all family members.