Guidelines on the Pag-IBIG Group Housing Loan Program

August 8, 2011

HDMF CIRCULAR NO. 293-11

 

Pursuant to the approval of the HDMF Board of Trustees in its 274th Board Meeting held last 27 May 2011, the Guidelines on the Pag-IBIG Group Housing Loan Program are hereby issued:

A. Objectives

The Pag-IBIG Group Housing Loan Program aims to:

1. Engage the participation and involvement of project proponents in housing provision, through land development and house construction on the land owned and provided by the project proponent;

2. Encourage project proponents to share in the development of housing packages by providing subsidy programs and other forms of assistance for the intended beneficiaries;

3. Promote homeownership among the beneficiaries by making it more affordable for them.

B. Coverage

The Pag-IBIG Group Housing Loan Program shall be open to the following project proponents with juridical personality: SEIacA

1. Local Government Units

2. Employers

3. Employees' Associations

4. Cooperatives

C. Financing Scheme

The project proponent shall be given access to the Pag-IBIG Group Housing Loan for site development and house construction, where the units from the project to be financed shall be offered for sale to the project beneficiaries.

1. Under this scheme, the project proponent shall provide land to serve as project site. He may, likewise, provide subsidy to project beneficiaries in the form of infrastructure support, preparation of plans, titling, extension of facilities and other resource.

2. The housing project subject of the loan shall benefit at least thirty (30) potential buyers per phase or building.

D. Eligibility Requirements

1. The proponent must have juridical personality.

2. The proponent owns and provides the land for the housing project.

3. The proponent is financially capable of fulfilling its commitment to the Fund relative to the Pag-IBIG Group Housing Loan.

4. The proponent must have a good credit standing among banks, financial institutions and other government housing agencies.

5. The proponent is not engaged in the business of development and construction of low-cost and socialized housing.

6. The key officers shall also be subject to credit and background investigation. HIAESC

7. There must be at least thirty (30) potential buyers who are Pag-IBIG members. They must have committed to acquire the property generated from the project and have been pre-qualified by the Fund prior to application for Pag-IBIG Group Housing Loan. The number of potential buyers must be 15% more than the number of units.

8. The selling price of the housing units shall in no case exceed Seven Hundred Fifty Thousand Pesos (P750,000.00).

E. Terms and Conditions

1. Loan Purpose

The proceeds of the Pag-IBIG Group Housing Loan shall be used for any of the following purposes:

1.1 Development of residential subdivision, provided that all of the lots being developed will have a housing component;

1.2 Construction of units eligible for mortgage financing under the existing guidelines of the Pag-IBIG Housing Loan Program;

1.3 Development of Medium-Rise Building in highly urbanized areas.

No part of the loan, however, shall be used to purchase or redeem land.

2. Loan Amount

The amount to be granted shall be based on actual project need as supported by cash flow projections or debt service capacity of the project proponent, whichever is lower; provided further that it shall not exceed the following rates:

2.1 In case of horizontal development, maximum of Twenty Million Pesos (P20,000,000) per phase or forty percent (40%) of construction cost, whichever is lower. Construction cost shall mean the project proponent's cost of the proposed physical improvements, using as basis the standards of HLURB for land development and construction. The improvements shall include buildings and utilities within the boundaries of the subject property. CTDHSE

 Phase refers to a portion of a subdivision master plan that is completed in accordance with the HLURB minimum planning and design standards. Community facilities and other amenities as provided in the approved master plan must be included in the initial phase of the subdivision project.

2.2. In case of vertical development, maximum of Forty Million Pesos (P40,000,000) per building or actual cost of the building, whichever is lower;

HDMF's exposure for institutional loans on projects of any one institution or entity shall not, at any time, exceed the single borrower's limit prescribed by the Fund.

3. Interest Rate

The loan shall bear interest at the rate corresponding to the Selling Price of units in the housing project:

Selling Price	Interest Rate
Up to P400,000	6%
Over P400,000 to P750,000	7%

A loan for a project that has different selling price shall be charged a weighted rate computed as follows:

Ʃ (Selling Price x No. of Units x Interest Rate)

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Ʃ (Selling Price x No. of units)

4. Loan Term

The loan shall be repaid based on the project's cash flow projections or three (3) years, whichever is lower.

5. Criteria for Development Loan AIHTEa

5.1 Technical

5.1.1 Site/Location

 The site must be approved for development into a housing project by the appropriate authorities, and shall meet the following criteria:

a. With legitimate title/s or other instruments proving a secured tenure on the properties subject of the loan, free from liens and encumbrances.

b. Physical suitability and accessibility as defined in the rules and standards established by the HLURB.

c. Must be within a distance of five (5) kilometer radius from community infrastructures such as schools, commercial centers, churches, etc.

5.1.2 Project Development

a. Project Design — The project design, i.e., the type of land development and the type of housing units, must conform to HLURB standards and must address an identified market.

  All lots in the project site must have a housing component.

b. Necessary Support Facilities — The project shall include provision for necessary support facilities in accordance with the standards of HLURB.

c. The proponent shall obtain the services of a contractor/developer acceptable to the Fund in the development of the housing project. The contractor/developer shall be evaluated in accordance with the eligibility criteria provided in RA 9184. DaHISE

5.2 Market

5.2.1 The prospective member-buyers must be Pag-IBIG members and must qualify to avail of a loan under the prevailing Pag-IBIG end-user housing loan guidelines.

5.2.2 All prospective member-buyers must have committed to buy a property in the housing project. The number of prospective member-buyers must be 15% more than the number of units.

6. Loan Releases

Loan releases to project proponents shall be based on project need and submission of the documentary requirements necessary for loan release per type of project proponent. The amount to be released shall be subject further to the following conditions:

6.1 Loan shall be released in tranches based on construction schedule. The initial loan release shall be based on the cash flow projection of the project proponent, not to exceed 50% of the approved loan amount, as provided in item E Section 2 hereof.

6.2 Succeeding loan releases shall be made only after at least ninety percent (90%) of the previous release has been infused in the housing project as assessed in its latest appraisal.

6.3 The outstanding obligation at any given time shall not exceed a maximum of seventy percent (70%) of the collateral value (land and improvements).

7. Loan Payment

7.1 Payments shall be applied in accordance with the following order of priorities:

a. Penalty CTIDcA

b. Interest

c. Principal

7.2 Interest — the first interest payment on the loan shall be due at the end of the 13th month from initial loan release and shall be paid monthly thereafter.

7.3 Principal — The principal payment on the loan shall be paid not later than the end of the 18th month from initial loan release and shall be paid monthly thereafter.

7.4 If there are sales or Pag-IBIG housing loans generated from the project at any time after the initial release, part of the takeout proceeds shall be assigned to the Fund based on the project proponent's cash flow projection in payment of the loan obligation for the period. Application of the takeout proceeds to the loan obligation shall be in accordance with the above order of priorities.

 The assignment of sales proceeds, however, does not relinquish the project proponent's obligation to collect the proceeds from buyers and to remit the same to HDMF.

8. Collateral

8.1 The Pag-IBIG Group Housing Loan shall be secured by first real estate mortgage on the real estate property subject of the loan. It must be covered by a Transfer Certificate of Title (TCT) issued by the Register of Deeds, free from all liens and encumbrances; and must be registered in the name of the project proponent.

8.2 Additional Collateral

8.2.1 In case the value of the on-site collateral is insufficient, the Pag-IBIG Group Housing Loan may be secured by additional or substitute collateral acceptable to the Fund, the value of which must be in accordance with the loan-to-collateral ratio provided for in Item E Section 6.3 hereof. This may come in the form of undeveloped, partially developed or developed residential lands, either, adjacent or contiguous to the project site or located in other area. The loan-to-value ratio of the additional collateral shall be limited to 50% of the appraised value. TcHDIA

8.2.2 Assignment of Rental Payments from Commercial Concessions.

 The LGU shall assign twenty percent (20%) of the rental payments from its commercial concessions, such as stalls in the public market and/or passenger terminals.

8.3 HDMF shall allow partial releases of collateral provided that the Loan to Collateral Value on the real estate property after the release of collateral shall not exceed percent (70%).

9. Warranties 

The project proponent shall provide the following warranties:

9.1 Documentation — The project proponent warrants that all documents submitted to HDMF relative to the program, are valid, binding and enforceable in all other respects that they purport to be;

9.2 Title/Ownership of Property — The project proponent warrants that he is the lawful owner of the property. Likewise, the project proponent warrants that the property is free from all liens, encumbrances and adverse claims, that the title/ownership papers have no vitiating defects, which could have been found or discovered with the exercise of proper diligence and technical skills;

9.3 Project Development — The project proponent warrants that the project shall be developed and completed in accordance with the developmental plans approved by the government agencies and other regulatory bodies concerned;

9.4 House Construction — The project proponent warrants that the residential units have been constructed in accordance with the plans and specifications approved by the concerned regulatory agencies, as well as with the local ordinances, and that there are no hidden defects whatsoever in the construction of the said units; DcITaC

9.5 Misrepresentation — The project proponent warrants that any of its employees or agent allowed to transact or do business in its behalf, has not committed any act of misrepresentation;

9.6 Compliance with Laws, Rules and Regulations — The project proponent warrants that all pertinent laws, rules and regulations have been complied with;

9.7 Delivery of Accounts and Occupancy of Units — Accounts delivered by the project proponent to HDMF shall be free from lien and encumbrances. The project proponent shall turn over the properties to the beneficiaries upon release of the takeout proceeds, and the beneficiaries can occupy these properties immediately.

F. Other Provisions

1. Project Appraisal

 HDMF shall conduct the appraisal on the property subject of land development and house construction.

2. Project Timetable

 The construction of the project must commence within six (6) months from the receipt of the Notice of Approval (NOA) and, within a period of twelve months from initial loan release, must have units ready for occupancy. Moreover, the project must be fully completed within a maximum period of three (3) years.

3. Monitoring

 The housing project shall be subject to routine financial and technical monitoring throughout the period of the Pag-IBIG Group Housing Loan.

 The project proponent may employ a third party project manager as deemed necessary by the Fund. DTEIaC

4. Loan Processing Fee

 A loan processing fee equivalent to P100 per unit to be generated for the housing project or P10,000, whichever is higher, shall be charged to the project proponent.

5. Penalties

 The project proponent shall be charged with a penalty of 1/20 of 1% of any unpaid amount for each day of delay for failure to pay loan obligations when due.

6. Default

 The project proponent shall be considered in default under the following circumstances:

6.1 Failure to pay three (3) consecutive amortizations and other obligations on the loan.

6.2 Failure to comply within the specified timeframe for land development and house construction.

6.3 Failure to comply with any of the terms and conditions of the loan.

7. Effects of default

 Upon occurrence of default, such default shall have the following effects, alternate, concurrent and cumulative with each other, which the Fund may exercise singly or collectively:

7.1 Declare the outstanding obligation, together with accrued interest, penalties, fees and other obligations immediately due and demandable:

7.1.1 Subject to penalty equivalent to one-twentieth of one percent (1/20 of 1%) for every day of delay; caIDSH

7.1.2 Continue to bear interest at the stipulated rate from the time the unpaid Note/s or other amounts due or other obligations become due and payable.

7.2 Call on the Assignment of Contract Receivables from commercial concessions.

7.3 Foreclose the mortgage securing the loan.

7.4 In case the bid price is not sufficient to cover the outstanding obligation, attorney's fee, foreclosure and other expenses, or in case of partial dacion, file an action for deficiency judgment.

7.5 To apply, at its option, at any time, the borrower's monies, which for any reason and under any contract, are presently or hereafter come into the possession or control of the Fund in full or partial payment of the borrower's obligation in the loan agreement and in the promissory note.

7.6 Enforce any and all rights, actions and remedies provided for under the loan agreement and promissory note evidencing the loan.

7.7 Avail of any other remedies provided for under existing laws, including but not limited to the filing of an action for sum of money or damages against the borrower. As an auxiliary to the civil action for sum of money or damages, the Fund may pray for the provisional remedy of attachment, when the proper statutory grounds for attachment exist.

8. Development Loan for Another Project

 The project proponent may apply for additional development loan, provided at least fifty percent (50%) of the previous loan has already been paid, and project development is completed.

G. Approving Authority EAIcCS

All loan applications shall be subject to the approval of the Senior Management Committee and submitted to the HDMF Board of Trustees for confirmation.

H. Repealing Clause

HDMF Circular Nos. 52 and 254, as well as all memoranda, rules, regulations and other issuances inconsistent herewith are hereby repealed, amended or modified accordingly.

I. Amendments

The Senior Management Committee may amend, modify or revise certain provisions of these guidelines, provided that the amendments, modifications, revisions thereof are in furtherance of the objectives of this program and are consistent with the mandate of HDMF under its charter and existing laws.

J. Effectivity

These guidelines take effect after one month from issuance of these guidelines.

Makati City, August 8, 2011.

 

(SGD.) ATTY. DARLENE MARIE B. BERBERABEChief Executive Officer

ANNEX A

SPECIFIC POLICIES FOR LOCAL GOVERNMENT UNITS

A. Preliminary Requirements for Loan Application

The following documents shall be submitted to the Fund:

1. Letter of Application. ScaATD

2. Resolution of Sangguniang Bayan/Panlungsod/Panlalawigan approving, certifying and ratifying:

a. The project site.

b. Authorizing the Local Chief Executive to secure a Pag-IBIG Group Housing Loan from and enter into a mortgage with HDMF to finance the housing project.

c. Authorizing the Provincial/Municipal/City Treasurer to certify the availability of funds for the housing project upon receipt of the Notice of Approval (NOA) from HDMF.

3. Preliminary development plan, specifications, estimates and house plans indicating the selling price of housing units, lot sizes, floor areas and breakdown of total number of production.

4. Three (3) year audited financial statements certified by the LGU Accountant or by COA.

5. Certification on Debt Service Capacity issued by the Bureau of Local Government Finance.

6. List of elected officials and key officers, and their resumes.

7. List of potential buyers and income profile.

8. Certified True Copy of TCT (Mother Title) free from liens and encumbrances.

B. Requirements for Loan Release

The following documents shall be submitted to the Fund prior to loan release:

1. Approved Subdivision Plan, house plans, specifications, estimates, HLURB permits and LGU Development Permit.

2. Ordinance passed by the Sangguniang Panlalawigan/Panlungsod/Bayan on the following:

a. Inclusion of the housing project in the LGU's approved local development plan; CSTHca

b. Annual budget of the LGU, which shall reflect allocation for debt servicing of the Pag-IBIG Group Housing Loan, for the calendar year following date of initial loan release. This particular ordinance must be submitted to the Fund after it has been enacted by the local Sanggunian.

3. Resolution/s passed by the Sangguniang Panlalawigan/Panlungsod/Bayan approving, confirming and ratifying the following:

a. All the terms and conditions of the loan.

b. The authority for the Local Chief Executive to execute a real estate mortgage and all documents pertaining to the loan.

c. Directive for the LGU's Treasurer and Accountant to enter the loan in the LGU's books.

d. The authority for the Provincial/City/Municipal Treasurer to certify the allocation of budget for debt servicing for the Pag-IBIG Group Housing Loan in the Annual Budget.

e. In case additional or substitute collateral is used to secure the loan, authority for LGU to Mortgage real property other than the one subject of the loan and for the Local Chief Executive to execute the Real Estate Mortgage in favor of HDMF.

4. Execution of Loan and Mortgage Agreement (LMA) between LGU and HDMF and annotation of First Real Estate Mortgage on the title/s of the housing project subject of the loan.

5. Cash flow projection.

6. Authority to Debit from the LGU's regular savings account with its depository bank to settle any unpaid amount in the event of default.

7. If necessary, Deed of Assignment of Rental Payments from Commercial Concessions.

C. Loan Release

The loan proceeds shall be directly released to a special fund, which should be used exclusively for the purpose of the housing project subject of the loan. SaCIDT

D. Local Housing Board

A Local Housing Board/Office or its equivalent will facilitate the implementation of policies, plans and programs of the LGU for all housing related activities.

ANNEX B

SPECIFIC POLICIES FOR EMPLOYERS, COOPERATIVES,

A. Preliminary Requirements for Loan Application

The following documents shall be submitted to the Fund:

1. Letter of Application.

2. Registration with proper agency that would vest the project proponent with legal personality (e.g., Securities and Exchange Commission, Cooperative Development Authority, Housing and Land Use Regulatory Board).  

3. Articles of Incorporation and By-laws.

4. Secretary's Certificate containing the Resolutions passed and approved by the project proponent's Board of Directors/Trustees on the following:

a. Grant of authority to the project proponent to avail of a Pag-IBIG Group Housing Loan from the HDMF and to mortgage the property subject of the loan in favor of HDMF.

b. Designate the project proponent's representatives who are authorized to secure a Pag-IBIG Group Housing Loan and to execute and sign loan documents relative thereto.

c. Designate the project proponent's representatives who are authorized to execute a real estate mortgage.

5. Preliminary development plan, specifications, estimates and house plans indicating the selling price of housing units, lot sizes, floor areas and breakdown of total number of production. STaCcA

6. Three (3) year audited financial statements certified by a Certified Public Accountant.

7. List of key officers, and their resumés.

8. List of potential buyers and income profile.

9. Certified True Copy of TCT (Mother Title) free from liens and encumbrances.

B. Requirements for Loan Release

The following documents shall be submitted to the Fund prior to loan release:

1. Approved Subdivision Plan, house plans, specifications, estimates, HLURB permits and LGU Development Permit.

2. Execution of Loan and Mortgage Agreement (LMA) between the project proponent and HDMF and annotation of First Real Estate Mortgage on the title/s of the housing project subject of the loan.

3. If applicable, presentation of a Joint Venture Agreement/Memorandum of Agreement with a developer/contractor who will undertake the development and completion of the project.

4. Cash flow projection.

ANNEX C

FINANCIAL RATIOS TO MEASURE FINANCIAL CAPABILITY

1. Liquidity Ratios

a.  Current Ratio of 1.20:1

e. Acid Test Ratio of 0.50:1

2. Solvency Ratios

a. Debt to Equity Ratio of 2.50:1

b. Debt to Equity Ratio (including loan amount applied for) of 4:1

3. Profitability Ratios

a. Net Profit Margin of at least 5%

b. Return on Owner's Equity of at least 10%

c. Gross Profit Margin of at least 20%