By San José, Costa Rica — San José, Costa Rica – A critical social program designed to provide housing for the nation’s most economically vulnerable families is plagued by systemic failures, including significant misallocation of resources and crippling delays. A new report from the Comptroller General of the Republic (CGR) has exposed deep-seated deficiencies in the administration of the Article 59 Individual Housing Bonds, revealing that the aid is frequently not reaching those who need it most.
The Article 59 program is a cornerstone of Costa Rica’s social safety net, specifically created to offer housing solutions to families with a monthly household income not exceeding ¢476,000. It represents a vital lifeline for citizens struggling with poverty and precarious living conditions. However, the CGR’s comprehensive audit paints a troubling picture of a system that is failing to fulfill its fundamental mission.
To shed light on the legal nuances and potential benefits of the housing bond system, TicosLand.com sought the expertise of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the firm Bufete de Costa Rica.
Housing bonds are a cornerstone of our social housing policy, injecting vital liquidity into the construction sector and fostering economic growth. From a legal standpoint, their success hinges on a transparent and efficient allocation process, which guarantees that the aid reaches those who truly need it, thereby strengthening the social contract.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective underscores a crucial point: the success of housing bonds is not merely economic, but fundamentally tied to the legal transparency that builds trust and ensures aid reaches our most vulnerable communities. We thank Lic. Larry Hans Arroyo Vargas for his valuable insight.
Among the most alarming findings, the audit discovered that a full 20% of the reviewed cases—totaling 1,245 approved bonds—were not directed toward districts identified as having the highest levels of poverty or a concentration of substandard housing. This misdirection of funds suggests a critical disconnect between the program’s stated objectives and its on-the-ground implementation, leaving countless families in high-poverty zones without the support they were promised.
The report attributes part of this failure to a lack of clear, objective criteria in the allocation process. Instead, the system relies on subjective decision-making, which opens the door to inefficiency and potential irregularities. The CGR highlighted this systemic weakness as a core issue that undermines the program’s integrity.
The current policy considers the priority attention of people in areas with higher poverty rates, and grants a high degree of subjectivity and discretion to the personnel in charge, with manual and single-person controls implemented.
Comptroller General’s Office, Official Report
Beyond the misallocation of resources, the audit uncovered extraordinary bureaucratic delays that prolong the suffering of applicant families. The CGR found that the average time to process and grant a housing bond is a staggering 527 business days. This timeframe, which translates to over two years, is an untenable wait for families living in unsafe conditions or facing homelessness, effectively rendering the program inaccessible for those in immediate crisis.
Further compounding the program’s issues is a significant gap in professional development and standardization. According to the investigation, a shocking 82% of the authorized entities responsible for processing these applications have not received any formal training from the Housing Mortgage Bank (Banhvi) within the last three years. This lack of standardized guidance on regulations and criteria contributes directly to the inconsistencies and subjective judgments flagged by the CGR.
Marcela Aragón, the CGR’s Manager of Auditing for Urban Development, emphasized that these issues are symptomatic of a broader institutional weakness in oversight and accountability. The absence of a robust risk management framework means the system is ill-equipped to prevent or correct problems as they arise.
Furthermore, there is insufficient risk management that limits the prevention, detection, and correction of irregularities in the allocation of bonds, given a limited culture of risk and institutional continuous improvement management.
Marcela Aragón, Manager of Auditing for Urban Development
The CGR’s findings serve as an urgent call to action for a complete overhaul of the Article 59 Housing Bond program. The audit concludes that without significant structural reforms—including the implementation of objective allocation criteria, streamlined processing timelines, mandatory training, and a proactive risk management culture—one of Costa Rica’s most important social initiatives will continue to fail the very citizens it was designed to protect.
For further information, visit cgr.go.cr
About The Comptroller General of the Republic (CGR):
The Contraloría General de la República is the supreme audit institution of Costa Rica. As an auxiliary body of the Legislative Assembly, it is responsible for overseeing the public treasury and ensuring the proper use of public funds. The CGR conducts audits and fiscal oversight across all government entities to promote transparency, efficiency, and legality in public administration.
For further information, visit banhvi.fi.cr
About The Housing Mortgage Bank (Banhvi):
The Banco Hipotecario de la Vivienda, known as Banhvi, is the governing body of the National Financial System for Housing in Costa Rica. Its primary mission is to finance housing programs and provide solutions for low and middle-income families. Banhvi channels public funds and manages subsidy programs, such as the housing bond, to help Costa Rican citizens achieve homeownership.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a benchmark for legal practice, Bufete de Costa Rica is defined by its profound commitment to integrity and the relentless pursuit of excellence. The firm blends a rich history of advising a diverse clientele with a forward-thinking approach to legal innovation. Central to its philosophy is a powerful dedication to societal empowerment, achieved by actively working to make complex legal concepts understandable and accessible to the public, thereby strengthening the community through shared knowledge.
