The objective of this paper is, th ere/ore, La assess the role C!l informal housing areas in addressing thernhousing problem of the urban poor. The study is carried Ollt in the pUiposefully selected kebeles ofrnHawassa city [Dato, Tille and Ttrla-gelelI 111 the meantime, the Slu{(v has examined: tenure security,rn(?!Jordabili(v, and good governance in these extra-legal settlement areas. For selecting samplernhouseholds and key injormanls, the study has entirely relied 011 non-probability sampling technique.rnConvenient sampling was used for selecting households to be surveyed and Plllpos ive and snowballingrnsampling l-vere used for selecting key informants. For the purpose of this study, primary data wasrncollected using J 60 household survey questionnaires which were distributed to the three kebeles based onrntheir intensity of informality; 3 separate FGDs consisting of 5 to 7 informants which were made ill eachrnkebele separately,' and semi structured interviews which was made with 9 key informants. Dala wasrnanalyzed quantitatively [using SPSS) and qualitatively [thematic description of issues).rnThe result of the stlldy has shown that informal settlement areas are dominated by male marriedrnhouseholds who either bought their plot from farmers or inherited it from their family. According to thernresults of the study, the length of stay in Hawassa city is directly proportional to one's ownership ofrninformal houses in the study area. The result of the study has revealed that the poorer segment of thernpopulation in the study kebeles of Hawassa city have less likely benefited from formal housing [costrnsaving, rental housing or condominiums] as anticipated.rnThe result of the study has confirmed that the process through which informal households get theirrnillegitimate title-deed has passed through three distinct but evoilitionary phases: via afamily conferencernvhich is more of verbal,' from the seller based on a hand written agreement between the buyer and thernseller; and with the help of a more legally bound agreement format. Conversely, farmers of the stlldyrnkebeles have got a legitimate title-deed. Tenure insecurity in the study kebeles has reached its climax firstrnwith the demolition of about 500 hOllses in the study kebeles in 20 II, and then, with the announcement ofrnthe new land lease proclamation No 7211201 I. This has brought threats to informal households: little orrnno compensation and/or relocation?rnThe study revealed that informal settlement areas of Hawassa city seems affordable only to somernhouseholds who have got the economic potential in the early years of land transaction [2003/04-rn2005/06). In the late years of the transaction, nevertheless, the cost of land for house construction hasrnincreased dramatically to the extent that it excludes the velY poor.rnThe study has shown that good governance in the study kebeles is deficient. Though the city muniripalityrndecentralized power to the kifle ketemas and kebeles, officials in the kebele remained partial, lessrntransparent, and less accountable to the people they administer and their jobs.rnTherefore, more attention should be given to the administration of these areas in a way that they benefitrnthe poor: revisiting housing development programmes and projects,' taking preventive measures thanrnreactive ones; promoting housingfinance and monitoring and evaluation of the decentralization process.rnKey ~Vo,.ds: Affordability, Tenure security, Good governance, Title-deed