HGC Implementing Rules and Regulation of R.A. 9507

March 27, 2009

HOME GUARANTY CORPORATION MEMORANDUM

 

Attached is HGC's Implementing Rules and Regulations of R.A. 9507, otherwise known as the "SOCIALIZED AND LOW COST HOUSING AND CONDONATION PROGRAM" for the Boards information and reference.

(SGD.) GONZALO BENJAMIN A. BONGOLAN

HOME GUARANTY CORPORATION

IMPLEMENTING RULES AND REGULATIONS FOR THE HOUSING LOAN RESTRUCTURING AND CONDONATION OF PENALTIES UNDER R.A. 9507, OTHERWISE KNOWN AS THE "SOCIALIZED AND LOW COST HOUSING LOAN RESTRUCTURING AND CONDONATION PROGRAM", PROVIDING THE MECHANISM THEREFOR, AND FOR OTHER PURPOSES

SECTION 1. Definition of Terms. —

As used in this "IRR for the Housing Loan Restructuring and Condonation Program under R.A. 9507", the following terms shall be defined as follows:

a) "Abandoned Unit" refers to a housing structure that has not been occupied by the borrower-owner for more than one (1) year from the date of delinquency.

b) "Condonation" means the relief given by law in the payment of penalties, surcharges and a portion of accrued interest, as approved by the HGC Board of Directors.

c) "Contract-to-Sell" pertains to a bilateral contract whereby HGC as seller expressly reserve the ownership of the subject property despite delivery thereof to the buyers and binds itself to deliver the title of the said property to the buyers upon full payment of the purchase price.

d) "Dacion en pago" refers to the mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor property for the satisfaction of monetary debt.

e) "Delinquent Accounts/Borrowers" refer to accounts/borrowers with accumulated arrearages equivalent to at least three (3) months of unpaid monthly amortizations/payments as of March 16, 2009.

f) "Fire and Allied Perils Insurance" refers to a yearly renewable term insurance on the housing structure subject of a loan/sale against fire, lightning, earthquake shocks, typhoons and floods.

g) "Force Majeure" refers to those events which cannot be foreseen or, if foreseeable, cannot be prevented or avoided by the exercise of due diligence such as strikes or other labor difficulties, rebellion or insurrection, acts of war, riots or civil commotions, acts of public enemies, national emergencies, fire, flood, earthquake or other catastrophes or acts of God. AIECSD

h) "Foreclosed Accounts" refer to accounts that have been issued Certificate of Sale (COS) by virtue of auction sale conducted by the court, sheriff or notary public and with expired redemption period.

i) "Foreclosure" refers to the legal procedure either judicially or extra-judicially, as long as due process is observed, for enforcing claims against a mortgagor in default of payment of its obligation.

j) "Guaranteed Accounts" means accounts assigned or conveyed to HGC pursuant to its guaranty business.

k) "IRET" means Interest Repricing and Extension of Repayment Term pursuant to HGC Board Resolution No. 36-2005 dated September 20, 2005, wherein the original interest rate of qualified delinquent accounts are repriced to 6% to 12% depending on the original loan value and the repayment term is extended to a maximum of twenty (20) years.

l) "Legal Heirs" pertain to persons who are called to succeed to the rights and interests of a deceased person either by provision of a will or by operation of law.

m) "Loan Restructuring" refers to a process where the principal terms and conditions of the original loan are modified in accordance with an agreement setting forth a new plan of payment or a schedule of payment on a periodic basis.

n) "Mortgage Redemption Insurance" refers to a yearly renewable term insurance where the borrower is covered for an amount equal to the restructured obligation. This also refers to Loan/Sales/Housing Redemption Insurance.

o) "Outstanding Obligation" refers to the sum of the outstanding loan principal, unpaid principal, accrued interests and penalties, insurance premiums, taxes, foreclosure and other incidental expenses, if any.

p) "Program" refers to the Socialized and Low Cost Housing Loan Restructuring and Condonation Program established under R.A. No. 9507.

q) "Redemption" means regaining possession of a mortgaged property by paying the debt or fulfilling other obligations.

r) "Restructured Obligation" refers to the sum of the interest bearing and non-interest bearing obligation.

 The interest-bearing portion refers to the total outstanding loan principal, unpaid principal, unpaid insurance premiums, taxes, foreclosure and other incidental expenses, if any.

 The non-interest bearing portion refers to the remaining accrued interest due net of condoned portion, if any, to be paid in equal monthly amortization within the term of the restructured obligation. TIHCcA

s) "Socialized and Low-Cost Housing Loans/Obligations" refer to housing loans/obligations the original amounts of which are within the housing loan ceilings as determined by the HUDCC and the original principal obligations of which do not exceed P2.5 million. These also refer to the obligations of community/group/homeowners' associations (HOA) provided the principal amount of the individual member's loan does not exceed P2.5 million. These further refer to installment receivables covering the sale of housing units/lots on installment basis, the selling price of which does not exceed P2.5 million.

t) "SRP" means Special Repayment Program pursuant to HGC Board Resolution No. 03-2006 dated May 8, 2006, wherein qualified delinquent borrowers can amortize their obligations categorized as the interest bearing portion and the non-interest bearing portion for a maximum period of twenty (20) years.

u) "Successors-in-interest" refer to the assignees, transferees and buyers of rights who have assumed the original loan as supported by legal documents, including Special Power of Attorney (SPA), duly approved by HGC.

SECTION 2. Coverage. —

a) This program covers all outstanding housing loans granted, acquired and being serviced by the Home Guaranty Corporation (HGC) as follows:

1. Guaranteed accounts assigned/conveyed to HGC by virtue of call payments;

2. BDC (Bliss) Accounts (exclusive of short term and renewable Contracts of Lease);

3. Abot-Kaya Pabahay Fund accounts;

4. Folio I (Retail-NHMFC Assigned Accounts);

5. Community Mortgage Program and Cooperative Housing Program accounts;

6. HGC in-house retail accounts; and

7. Trust Accounts (subject to approval of trustor).

b) The borrowers on record, including successors-in-interest/legal heirs, as of March 16, 2009 shall benefit from this program.

c) The program shall be implemented for a period of eighteen (18) months from March 16, 2009. HDAaIc

SECTION 3. Conditions. —

a) The housing loan must have accumulated arrearages equivalent to at least three (3) monthly amortizations/payments as of March 16, 2009.

b) The original principal amount of the housing loan does not exceed

Two Million Five Hundred Thousand Pesos (P2,500,000.00).

c) The member-borrower may apply only once for the restructuring and condonation of penalties on the entire loan amount, except in case of force majeure affecting the ability of the borrower to fulfill his/her financial obligations under the contract.

d) Borrowers who have availed themselves of any previous condonation program of HGC or any government financial institution or housing agency may still avail themselves of the benefits of this new condonation and loan restructuring program.

e) The program provided for under R.A. 9507 shall be construed as a separate and distinct program from the ones being implemented by HGC.

f) Qualified borrowers shall be notified through letter, publication or posting at his/her last known address, or at the unit subject of the loan on how they can avail themselves of this program.

SECTION 4. Exclusion from Coverage. —

The following housing loan accounts shall not be covered by this Act:

a) Any account without a single payment since take-out/effectivity of Contract to Sell;

b) An account which housing unit has been abandoned by the borrower-owner for more than one (1) year from the date of delinquency;

c) An account which housing unit is assigned/transferred or occupied by a third party other than the original registered beneficiary or his/her legal heirs/successor-in-interest;

d) An account that has been foreclosed and the redemption period has already lapsed;

e) An account covered by a Contract to Sell that has expired or been cancelled; and

f) An account whose underlying asset has been surrendered to HGC through a dacion en pago, the title of which has already been consolidated/transferred in the name of HGC.

SECTION 5. Scope and Manner of Condonation. —

5.1 General Guidelines

a) The delinquent borrower/installment buyer, legal heir or successor-in-interest applying for condonation and loan restructuring shall not be charged a processing fee and no downpayment shall be required.

b) All accumulated unpaid penalties and surcharges on due and demandable arrearages shall be condoned upon approval of the restructuring application.

c) All due and demandable arrearages in interest, net of condoned amount, shall be treated as non-interest bearing principal to be paid in equal monthly amortizations during the term of the restructured loan.

d) The outstanding principal balance of the housing loan shall be restructured over the remaining term of the original loan or thirty (30) years, whichever is longer, provided that the extension of the restructured loan shall not exceed the difference between the borrower's age at the time of the application and age seventy (70) at an interest rate of not more than the interest of the original loan or twelve percent (12%), whichever is lower.

e) Penalties that have been fully paid when a borrower/beneficiary updated his/her account and/or availed himself/herself of this restructuring and condonation program are not within this scope.

5.2 Specific Guidelines

a) Borrower who has availed himself/herself of the existing restructuring programs of HGC shall be entitled to the following:

1) Special Repayment Program (SRP): ESacHC

1.1) All accumulated unpaid penalties and surcharges on due and demandable arrearages of the non-interest bearing portion of the loan and all accumulated unpaid penalties and surcharges on due and demandable arrearages of the interest bearing portion of the loan after availing himself/herself of SRP shall be condoned upon approval of the restructuring application.

1.2) All accrued interest of the non-interest bearing portion of the loan and the due and demandable arrearages in interest on the interest bearing portion of the loan after availing himself/herself of SRP, net of the total condoned amount, shall be treated as non-interest bearing principal payable over the restructured term of the loan.

1.3) The balance of the interest bearing portion may be payable over the remaining term of the loan or may be extended to thirty (30) years whichever is longer, provided that the extension of the restructured loan shall not exceed the difference between the borrower's age at the time of the application and age seventy (70) at an interest rate of not more than the interest of the restructured loan or twelve percent (12%), whichever is lower.

2) Interest Repricing and Extension of Repayment Term (IRET)

2.1) All capitalized penalties and surcharges and due and demandable penalties and surcharges shall be condoned upon approval of the restructuring application.

2.2) All capitalized interest before and due and demandable interest, net of the condoned amount, shall be treated as non-interest bearing principal payable over the restructured term of the loan.

2.3) The outstanding restructured principal balance may be payable over the remaining term of the loan or may be extended to thirty (30) years whichever is longer, provided that the extension of the restructured loan shall not exceed the difference between the borrower's age at the time of the application and age seventy (70) at an interest rate of not more than the interest of the restructured loan or twelve percent (12%), whichever is lower.

b) Borrower whose account has been foreclosed but the redemption period has not yet expired shall be entitled to the following:

1) All accumulated unpaid penalties and surcharges on total outstanding obligation shall be condoned upon approval of the restructuring application.

2) The remaining balance of the redemption value inclusive of HGC advances and foreclosure expenses, such as insurances, filing, publication, posting, out of pocket, attorney's fees and other incidental expenses, net of the condoned amount on interest, shall be payable upon approval of the application and before the expiration of the redemption period.

c) A borrower who is a prompt payor may apply for restructuring of the outstanding principal balance payable over the remaining term of the loan or may be extended to thirty (30) years whichever is longer, provided that the extension of the restructured loan shall not exceed the difference between the borrower's age at the time of the application and age seventy (70) at an interest rate of not more than the interest of the original loan or twelve percent (12%), whichever is lower.

SECTION 6. Availment Procedures. —

Applicants for the program shall follow the following procedures:

a) The borrower, his/her legal heir or successor-in-interest shall file the application for the Program with HGC.

 A SPA shall be accepted only in cases when the party is working overseas and the SPA presented has been executed and duly notarized prior to his/her departure from the country or duly authenticated by the Philippine Consul in the foreign country, or when the applicant is physically incapacitated as evidenced by a Medical Certificate.

b) HGC shall evaluate the application of the borrower/legal heir/successor-in-interest and if found qualified, require the latter to accomplish the Financial Restructuring Agreement and Promissory Note and affix his/her signature on the Restructured Financial Package.

SECTION 7. Accounts of Borrowers who Become Permanently Physically Incapacitated. —

In case of permanent physical incapacity of a borrower, his/her legal heirs and successor-in-interest may assume payment of his/her outstanding housing loan. Such legal heirs and successors-in-interest must pass the HGC's eligibility requirement before they are allowed to assume payment of the borrower's loan obligation. In case of death of the borrower, the proceeds of the Mortgage Redemption Insurance (MRI) shall be fully applied. Any remaining balance shall be amortized by the legal heirs or successor-in-interest.

SECTION 8. Incentive for Prompt Payment of Monthly Amortization. —

All accounts, the monthly amortizations of which are paid on time at all times, shall be entitled to incentives in the form of a one percent (1%) reduction on the interest. AECDHS

SECTION 9. Remedies Against Delinquent Accounts. —

9.1 The HGC shall continue to exercise its right to foreclose the mortgage, cancel Contracts to Sell or other remedies involving properties covered by the following:

a) Accounts excluded from the coverage of this program as listed in Section 3;

b) Delinquent accounts of borrowers who fail to avail themselves of the benefits under this condonation and loan restructuring program; and

c) Accounts of borrowers who avail themselves of the benefits of this program but subsequently defaults in the payment of three (3) consecutive monthly amortizations of the restructured loan.

9.2 The foreclosure proceedings shall be exempt from publication in newspapers of general circulation. In lieu thereof, the following shall be undertaken:

a) Posting of the date and place of auction shall be made for not less than twenty (20) days in at least three (3) conspicuous public places in the city or municipality where the property is situated;

b) A written notice of foreclosure shall be sent to the borrower at his/her last known address.

9.3 The Contracts to Sell shall be considered cancelled after thirty (30) days from receipt by the buyer of the notice of cancellation or demand for rescission of contract/deed by notarial act sent to his/her last known address or to the address of the subject property.

SECTION 10. Reporting. —

HGC shall submit, through the HUDCC, to the Committee on Urban Planning, Housing and Resettlement of the Senate and the Committee on Housing and Urban Development of the House of Representatives an annual report on the implementation of the condonation and loan restructuring program.

(SGD.) GONZALO BENJAMIN A. BONGOLANPresident

ATTACHMENT

FINANCIAL RESTRUCTURING AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Financial Restructuring Agreement, made and entered into in Makati City, Philippines, this ____ day of _____________, 2009, by and between:

HOME GUARANTY CORPORATION, a government owned and controlled corporation created under the provisions of Republic Act No. 8763, as amended, with principal office at Jade Building, 335 Sen. Gil J. Puyat Avenue, Makati City, herein represented by its Manager/s, ____________, hereinafter referred to as the "HGC";

-and-

____________, of legal age, Filipino, married to ________________, and with residence and postal address at ________________, hereinafter referred to as the "BUYER/BORROWER".

WITNESSETH THAT —

WHEREAS, the HGC and the BUYER/BORROWER entered into a __________________, dated _______________ and executed on ___________________ (Annex A) covering the property owned by the HGC situated at _________________, with an area of ________ square meters, more or less, as evidenced by TCT No. ___________ of the Office of the Register of Deeds _____________ (Annex B).

WHEREAS, the BUYER/BORROWER defaulted in his/her payment obligations under the aforesaid ________________.

WHEREAS, pursuant to Republic Act No. 9507 otherwise known as the "The Socialized and Low Cost Housing Loan Restructuring and Condonation Program" and HGC's Implementing Rules and Regulations ("IRR"), the BUYER/BORROWER intends to avail of the benefits arising therefrom.

NOW, THEREFORE, for and in consideration of the foregoing premises, and the terms and conditions set forth hereunder:

1. As of _________________, the BUYER/BORROWER has an outstanding obligation to the HGC in the total amount of _____________, broken down as follows: IaHSCc

Arrearages
	Principal
	Interest
	Penalties
Total
Add:	HGC Advances
	Outstanding Loan Balance
Less:	Condoned per RA 9507
	Penalties
	Interest (20%)
Net Obligation Due

2. Pursuant to Republic Act No. 9507 and the IRR, the BUYER/BORROWER'S outstanding obligation in the amount of _____________ has been restructured in the following manner:

		Interest Bearing	Non-interest	Total
			Bearing
Arrearages
	Principal	____________	____________	_________
	Interest	____________	____________	_________
Outstanding Loan Balance	____________	____________	_________
Total	____________	____________	_________

3. The BUYER/BORROWER shall pay the restructured obligation in the following manner:

(INSERT CHOSEN MANNER OF PAYMENT)

4. The restructured obligation shall be paid at the principal office of the HGC or at such other place as the HGC shall designate in writing and without need of demand or the services of a collector.

5. A monthly amortization paid on or before the due date shall be entitled to a prompt payment discount of one percent (1%) on the interest rate.

6. All payments made under the Financial Restructuring Agreement shall be applied in the following order of priority: HGC advances (i.e., Real Property Tax and Insurance); penalty, if there is any; interest; and principal.

7. Notice/s and other communications arising under this Agreement and the attached Promissory Note shall be sent by the HGC to _____________ at the following address: ______________________. In case of non-receipt by the BUYER/BORROWER of the said notice/s and other communications in the said address, notice to the BUYER/BORROWER shall be considered sufficiently served for purposes of enforcing this Agreement if the same has been sent to the homeowners' association and barangay and posted in the vicinity where the above-described property is located, in that particular order.

 

8. This Agreement has been explained to the BUYER/BORROWER in the language that he/she understands and that this Agreement has been understood by him/her.

9. All the terms and conditions of the _________________ dated ________________ and executed on ________________________ and the attached Promissory Note not inconsistent herewith are deemed incorporated herein.

IN WITNESS WHEREOF, the parties have hereunto set their hands this ___th day of ________________, 2009 at Makati City.

HOME GUARANTY CORPORATION ___________________________ Buyer/Borrower

By: ___________________________ Co-borrower

Signed in the presence of:

 _______________________ _______________________

ACKNOWLEDGMENT

BEFORE ME, this ___ day of __________, 20 __, in __________, Philippines, personally appeared with __________, issued at ____________, on ____________, known to me to be the same person who executed the foregoing instrument, and acknowledged to me that the same is his/her/their voluntary act and deed. DHEACI

In witness whereof, I/we have hereunto set my hand and affixed my notarial seal, the day, year, and place above-written.

NOTARY PUBLIC

Doc. No. ____;

PROMISSORY NOTE

PROJECT: ______________________ DATE: _______________________ ______________________

Pursuant to the Financial Restructuring Agreement, for value received, I/We ____________________, married to ___________________________; __________________________________________, married to __________________________, jointly and severally, without need of demand, promise to pay HOME GUARANTY CORPORATION ("HGC") or order, or its assignee/transferee of this Note, at its principal office at Ground Floor Jade Bldg., No. 335 Sen. Gil J. Puyat Ave., Makati City, the following amounts:

OBLIGATION	OUTSTANDING	INTEREST	TERM	MONTHLY
CLASSIFICATION	OBLIGATION	RATE		AMORTIZATION
	Interest Bearing	___________	_____________	___________	____________
	Non-interest Bearing	___________	_____________	___________	____________
TOTAL	___________	_____________	___________	____________

The payment of the aforementioned amounts shall commence on _____________ and every ___ day of each succeeding months until the entire obligation is fully paid.

I/We hereby agree that in case of default in the payment of any installment/s or late payment charges thereon when the same becomes due and payable as specified in this Note, the entire amount outstanding on the Note and the accrued interest, penalties including charges, fees and other obligations provided herein and in the Restructured Financial Agreement and Contract shall become immediately due and demandable. In addition, a penalty of __________________ of the total amount due shall be paid per ___________ of delay until full payment thereof.

I/We also promise to pay insurance premiums for Yearly Renewable Term Insurance/Mortgage Redemption Insurance, Fire insurance, Insurance against loss, and other insurable risk at my expense and assign relevant insurance policy to the HGC. Failure on my part to insure the said risk/s shall be a ground for default subject to the provisions of the above paragraph.

It is further agreed that in case of litigation arising from this Promissory Note and attorney's services are availed of, an additional sum of twenty five percent (25%) of the sum due thereon, which shall not be less than Five Hundred Pesos (P500.00), shall be paid to the holder hereof for attorney's fees, plus additional sum equivalent to twenty five percent (25%) of the total sum due which likewise shall not be less than Five Hundred Pesos (P500.00) for liquidated damages, aside from expenses of collection and the legal cost provided for in the Rules of Court. CacISA

It is expressly agreed that all legal actions arising out if this note or in connection with the Restructured Financial Agreement, the Amended Contract to Sell, and the Contract to Sell/Deed of Sale with Mortgage/Real Estate Mortgage shall only be brought in or submitted to the jurisdiction of the proper court of the City of Makati or in the province, municipality where the office of HGC assignee/transferee is located.

Acceptance by the holder hereof of payment of any installment or any part hereof after due date shall not be considered as extending the time for the payment of any installments or as a modification of any conditions hereof.

All the terms and conditions of the original Contract to Sell/Deed of Sale with Mortgage/Real Estate Mortgage and all other contracts entered into prior to the execution of the present Promissory Note not inconsistent herewith are deemed incorporated herein.

________________________	________________________
Borrower	Co-Borrower

With my marital consent:

________________________	________________________
________________________	________________________
Witness	Witness

 

ACKNOWLEDGMENT

BEFORE ME, this ___ day of _________, 20___, in ___________, Philippines, personally appeared with ____________, issued at _____________, on ___________, known to me to be the same person who executed the foregoing instrument, and acknowledged to me that the same is his/her/their voluntary act and deed.

In witness whereof, I/we have hereunto set my hand and affixed my notarial seal, the day, year, and place above-written.

NOTARY PUBLIC

Doc. No. ____;