Revised Implementing Guidelines for Housing Loan Receivables Purchase Program

September 17, 2013

NHMFC CORPORATE CIRCULAR NO. HLRPP-005-13

 

In order for NHMFC to be relevant in the housing finance industry, significant provisions on the guidelines under the Housing Loan Receivables Purchase Program have to be amended. The attached Revised Implementing Guidelines for Housing Loan Receivables Purchase Program, hereinafter referred to as RIG-HLRPP is hereby issued pursuant to the authority granted by the NHMFC Board of Directors under Resolution No. 3787 dated 03 September 2013.

These Revised Implementing Guidelines shall take effect immediately and shall remain effective unless otherwise repealed, revised, modified, and/or supplemented, with proper notice to all concerned and subject to clarificatory and/or equitable application by the NHMFC.

(SGD.) FELIXBERTO U. BUSTOS, JR.President, NHMFC

NHMFC Revised Guidelines on the Housing Loan Receivables Purchase Program (HLRPP 005)

I. Scope and Coverage

These revised guidelines shall apply to the purchase of quality residential loans/mortgages/receivables originated by public/private financial institutions, and housing developers, in accordance with the terms, conditions and standards of NHMFC. IaEHSD

II. General Provisions

A. Purpose

NHMFC shall purchase existing residential loans from qualified housing loan originator/s to serve as the underlying collaterals that are eligible for securitization.

B. Type of Loans

NHMFC shall purchase Seasoned Residential Loans (SRL) and/or Newly Seasoned Residential Loans (NSRL).

The residential loans shall have the following equity, OPB-to-Collateral Ratio, insurances and warranties with the corresponding seasoning period:

		Equity	Seasoning	Warranty	OPB-to-
		Period		Collateral
				Ratio
HOUSE	a.	Fully paid of	Six (6)	-	w/ warranty	Not over 80% for
AND LOT *		not less than	consecutive		for CTS	REM and CTS
		20% of the total	monthly
		contract price	amortization	-	w/out
					warranty for
					REM
	b.	Fully paid of	Twelve (12)	-	w/ warranty	Not over 90% for
		not less than	consecutive		for CTS	REM and CTS
		10% of the total	monthly
		contract price	amortization	-	w/out
					warranty for
					REM

 

Enrolment or renewal of MRI/SRI and Fire Insurance shall be done by NHMFC through its Insurance Division to ensure that the account is fully covered. Originators shall inform the borrower that the insurance premium payments shall be included in the monthly amortization.

C. Purchase Price of the Loan Receivables

NHMFC shall pay the amount equivalent to the PURCHASE PRICE of the residential portfolio upon assignment of the corresponding loan receivables and compliance with the NHMFC housing loan guidelines and requirements.

D. Interest Rate

For CTS and REM

With interest bracket:

1.0 M and below	—	8% (fixed)
Over 1.0 M	—	10% (fixed)

Rate reduction may be allowed provided that the NHMFC rate is not less than the prevailing market rate as determined by the Executive Committee and confirmed by the Risk Management Committee of the NHMFC Board.

E. Loan Term

The loan period shall not be more than 25 years but in no case exceed the difference between the present age and 70th year of the principal borrower.

F. Borrower Credit Worthiness

NHMFC shall conduct due diligence on both the originating institution, to assess the originator's credit processes and risk management policies, and the borrower. It shall likewise conduct analysis on the profile of the loan portfolio and the underlying asset to determine the credit risk associated in the purchase. The portfolio's performance, more particularly, the four (4) C's of Credit shall form part of the assessment, as follows:

Capacity — The borrower must have the capacity to meet the monthly loan obligation. Sources of income shall be submitted for evaluation, including family member/s still living with the borrower. The portfolio's profile must contain any of the following documents: DaESIC

1. Latest Income Tax Returns;

2. Certificate of Employment;

3. Employment Contract duly certified by the Embassy (for OFW);

4. Other documents showing other income.

The borrower's repayment capacity shall be based on the front end ratio of not more than 33%. Front-end Ratio shall mean the portion of the borrower's income used to make mortgage payments. The ratio is computed as follows:

Front-end Ratio	=	Monthly Mortgage Payments
		––––––––––––––––––––––––
		Monthly Gross Income

Housing expenses or Monthly Mortgage Payments include Principal, Interest, Real Estate Taxes and Insurances, while Monthly Gross Income shall be determined by the submitted ITR and/or Certificate of Employment and Compensation and other acceptable documents.

Character or Credit History — The character or credit history shall form part of the evaluation process to determine payment patterns and history of borrower in meeting his obligation. The following documents shall be used to evaluate the borrower's credit history:

1. Borrower's Ledger; and

2. Originator's copy of Receipts showing amortization payments.

Capital — The borrower has provided adequate capital or equity for the underlying asset. The Originator must provide copies of the receipts representing payment/s of Equity.

Collateral — The property is existing and construction is complete; that it is free from any liens and encumbrances. Site inspection shall be conducted by the Collateral Valuation and Appraisal Division to confirm existence and completion of the unit.

G. Appraisal of Collateral

The NHMFC or its accredited External Appraisers shall conduct appraisal to determine the value of the housing loan receivable/housing portfolio for purchase using standard procedures for appraisal.

The collateral appraisal shall be conducted in accordance with the following general methods:

1. Lot Appraisal — Market Data Approach shall be used wherein the market value estimate is based on prices paid in actual market transactions and/or current listings. At least three (3) reliable market data preferably made within one (1) year from date of sale of the property and close to the date of appraisal shall be given more consideration.

2. House/Building Appraisal — Cost or Engineering Approach shall be used in which the value of the building is derived by estimating the cost of the unit as if it were to be reproduced or replaced in new condition. The estimated depreciation caused by physical deterioration, functional or economic obsolescence is deducted from the Reproduction or Replacement Cost New (RCN).

H. Insurances

The portfolio shall be compulsorily covered with Mortgage or Sales Redemption Insurance (MRI/SRI) and Fire Insurance. The premiums for such insurance shall have been paid at the time of purchase.

1. Mortgage or Sales Redemption Insurance (MRI/SRI)

The borrower shall be covered by Mortgage or Sales Redemption Insurance (MRI/SRI) under the automatic coverage system of an insurance pool or an acceptable insurance entity as evidenced by the original loan documents of the borrower. The insurance amount or premium shall be in accordance with the schedule in the Master Policy.

2. Fire Insurance

The borrower shall include the property insurance or obtain from the NHMFC accredited insurance pool, Fire insurance on the property mortgaged for an amount equivalent to at least NHMFC's purchase price of the dwelling unit and/or its improvements.

3. Premium Payments

The premium on the aforesaid coverage shall be prepaid annually by the borrower. MRI/SRI and Fire Insurance premium payments shall be included in the monthly housing loan amortization of the borrower. EDHTAI

I. Default and Penalties

A. Contract-to-Sell (CTS)

1. The developer shall be considered in default, among other instances as stipulated in the Deed of Assignment of Receivables with Recourse (DARR), where the check issued was Drawn Against Insufficient Funds (DAIF) or any other similar instances where NHMFC cannot collect from the issued check. In the event of default, the outstanding loan balance, all accrued interests, fees, charges and penalties shall become due and demandable from the developer. The developer will automatically be blacklisted in NHMFCs roster of originators.

2. The developer/originator who failed to pay the full monthly amortization and/or other loan obligations when due shall pay a penalty of one-fifteenth of one percent (1/15 of 1%) of any unpaid amounts for each day of delay.

3. Failure of the developer to pay his/her loan obligations results to an automatic increase of interest rate (2%). Once updated the interest rate reverts back to the original rate.

B. Real Estate Mortgage (REM)

1. The borrower shall be considered in default, among other instances as stipulated in the Loan Agreement, where there is failure to pay any three (3) consecutive monthly instalments and/or other loan obligations as stated therein. In the event of default, the outstanding loan balance, all accrued interests, fees, and charges shall become due and demandable.

2. Failure of the borrower to pay his/her loan obligations results to an automatic permanent increase of interest rate by two percent (2%).

J. Collection Agreement

The originator shall have its existing collecting banks/agents to collect the amortization payments of its borrowers/buyers on instalment provided that the same shall be remitted directly to NHMFC or to its accredited collecting banks/agents.

K. Fees and Charges

For the origination of housing loan receivables, the originating institution shall pay the following fees: aCcSDT

1) Processing Fee = Php2,000.00 per account (to be deducted from the take-out proceeds);

2) Preliminary Appraisal Fee = Php3,000.00 per project (to be paid up-front); and

3) Final Appraisal Fee = Php1,000.00 per account (to be paid up-front).

All incidental expenses including air fare/transportation and hotel accommodation related to site inspection, borrower interview, and other related due diligence activities shall be borne by the originator.

No amount or portion of all the fees collected shall be charged or passed to the borrower(s) nor shall the borrower be required to advance the same.

L. Terms and Conditions for Purchase

The purchase of the housing loan receivables shall be governed by the terms and conditions herein stated:

1. Representations and Warranties of the Originating Institution

With respect to the housing loan receivables purchased by NHMFC, whether the said receivable arose from a CTS or REM, the originating institution shall be required to warrant against the following:

a. Non-Performing Loans (only for CTS accounts) — The originator shall warrant that the borrower has the capacity to pay his/her monthly amortizations as they fall due. In this regard, the originator is deemed to be the agent of the borrower (for CTS accounts), whereby the originator shall undertake to collect from the borrower all the monthly amortizations due and to remit the same to the NHMFC.

 In the event, however, that the borrower incurs default in his/her obligation during the term of the loan, the originator shall buy back the non-performing loan/s or defaulting loans. Default shall mean failure of the borrower to pay when due any three (3) consecutive monthly instalments as stipulated in the CTS, which is inclusive of the two (2) months grace period provided for in Section 4 of Republic Act No. 6552. SICDAa

 In the alternative and subject to the approval of the NHMFC, the originator may substitute the non-performing loan/s with an equally qualified loan receivable.

b. Defective Title or Collateral — The originator shall warrant that the title of the property covering the CTS/REM is free from all liens and encumbrances. The originator shall certify that it has the technical know-how and had exercised proper diligence in the verification of the title/ownership of the mortgage(s)/buyer over the property and that the title/documents of ownership contained no vitiating defects, which could have been found or discovered with the exercise of proper diligence and technical skill.

c. Validity of Contract to Sell — The originator shall warrant that the contract to sell has complied with all the requirements of a valid CTS.

d. Hidden Faults or Defects of the Land — The originator shall warrant that the land where the housing unit is constructed is free from hidden defects. In this case, the originator shall certify that the land is fit for the use it was intended at the time of sale.

e. Structural Defects — The originator shall warrant that the housing unit has no structural defect and that the materials used in the construction of the housing unit have passed the standards set forth by appropriate government agencies.

 In case of a structural defect, or in the event that a case is brought by the borrower against the originator alleging structural defects, the originator shall buy back the loan within thirty (30) days from the date of receipt of NHMFC's notification.

 To ensure the compliance of the originator with its warranties, the originator shall execute an affidavit/certification of warranties.

2. Effect of Breach of Warranties

In case the originating institution breaches any of the warranties stipulated above with respect to any of the loans/receivables purchased, NHMFC shall without prejudice to other legal remedies, have a right of recourse against the originating institution for the outstanding principal balance (OPB) of such loans/receivables, including accrued interests and charges thereon, together with a three percent (3%) surcharge on the aggregate amount due. Failure to pay such amount due within fifteen (15) days from demand shall subject the originating institution to a penalty of one tenth of one percent (1/10 of 1%) thereon per day of delay in addition to the regular interest, penalties and charges on the loan/receivables.

Further, NHMFC shall have the right of recourse against the originating institution in case of breach of any of the warranties stipulated with respect to any of the loans/receivables purchased, or breach of any provision of the Deed of Assignment, or in case of failure to assign a new borrower or failure to buy back the non-performing accounts. In the event the NHMFC exercise its right of recourse, the originating institution shall have the duty to reimburse the NHMFC to the full amount previously released by the NHMFC to the developer/originator plus a penalty of three percent (3%) per month computed on a daily basis for everyday of delay from date of accrual of said right upon demand.

The Developer's/Originating Institution's penalties, surcharges and other liabilities under this provision or the DARR may be taken/deducted from any of its funds/checks which may be in the possession of NHMFC.

3. Post-Dated Checks and Additional Securities/Collateral

A. Contract-to-Sell (CTS)

The originator shall issue twenty-five (25) post-dated checks (PDCs) in favor of NHMFC to cover the monthly amortizations in the Contracts to Sell for the first twenty-four (24) months from take-out date and (in the 25th check) the remaining outstanding balances. The originator shall continue with the same arrangement every two (2) years until the loans are fully paid or the Contracts-to-Sell are converted to Real Estate Mortgage (REM) Contracts. The 25th check may also be held to cover all penalties, surcharges and/or liabilities incurred by the originator. NHMFC may require additional securities/collateral to cover defaults, defects or deficiencies which may arise.

The PDCs herein mentioned shall be issued by the originator after the purchase is approved by the Credit Committee/Board but before the purchase price is released to the originator.

For accounts converted from CTS to REM, the borrower shall issue the PDCs immediately upon conversion.

B. Real Estate Mortgage (REM)

Borrowers, taken out as REM, including those already converted from CTS to REM accounts, shall issue twenty-five (25) Post-Dated Checks (PDCs) in favor of NHMFC. The twenty-four (24) PDCs will cover the monthly amortization payments while the 25th PDC will cover the equivalent of the Outstanding Principal Balance (OPB) as of the 25th month. The 25th check will ensure that the borrower/s will submit the next 24 PDCs (amortization for the 25th to 48th month) plus another check equivalent to the Outstanding Principal Balances as of month 49. The cycle shall be repeated until the loan is fully paid. The excess of the 24 PDCs will be deposited if the borrower fails to submit the next set of 25 PDCs.

For accounts originally taken out as REM, the PDCs herein mentioned shall be issued by the borrower after the purchase is approved by the Credit Committee/Board but before the purchase price is released to the originator. HCEcaT

For accounts converted from CTS to REM, the borrower shall issue the PDCs immediately upon conversion.

4. Liability of the Originating Institution, Engineer, Architect or Contractor

The originating institution, at its own expense, shall commit to answer for any defects on land development and house construction (except that which is caused by wear and tear), to meet the specifications set by the Housing and Land Use Regulatory Board (HLURB). This is without prejudice to the provisions of Article 1723 of the Civil Code of the Philippines, which the originating institution agrees to bind itself with the engineer, architect or contractor (as the case may be).

5. Expenses for Registration of the Deed of Assignment of Receivables with Recourse (DARR)/Loan and Mortgage Agreement (LMA)

The originating institution shall be responsible for the payment of all expenses incidental to the registration of the DARR/LMA, which necessarily includes the payment of all tax obligations that may be imposed as a consequence of the execution of the DARR/LMA.

6. Release of Payment

The proceeds of the purchased loan will be released to the originating institution after NHMFC's receipt of and compliance with all requirements as stipulated under this Revised Guidelines and after passing the underwriting criteria and standards of NHMFC.

In cases where the original Transfer Certificates of Title (TCTs) or Condominium Certificates of Title (CCTs) involved in the purchase are in the possession of a third party/ies, the proceeds of the purchase of receivables may be released, provided that the Developer guarantees the prompt release and delivery of the TCTs/CCTs free from any lien or encumbrance to NHMFC and, 1) submits a Letter of Guaranty (LOG) executed by the third party/ies guaranteeing (upon receipt of payment/ consideration) the immediate release and delivery of the clean original TCTs/CCTs directly to NHMFC, or 2) executes a binding contract/undertaking with the third party/ies and NHMFC in the form and with such terms and conditions as may be acceptable to NHMFC.

7. Notice of Cancellation

In case of default, non-payment and/or violation of any provision in the CTS by the borrower which would give the developer/originator the right to rescind or cancel the CTS, the originating institution shall notify the NHMFC within five (5) days prior to the actual cancellation of the CTS concerned.

Failure to pay three (3) consecutive monthly amortizations shall be a ground for the automatic cancellation of the CTS.

The originating institution shall be wholly responsible for any liability arising from Republic Act No. 6552, otherwise known as the Maceda Law.

In case of rescission or cancellation of the CTS, NHMFC has the option to either require the originating institution to buy-back the loan subject of the cancelled CTS, or require the originating institution to replace the cancelled CTS with an equally qualified loan receivable, at NHMFC's sole option.

8. Conversion of CTS Accounts to REM

For accounts purchased under CTS with remaining term of over five (5) years, the same shall be converted to REM within twenty four (24) months from date of take out. Annotation of the mortgage shall be in favor of NHMFC.

To guarantee that the Originator/Developer will convert the CTS accounts to REM accounts, a 10% hold-out based on the purchase or take-out price shall be deducted from the take-out proceeds. Conversion of the accounts shall be done by NHMFC with the assistance of the Originator. Should there be excess in the hold-out amount after payment of the annotation fees and other charges, NHMFC shall remit the same to the Originator; however, when the excess amount is Php1,000.00 or less, the excess amount shall no longer be remitted and shall be treated as miscellaneous income.

9. Return of Deficient CTS

Within the period of ten (10) working days, unless extended, NHMFC shall return to the originating institution all CTS found deficient. In such cases, the originating institution shall be given thirty (30) working days to redeliver corrected/completed CTS with the required documents.

10. Authority to Approve Deviations

The NHMFC Credit Committee has full authority to approve documentary deviations from these guidelines provided that all the following requirements listed below are satisfied:

1) All provisions relating to the Transfer Certificates of Title (TCTs) or Condominium Certificates of Title (CCTs) are complied with;

2) OPB-to-Collateral Ratio is complied with; and, DIcTEC

3) The requirements relating to the Borrower's Capacity to Pay is satisfied.

11. Documentary Requirements

The originating institution shall submit the following documents covering the borrower's loan account and such other documents as required or as applicable in the course of the due diligence process.

A.	Contract-to-Sell (CTS)
Document	Description	No. of
			Copies/Remarks
Legal
1.	Contract to Sell (CTS)	Duly executed between the	1-Original
		borrower and the owner-	1-Duplicate
		developer or originator, as
		the case may be with the
		written conformity of the
		borrower to the assignment
		of the loan receivable to a
		third party.
2.	Deed of Assignment of	Duly executed by the	1-Original
	Receivables with	developer/originator in favor	6-Duplicate
	Recourse (DARR)	of NHMFC assigning its
		receivables under the CTS.
3.	Irrevocable Special	Duly executed by the	1-Original
	Power of Attorney	Developer/Originator,	1-Duplicate
	(SPA)/Secretary's	constituting NHMFC as its
	Certificate	attorney-in-fact. The SPA shall
		include the authority for
		NHMFC to claim and receive
		the proceeds of any insurance
		policy, when applicable.
4.	Affidavit/Certification of	Executed by the	1-Original
	Warranties	developer/originator's	1-Duplicate
		authorized representative &
		notarized
5.	Secretary's Certificate	Designating the representative	1-Original
	(Sec. Cert.)	of developer/originating
		institution
6.	Individual Transfer	In the name of the developer	1-Original (Owner's
	Certificate of Title		Copy)
	(TCT)/Condominium		1-Duplicate
	Certificate of Title (CCT)
7.	Tax Declaration/Tax	Land and building	1-Original
	Receipt(s)		1-Duplicate
8.	Acknowledgment that		1-Original
	the buyer consents to
	the assignment of the
	receivables in favor of
	NHMFC
9.	Certificate of House and	Declaring that the buyer	1-Original
	Lot Acceptance	unconditionally accepts the	1-Duplicate
		housing unit
For the Borrower
10.	Borrower's Information		1-Original
	Sheet with 2x2 ID
	picture
11.	Photocopies of 2 valid	Government issued with
	IDs	specimen signature. The same
		IDs must be presented during
		the conduct of borrower's
		interview and validation.
12.	Marriage Contract, if		1-Photocopy
	Applicable
13.	Letter of Authority in		1-Original
	favour of NHMFC to
	inspect the property of
	the borrower/buyer
14.	Authority for		1-Original
	Background and Credit
	Investigation
15.	Proof of Capacity to Pay	If employed: Latest Income Tax	ITR-1-Original &
		Returns (ITR), Certificate of	photocopy
		Employment (COE), Pass book,	COE-1-Original
		or other documents showing
		other income.
		If in business: Latest ITR and	Original &
		Audited Financial Statement,	Photocopy
		DTI Registration/Mayor's
		Permit/Business Permit, Bank
		statements or passbook for the
		last 12 months, or other
		documents that would validate
		capacity to pay.
		If OFW: Employment Contract
		(English), Bank statement or
		passbook for the last 12
		months, or other documents
		that would validate capacity to
		pay.
		Other: Lease contract for
		income generating properties,
		OR/CR of vehicles owned,
		stock certificates, or other
		documents showing source(s)
		of income.
16.	Borrower's Ledgers and	Borrower's Ledgers (Original)
	Official Receipts	Official Receipts (Photocopies)
17.	Insurance Policy	If in house (not compulsory	Copy
	covering MRI and Fire	covered by NHMFC)
	and Lightning
18.	Health Statement Form	(If applicable)	Original
	For Originators (Developer/Financial Institution)
19.	Application letter from	Prescribed Form	Original
	the Developer/
	Originator/Bank/
	Financial Institution
20.	Audited Annual	For the past 2 years	Original
	Financial Statements
21.	Information sheet	Prescribed Form	Original
22.	Bio-Data of the Board of		Original
	Directors and Key
	Officers
23.	Brief Corporate History		Original
	For Developers Only
24.	Certificate of		Original & Certified
	Registration with		True Copy
	SEC BDT
25.	Articles of		Original & Certified
	Incorporation/By-Laws		True Copy
	or Articles of Partnership
26.	Authority for		Original
	Background and Credit
	Investigation
	For Banks/Financial Institutions Only
27.	Financial Statements	For the past 8 quarters	Original
	duly stamped received
	by Bangko Sentral ng
	Pilipinas
28.	Interim Financial		Original
	Statements
29.	Latest CAMELS Rating		Original
	from BSP.
	Technical Documents
30.	Individual TCT/CCT		Certified True Copy
31.	Vicinity Map or Location		Certified True Copy
	Plan
32.	Lot Plan		Certified True Copy
33.	Approved	Complete set with	Certified True Copy
	Subdivision/Site	profile/details topographic
	Development Plan	map, road layout plan,
		drainage/sewer system, water
		distribution system, power
		distribution system.
34.	Approved Building Plan	Complete Set per model	Certified True Copy
35.	Detailed Bill of Materials	Land Development and	Certified True Copy
	and Specifications	Building
36.	Specification for Land		Certified True Copy
	Development and
	Housing Units
37.	Permits for Building and		Certified True Copy
	Site Development with
	Environmental
	Compliance Certificate
	(ECC) & Occupancy
	Permit
38.	License to Sell		Certified True Copy
B.	Real Estate Mortgage (REM)
Document	Description	No. of
			Copies/Remarks
	Legal
1.	Purchase of Loan	A deed executed by the	1-Original
	Agreement (PLA)	originating institution in favor	6-Duplicate
		of NHMFC, whereby the
		originating institution sells the
		loan obligation/mortgage
		receivables covered by the
		LMA, PN and other auxiliary
		documents in favor of NHMFC
2.	Loan and Mortgage	Entered into by the borrower	1-Original
	Agreement (LMA)	and the originating institution,	1-Duplicate
	(Annex A)	notarized and duly annotated
		on the TCT/CCT
3.	Promissory Note (PN)	Notarized	1-Original
	(Annex B)		1-Duplicate
4.	Affidavit/Certification of	Executed by the	1-Original
	Warranties	developer/originator's	1-Duplicate
	(Annex C)	authorized representative &
		notarized
5.	Secretary's Certificate	Designating the representative	1-Original
	(Sec. Cert.)	of developer/originating
		institution
6.	Individual Transfer	In the name of the borrower	1-Original (Owner's
	Certificate of Title		Copy)
	(TCT)/Condominium		1-Duplicate
	Certificate of Title CCT)
7.	Tax Declaration/Tax	Land and building	1-Original
	Receipt(s)		1-Duplicate
8.	Certificate of House and	Declaring that the buyer	1-Original
	Lot Acceptance	unconditionally accepts the	1-Duplicate
		housing unit
	For the Borrower
9.	Borrower's Information		1-Original
	Sheet with 2x2 ID
	picture
10.	Photocopies of 2 valid	Government issued with
	IDs	specimen signature. The same
		IDs must be presented during
		the conduct of borrower's
		interview and validation.
11.	Marriage Contract, if		1-Photocopy
	Applicable
12.	Letter of Authority in		1-Original
	favor of NHMFC to
	inspect the property of
	the borrower/buyer
13.	Authority for		1-Original
	Background and Credit
	Investigation
14.	Proof of Capacity to Pay	If employed: Latest Income Tax	ITR-1- Original &
		Returns (ITR), Certificate of	Photocopy
		Employment (COE), Pass book,	COE-1-Original
		or other documents showing
		other income.
		If in business: Latest ITR and	Original &
		Audited Financial Statement,	Photocopy
		DTI Registration/Mayor's
		Permit/Business Permit, Bank
		statements or passbook for the
		last 12 months, or other
		documents that would validate
		capacity to pay.
		If OFW: Employment Contract
		(English), Bank statement or
		passbook for the last 12
		months, or other documents
		that would validate capacity to
		pay.
		Other: Lease contract for
		income generating properties,
		OR/CR of vehicles owned,
		stock certificates, or other
		documents showing source(s)
		of income.
15.	Borrower's Ledgers and	Borrower's Ledgers (Original)
	Official Receipts	Official Receipts (Photocopies)
16.	Insurance Policy	If in-house (not compulsory	Copy
	covering MRI and Fire	covered by NHMFC)
	and Lightning
17.	Health Statement Form	(If applicable)	Original
	For Originators (Developer/Financial Institution)
18.	Application letter from	Prescribed Form	Original
	the Developer/
	Originator/Bank/
	Financial Institution
19.	Audited Annual	For the past 2 years	Original
	Financial Statements
20.	Information sheet	Prescribed Form	Original
21.	Bio-Data of the Board of		Original
	Directors and Key
	Officers
22.	Brief Corporate History		Original
	For Developers Only
23.	Certificate of		Original &
	Registration with		Certified True
	SEC/BDT		Copy
24.	Articles of		Original &
	Incorporation/By-Laws		Certified True
	or Articles of Partnership		Copy
25.	Authority for		Original
	Background and Credit
	Investigation
	For Banks/Financial Institutions Only
26.	Financial Statements	For the past 8 quarters	Original
	duly stamped received
	by Bangko Sentral ng
	Pilipinas (BSP)
27.	Interim Financial		Original
	Statements
28.	Latest CAMELS Rating		Original
	from BSP
	Technical Documents
29.	Individual TCT/CCT		Certified True
			Copy
30.	Vicinity Map or Location		Certified True
	Plan		Copy
31.	Lot Plan		Certified True
			Copy
32.	Approved	Complete set with	Certified True
	Subdivision/Site	profile/details topographic	Copy
	Development Plan	map, road layout plan,
		drainage/sewer system, water
		distribution system, power
		distribution system.
33.	Approved Building Plan	Complete Set per model	Certified True
			Copy
34.	Detailed Bill of Materials	Land Development and	Certified True
	and Specifications	Building	Copy
35.	Specification for Land		Certified True
	Development and		Copy
	Housing Units
36.	Permits for Building and		Certified True
	Site Development with		Copy
	Environmental
	Compliance Certificate
	(ECC) & Occupancy
	Permit
37.	License to Sell		Certified True
			Copy

III. Definition of Terms

Amortization Payment is the monthly amortization payment of the principal and accrued interest of a residential loan at stated periods for a definite time as stipulated in the Promissory Note or Contract to Sell. DCcAIS

Amortizing Account is an account that has fully paid the required down payment or equity of a housing loan and has commenced gradual payment of the monthly loan obligation.

Appraised Value is the value of the property taken up at the time of purchase. It is the fair valuation of real estate property as determined by the NHMFC appraiser.

Buy Back Guarantee is a guarantee that the originator pledged to NHMFC that it shall repurchase the loan receivable in case of breach of any of the provision in the Deed of Assignment of Receivables or when NHMFC exercises its call for non-performing loans.

Contract-to-Sell is a sales contract between a housing loan buyer/borrower and the housing developer or housing loan originator where the buyer/borrower of the housing unit is obliged to pay a pre-determined amount on instalment basis within a specified period of time and that the seller is obliged to deliver title to the housing unit when the buyer/borrower has fully paid the housing loan.

Discount is a percentage deducted from the purchase price of an acceptable portfolio but not to go below the approved interest rate.

Equity represents a percentage of the selling price which the borrower contributed as capital for the purchase of the housing unit. Full payment of the equity shall be required under these guidelines.

Front-End Ratio is the portion of the borrower's income allocated to make mortgage payment.

Letter of Guaranty is a binding contract/undertaking (in the form and with such provisions as may be acceptable to NHMFC) issued by a third party whereby it binds itself to release the original Transfer Certificates of Title (TCTs) or Condominium Certificates of Title (CCTs), free from all liens and encumbrances, directly to NHMFC upon receipt of payment/consideration (from the loan proceeds) owed by the originator.

Loan-to-Collateral Ratio (LCR) is the proportion or percentage between the outstanding principal balance at the time of purchase over the appraised value of the underlying collateral.

Mortgage is a financial transaction by which a borrower/debtor secures for the seller/creditor the fulfilment of a principal obligation by subjecting to such security the residential property or real rights over the real property in case of non-fulfilment of said obligation at the time specified.

Newly Seasoned Residential Loan (NSRL) means that the portfolio has been religiously amortizing for at least six (6) consecutive months and with fully paid equity of at least 30% of the selling price.

Occupied refers to a house and lot or condominium unit which is actually:

1) utilized by the owner or any member of his/her family as residence;

2) occupied as a residence by a person other than the owner or any member of his/her family by virtue of a lease or other contractual arrangement with the owner or his/her lawful representative; or

3) being used as residence, even if for the time being it is vacant due to renovation/improvement.

Original Interest Rate is the original interest rate agreed upon at the point of sale between the Housing Developer/Originating Institution and the Borrower as stated in the original promissory note and contract to sell. CaEATI

Originating Institution is a public/private financial institution or a real estate developer from whom housing loan receivables are purchased.

Outstanding Principal Balance is the selling price minus equity payments and monthly amortization payments applied to the principal as of cut-off date.

Premium is a percentage added to the purchase price of a good quality portfolio.

Purchase Price is the Outstanding Principal balance (OPB) as of cut-off date minus discount or plus premium as the case may be.

Seasoning Period is the period where the account is amortizing prior to its sale/assignment to NHMFC. The seasoning period shall commence at the point where the amortization payment of the loan with interest bearing portion begins.

Seasoned Residential Loan (SRL) is a loan receivable that has been religiously amortizing for over twelve (12) consecutive months and with fully paid equity of at least 20% of the Selling Price.

Selling Price is the agreed price between the originator and the buyer in the purchase of the housing unit.

Warranty is a pledge or assurance that the originator will perform its obligation in case of a buy back call by NHMFC as a result of any breach with respect to the purchase of residential loan receivables.

Footnotes

* The house and lot unit must be complete, occupied and used for residential purposes to be eligible for purchase.