ABSTRACT
The Brazilian Financial Housing System is on the verge of virtual insolvency. The continued presence of inflation, coupled with an inconsistent system of debt indexation (the so - called monetary correction), further aggravated both by a plethora of concessions given to the borrowers and by some ill-conceived procedures that were imposed by a sequence of stabilization plans (Cruzado, Summer .and Collor) has resulted in a potential imbalance of US$ 20 billions for the Fundo de Compensação de Variações Salariais - FVCS (Compensation Fund of Wage Variations). Discussing the basic inconsistency of the debt indexation scheme that is still being used, the paper points out the origin of the problem and offers some suggestions on how it could be reduced.
KEYWORDS:
Construction; inflation; housing policy