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Housing microfinance story series: Carmen Ramírez

March 15, 2010




Monthly Income, gross: **US$250
Monthly Income, net: US$93
Monthly Remittances: US$147
Source of income: Remittances, small business
Loan amount: US$800
Term of loan: 24 months
Monthly payment range: US$34-58

Carmen Ramírez* has been living in her home for more than 25 years. At times, she has had as many as 10 people living with her. The house itself has gone through multiple transformations. The land that the house is built on was donated by the Nicaraguan government. After the civil war ended in 1979, the Sandinista government provided land to a number of families. However, these new land owners did not build homes on the land in due time, so the government granted the land to other families—including Ms. Ramírez’s. She submitted an application and received the land at no cost. Several years later, she received the property title through a government program that provides secure tenure for residents of her municipality. She expressed gratitude that she was able to access land to build her home, which has come a long way from the undeveloped plot that it was more than two decades prior.

Over time, he Ramírez family has progressively built and improved upon their home. A few years after receiving the plot of land, Carmen built a one-room house of wood measuring about 15-20 square meters, roughly half the size of her current entry room. As a single mother, she lived in this one room along with her six children. There was barely enough room for the beds, she recounted, and the family cooked outside on an open fire.

Carmen says that she funded the construction with money she had saved from selling basic foodstuffs in the market, as well as other supplementary jobs. She also had some assistance from family to build this first room. Then, she continued to save and progressively expand the home, and would try to set aside something every day from her profits as a merchant.

On good days, Carmen was able to save 25-50 córdobas (US$1.25-2.50 at today’s exchange rate). On slow days, nothing at all.

About three years later, Carmen was able to begin constructing additional bedrooms. Her plan was to purchase construction materials about twice a year, whenever she had enough money to make a sizable purchase. Her brother and father provided most of the labor to build the rooms. She was able to add on about one small bedroom every year.

The third phase of improvements was to expand the front room and build block walls to enclose an improved living area that had been part of the original wood home.

Three of Carmen’s children still live in Nicaragua. María and Elizabeth live in the home, and María makes tortillas and sells them independently. Elizabeth was, until recently, pursuing studies in nursing. Her oldest son, Luis, works in the nearby tax-free manufacturing zone, making about 1,300 córdobas every two weeks, or US$65 dollars.

Carmen’s family has a remarkable immigration story, with half of her children having migrated at some point to another country. The first to leave was her oldest daughter Nora, 35, who made the trip to the U.S. around the year 2000 at the age of 26, in search of higher-paying employment than she was able to find in Nicaragua. She and her husband went on a tourist visa but settled in Miami, where her husband eventually started his own business manufacturing furniture. Its success led him to hire his own employees, including Nora. Driven by a desire to “get ahead,” Carmen’s son John joined his sister in Miami in 2003, securing work at his brother-in-law’s furniture shop. John now works and studies English, and is in the process of applying for American residency. Her third child living abroad is her son Juan Pablo, who has lived off and on in Costa Rica for the last seven years.

All of Carmen’s children that are living abroad send her some type of remittance. Nora took the better part of three years to get established in the U.S. and pay the debt she incurred to make the trip. Once established, she sent an average of US$100 each month, closer to US$150 in better times. Nora returned to Nicaragua with her children in November of 2008.

Given that he was also funding his studies, John sent less—typically US$50-100 when he could. Her son in Costa Rica sent regular remittances, but in smaller amounts than John, possibly as a result of the reduced earning power in Costa Rica compared to the U.S.

Carmen recounts that when unanticipated expenses arose, her children would send extra remittances—when she faced medical costs or needed to complete the payment of materials on the renovation of the house, for example. Her daughter Nora commented that the decision of how to use the funds rested entirely on her mother. Nora never dictated how funds should be spent.

The Local Development Fund (FDL in Spanish) was not Carmen’s first experience with microfinance. In the nineties she participated in a group of 20 vendors that took on a group loan. It was, according to Carmen, one of the first projects piloted by FINCA, a microfinance lender in Nicaragua. She was proud of her participation, which enabled her to gain access to capital of up to 6,000 córdobas (US$300 at today’s exchange rate). Thus, when Carmen heard about the housing loans offered at the Local Development Fund (FDL in Spanish), she was already familiar with the microfinance model.

Carmen visited FDL to inquire about housing loan options, and decided on an application for US$1,000 loan to purchase materials to finish parts of the walls in her front room and corridor. She said that an FDL official came to visit after, to look at the house and become familiar with the improvements she was hoping to carry out.

Carmen was approved for s loan of US$800 in May of 2008, of which she used US$500 to finalize the purchase of a small plot of land on which she had already put a down payment. The total price of the lot was US$1,500 dollars. Carmen had purchased the plot for her daughter Lucia, who plans to eventually build her own home there. With the remaining US$300, Carmen purchased materials to complete some of the walls of her home. The walls would make the house more secure, she explained, because they would enclose the space that left them vulnerable to intruders.

Carmen said she was satisfied with the service of FDL, in both the loan approval and implementation process. She did not seem to recognize the role of a technical assistance professional per se, although she did recognize that the FDL representative had helped her to define a budget for the improvements.

Carmen commented that paying off the loan had become more difficult since the return of her daughter, as she could no longer count on the remittance income that her daughter used to send on a monthly basis. When asked how her sales had been impacted by the economic crisis, she responded, “What can I do, drive away the crisis? The only thing we can do is to keep fighting.” She indicated that she managed to make payments on the loan however she could.

It is important to note that Carmen still received some remittance income from her sons in Miami and Costa Rica, and also was supported by the contributions of other working members of the household.

Carmen expressed happiness, however, that her daughter Nora, who had been away for nearly a decade, had returned home with her two daughters—Carmen’s grandchildren.

Nora explained that the economic crisis was part of the motivation for her family’s decision to move back to Nicaragua. Her husband’s once-thriving furniture business had taken a downturn, she explained, since the demand for furniture had shrunk given the reduction in home purchases in Florida. He was now working alone in his shop, saving up as much as he could to construct a home located on a plot right next to her mother’s.

Nora and her husband have also purchased a plot of land down the street where they plan to build a furniture workshop.

The decision to relocate back to Nicaragua was also fueled, according to Nora, by the insecurity and lack of rights that they experienced as undocumented immigrants. None of the family had migrated legally, including her two children, which limited their options for university studies and left Nora and her husband feeling tenuous about their future. Given economic conditions and the fact that one of her daughters was just finishing high school, they decided that it was time to return to Nicaragua.

Key points from Carmen’s story:

  • The loan enabled the family to complete the purchase of a small plot of land and start finishing work that improved the security of their home. The client’s experience with the loan was positive, and she said that it helped to speed up the incremental construction process to which she was accustomed.
  • On the other hand, Carmen did not seem to recognize that there was a technical assistance component to the loan, though did recognize the help that was offered in preparing a construction budget. Ultimately, she employed the loan for a use different from that originally intended, so the technical assistance was not put into action.
  • Carmen’s loan was underwritten based on income derived almost exclusively from remittances, but she did not miss a payment on the loan when her main source of remittances ceased providing this income source. She did, however, receive limited remittance income from two other children, which served as a safety net once remittances from her daughter were no longer forthcoming. This dynamic suggests that it is not necessarily the proportion of income from remittances that increases the probability of default or late payment, but whether or not remittance income is received from more than one source. Carmen received 92 percent of her income from remittances, but never missed a payment. The fact that she had diversified sources of remittance income may be what provided her a safety net.
  • Remittances have variously and positively impacted the shelter profile of Carmen’s family. She has used remittances to incrementally improve her home, and her remittance income has helped her to qualify her for a loan to further these improvements and purchase a plot of land for her daughter. Both her sons living abroad have been able to purchase land in the neighborhood, and one is building a home. Her daughter and son-in-law purchased the plot directly next to her, and have already made significant progress on the construction of a large, two-story home that will eventually serve as the home for themselves and their two daughters.

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.