What Causes Arrears in Government Housing Programs?: Perceptions and the Empirical Evidence from Jamaica

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Abstract
This paper assesses commonly held views about the causes of mortgage arrears in government programs in poor countries. Data from Jamaica support housing officials' perceptions that higher arrears are found among those who view government housing programs as a gift and among male mortgagors. The remainder of the evidence, however, runs contrary to perceptions. Arrears are not exclusively a low-income problem, nor are they more likely to occur with loans that have escalating payments or low initial mortgagor equity, nor for untitled property. Nor do arrears seem to be correlated to large loan-income ratios. Comparisons of perceptions and reality suggest that an agency's public image is critical to repayment and that mortgages can be made more available to prospective low-income homeowners without increasing arrears.