By Flávia Leite
Why does a program that provides virtually free access to homeownership still generate debt and evictions? This puzzle animated my research on the Minha Casa Minha Vida (MCMV, My Home My Life) Program, Latin America’s largest social housing initiative. My initial fieldwork in São Paulo, Brazil, examined the high rate of consumer debt common among the Brazilian poor and its relationship to the high housing costs associated with formal living. However, as I investigated MCMV housing projects, I encountered something strange: people who had just been given stable, formal housing were rapidly becoming indebted again, and some were being evicted. My fieldwork then became geared toward understanding why that was the case.
The MCMV program was created in 2009 by Brazil’s federal government, becoming the first major federal housing program since the country’s dictatorship period. Brazil’s housing deficit1 has been historically concentrated among low-income households. In 2024, the very poor (those earning less than three times the minimum wage), who only represent roughly 40% of the Brazilian population, accounted for 74% of the country’s housing deficit. Yet state housing policies have consistently failed to prioritize them. The MCMV program represented an attempt to change this scenario.
In practice, “MCMV” functions as an umbrella label for a series of subprograms. The focus of my research was on the MCMV Faixa (Range) 1, the subprogram designed for the lowest-income households. This modality disrupted the model of homeownership through debt and offered “free housing for the poor” (Gilbert, 2014). MCMV Faixa 1 does not involve interest nor require credit evaluation. Beneficiaries are responsible only for symbolic monthly payments proportional to their incomes for a period of ten years (in general), after which they acquire full ownership of the property.
Since the program’s inception, 1.3 million Faixa 1 units have been produced across Brazil. In São Paulo, there are over 16,000 MCMV units, distributed in 77 apartment complexes rather than single-family houses. High-rise MCMV developments are the norm in São Paulo due to the scarcity and high cost of land. And by design, high-rise projects have a very different legal structure than single-family ones. In the latter, residents become the sole owners of their houses. In the high-rise case, in contrast, residents come together under a condominium structure, a form of property ownership in which each resident owns their individual unit as well as a proportional share of a development’s common areas (fração ideal).
At this point, the pieces of the puzzle began to come together. Condominiums operate under regulations commonly decided by residents, who pay a monthly fee to cover expenses such as security, cleaning, maintenance, and utilities for shared spaces. Residents are required to hire an external property-management firm responsible for billing, payroll, bookkeeping, and legal support. In addition, they must elect a síndico (a building manager, typically a resident, though sometimes the síndico is a hired professional) who enforces the rules, manages service providers, and legally represents the condominium in judicial cases. In other words, in single-family housing, families take care of their own units, whereas in condominiums residents must jointly fund and oversee the maintenance of shared spaces and services — a task that, under Brazilian law, must be delegated to private intermediaries.
The condominium arrangement that structures high-rise MCMV projects also means that low-income residents face new costs they had not previously incurred. Before moving into MCMV units, many families paid little or nothing for utilities, and a significant share owned their homes informally, without paying rent. After moving into new housing, households face an array of new costs, from the symbolic payments to condo fees and utilities. For many, these new costs exceed their previous housing expenditures and quickly become unsustainable, especially given stagnant and limited household incomes. Failure to pay condominium fees and utility bills has immediate repercussions for project maintenance and overall living conditions, in addition to financial and legal consequences for the homeowners themselves.
In fact, many MCMV residents struggled to pay these fees. My research shows that nearly 30% of them became delinquent. I also found that this new debt quickly became a problem subject to private and discretionary enforcement. As established by the Brazilian Civil Code, if a resident misses a payment, síndicos and property managers can immediately apply up to a 2% penalty fee, 1% monthly interest, and inflation adjustments. But whether these penalties are enforced depends largely on these intermediaries, the síndicos and property managers. Some negotiate, postpone, or try informal arrangements. Others enforce legal penalties strictly; the same legal framework can produce very different outcomes depending on who manages a building.
Matters get more complicated when nonpayment becomes persistent. Condominium managers and síndicos can escalate matters through judicial filings. Again, this is a discretionary decision of intermediaries. In my research, I collected court documents and found that at least 7% of Faixa 1 residents (1,158 households) have been taken to court for nonpayment, with the majority of these lawsuits still active. Once in court, the delinquent household faces additional legal fees equal to 10–20% of the debt owed. If the debt remains unpaid, they may ultimately be evicted from their home and the house auctioned. I find that dozens of MCMV project residents in São Paulo have already faced this outcome, with many more in peril.
Perhaps the most striking part of my findings concerns the role of a particular type of intermediary actor: guarantors (garantidoras), private companies that offer condominiums a solution to high rates of condominium fee delinquency. These firms guarantee condominiums’ full revenue in exchange for control over their condo-fee collection, effectively transforming social housing management into a profit-driven business, accelerating judicial action and embedding social housing within circuits of financial extraction.
Guarantors approach síndicos and property managers promising condominiums financial stability. They guarantee 100% of condominium fee revenue, and in exchange, they charge a fee for their service, typically between 5% and 15% of total monthly collections. For síndicos and property managers struggling with high levels of nonpayment, this arrangement offers immediate relief: cash flow becomes predictable, enabling regular payment of the condominium’s utility, maintenance, and employee expenses.
But residents pay the price. When guarantor firms take control of debt collection, they generally do so using a standard and inflexible model. Unlike síndicos, they are not neighbors mediating the problems of fellow residents. They are external private companies whose business relies on debt enforcement. Throughout my fieldwork, I found that these firms occupy the most aggressive end of MCMV’s governance chain. Many interviewees describe them as agiotagem (loan sharks) or a máquina de fazer dinheiro (machine of making money).
My statistical analysis shows that the presence of guarantor firms is the main factor associated with whether an MCMV resident faces a lawsuit. Their business model depends on speed, scale, and high levels of delinquency. They possess significant legal capacity and the ability to file lawsuits in bulk. The faster they recover debt, the more profitable they become.
The contrast is stark. Síndicos and property managers tend to rely on relational, negotiated strategies, accepting partial payments or allowing residents more time to pay. Some organize collective repayment plans or attempt internal mediation. Others adopt coercive practices, like the illegal shutting off of water services. But the rise of guarantor companies adds a new layer to debt governance, one that is financialized, standardized, and predatory. Their business model relies on exploiting the financial fragility of housing projects and extracting returns from indebted residents, not only through fees and fines, but also through home evictions, seizures, and auctions.
I document how these actors rely on standard, rigid, and often predatory practices to collect condo fees, filing lawsuits in an automatic manner, with little discretion or room for negotiation. My research also shows how these firms, with their greater financial and institutional capacity to litigate, pursue a high volume of legal actions for debt recovery.
The result is an ecosystem of debt collectors composed of property managers, síndicos, and guarantor firms. These actors collectively determine whether residents build assets, break even and live with manageable obligations, or lose their homes. They are, in practice, brokers of the welfare state, mediating the relationship between state policy and the realities of low-income households.
The different debt governance strategies I document help explain why a program that provides virtually free access to homeownership still produces debt, evictions, and housing insecurity. More broadly, my findings demonstrate how even well-intentioned housing programs, those that successfully deliver homes, can generate new forms of precarity when welfare management is outsourced to unregulated and predatory private actors.
- The housing deficit in Brazil, according to the Fundação João Pinheiro (FJP), is defined as the set of households whose living conditions are inadequate, either because they lack access to housing (such as families cohabiting or paying excessive rent) or because their homes are physically or structurally unsuitable and require replacement. ↩︎
Reference
Gilbert, A. (2014). Free housing for the poor: An effective way to address poverty? Habitat International, 41, 253–261.https://doi.org/10.1016/j.habitatint.2013.08.009
Flávia Leite is a housing and land policy researcher. She is currently a Ph.D. student in the Department of City and Regional Planning at UC Berkeley and a fellow at the Institute for Applied Economic Research (IPEA) in Brazil. Her Ph.D. research examines the roles of state and private actors in shaping the experiences of very low-income homeowners in Brazil.
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