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Pag-IBIG Fund

Corporate Headquarters
Petron MegaPlaza
358 Sen. Gil Puyat Ave.,
Makati City

Circular No. 371

TO: ALL CONCERNED

SUBJECT: REVISED GUIDELINES ON THE Pag-IBIG GROUP HOUSING


LOAN PROGRAM

Pursuant to the approval of Senior Management Committee, the Revised


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 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 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:

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 the 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.

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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 Program.

4. The proponent 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.

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 sales package of the housing units to generated by the project


should not exceed the maximum loanable amount under the prevailing
retail housing programs.

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 of loan to be granted shall be based on whichever is lower


of the following:

2.1. Actual project need as supported by cash flow projections; and,

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2.2. Prudent production cost as defined in the Fund's Appraisal
Manual.

Provided, the loan amount and any other outstanding wholesale loan,
if any, shall not exceed the project proponent's debt capacity and
Single Borrower's Limit.

3. Interest Rate

The loan shall bear interest at the rate based on the prevailing rates of
the Fund's Full Risk-Based Financing Framework for wholesale loan
programs.

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 Developmental Financing

5.1 Technical

5.1.1 Site I 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


developer accredited by the Fund in the
development of the housing project.

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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
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.

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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.

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 seventy 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;

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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;

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.

4. Loan Processing Fees

The project proponent shall be charged with a processing fee of P100 per
unit to be generated for the housing project or P10,OOO.OO, whichever is
higher.

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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;

7.1.2 Continue to bear interest at the stipulated rate from the


time the unpaid Notels 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

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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

All applications shall be subject to the approval of the appropriate level


of approving/signing authorities.

H. REPEALING CLAUSE

Pag-IBIG Fund Circular Nos. 293 and 354, as well as all memoranda, rules,
regulations and other issuances inconsistent herewith are hereby repealed,
amended or modified accordingly.

I. EFFECTIVITY

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

~~~
ATTY. DARLENE MARIE B. BERBERABE
Chief Executive Officer

Makati City,
December 27, 2016

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ANNEXA

SPECIFIC POLICIES FOR LOCAL GOVERNMENT UNITS

A. TARGET MARKET

Interested and eligible LGUs may apply for GHLP. However, as a special
focus, the Fund will be proactive in marketing the GHLP to LGUs to cater
to the housing needs of the unserved/underserved Pag-IBIG Fund
members in their area.

B. INTEREST RATES FOR PROJECT BENEFICIARIES

The interest rate shall be based on the rates under the applicable retail
housing loan programs.

C. PRELIMINARY REQUIREMENTS FOR LOAN APPLICATION

The following documents shall be submitted to the Fund:

1. Letter of Application

2. Resolution of Sanguniang 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

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

D. 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;

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 /


8ayan 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.

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

E. 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.

F. 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. It
must be established prior to application for Pag-IBIG Group Housing
Program.

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ANNEXB

SPECIFIC POLICIES FOR EMPLOYERS, COOPERATIVES,


EMPLOYEES' ASSOCIATION AND OTHER GROUPS

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 DirectorslTrustees 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.

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


Accountant

7. List of key officers, and their resumes

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:

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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
titlets of the housing project subject of the loan.

3. If applicable, presentation of a Joint Venture Agreement I Memorandum of


Agreement with a developer t contractor who will undertake the
development and completion of the project.

4. Cash flow projection

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ANNEXC

FINANCIAL RATIOS TO MEASURE FINANCIAL CAPABILITY


OF THE PROJECT PROPONENT

1. Liquidity Ratios

d. 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%

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ANNEXO

ALTERNATIVE APPROACHES AVAILABLE TO LGUs/PROJECT


PROPONENTS TO FAST TRACK LOAN TAKEOUTS UNDER THE PROGRAM

The LGUs/Project Proponents may consider the following alternative approaches


to enable the target beneficiaries to still avail of Pag-IBIG Housing Loan:

1. It can enter into a joint venture with the landowner and a developer. In this
option, the land is owned by an individual or company, the developer will be in
charge of land development and house construction, and the project proponent
will pre-qualify the beneficiaries who will be availing of Pag-IBIG housing loan.

2. The project proponent can enter into a joint venture with a developer. While the
project proponent provides the land, the developer can provide the cost for land
development and house construction. The Fund can then process the housing
loan applications of the eligible beneficiaries of project proponent pre-qualified
and takeout the approved loans.

3. For the LGU, it can apply for a developmental loan from the Landbank of the
Philippines and have the housing loan applications of the target beneficiaries
processed and taken out with the Fund.

4. A home-matching program can be established to assist the project proponent's


target beneficiaries. The Fund may recommend accredited developers and
housing projects that will tailor-fit the needs of the beneficiaries based on their
preferred property location, house models, and price ranges of property. As
soon as the beneficiaries had chosen their dream house/property, the Fund
shall process and approve the housing loan applications of qualified borrowers.

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