SEC. 9. With a view to encourage the financing of new construction for small business, agricultural and residential units in a limited amount, the repair of existing residential, small business or agricultural buildings and the rehabilitation requirements and recovery from damage caused by the elements, the Home Financing Commission shall prescribe rules and regulations to govern the insurance authorized under this section in accordance with the provisions set forth hereunder:
The Commission is authorized to insure banks, insurance companies, building and loan associations and other qualified lending institutions against losses which they
may sustain as a result of eligible property improvement loans. The lending institutions shall be charged with the responsibility of exercising the proper credit judgment in
making the loans.
The lending institution shall be insured against loss up to ten per centum of the aggregate net amount loaned over a given period.
Four classes of loans may be insured under this section at the discretion of the Commission even though they may be subject to existing mortgages:
Loans covering the cost of repair, alteration or improvement begun after the date of the approval of this Act of an existing structure, such loans not to be in excess of six thousand pesos and to mature in not to exceed five years on a monthly amortization
basis;
Loans covering the cost of alteration, repair, improvements or conversion begun after the date of the approval of this Act of an existing structure used or to be used as a dwelling for two or more families, such loans not to be in excess of twenty thousand pesos and to mature in not exceeding ten years on a monthly amortization basis;
Loans covering the construction of a new structure begun after the approval of this Act to be used for small business or agricultural purposes, such loans not to be in excess of six thousand pesos and to mature in not exceeding six years on a monthly amortization
basis;
Loans covering the construction of a new structure begun after the date of the approval of this Act to be used for a combination of residential and small business purposes or for a combination of residential and agricultural purposes, such loans not to be in excess of ten thousand pesos and to mature in not to exceed ten years on a monthly amortization basis
SEC. 10.
The Commission is authorized, upon application by a qualified mortgagee, to insure in accordance with the provisions of this Act, any mortgage offered to it which is eligible for insurance as hereinafter provided, and, upon such terms as the Commission may prescribe, to make commitments for the insuring of such mortgages prior to the date of their execution or any disbursement thereon.
To be eligible for insurance under this section a mortgage shall—
Involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Commission shall approve) in an amount—
not to exceed thirty thousand pesos nor in any case eighty per centum of the appraised value (as of the date the mortgage is accepted for insurance) of a property upon which there is located a dwelling or dwellings designed principally for residential use by not more than four families in the aggregate, irrespective of whether or not such dwelling or dwellings have a party wall or walls or are otherwise physically connected with another dwelling or dwellings the construction of which is begun after the date of the approval of this Act: Provided, That no mortgage shall be insured under this paragraph unless the mortgagor is the owner and occupant of at least one of the dwelling units of the property at the time for the insurance and shall have paid on account of the property, in cash or, its equivalent, at least twenty per centum of the appraised value thereof;
not to exceed thirteen thousand five hundred pesos nor in any case ninety per centum of the appraised value (as of the date the mortgage is accepted for insurance) of a property, whether urban, suburban, or rural, upon which there is located a dwelling designed principally for a single-family residence, the construction of which is begun after the date of approval of this Act and which is approved for mortgage insurance prior to the beginning of construction: Provided, That no mortgage shall be insured under this paragraph unless the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property, in cash or its equivalent, at least ten per centum of the appraised value thereof;
not to exceed nine thousand five hundred pesos nor in any case ninety-five per centum of the appraised value of a property, whether urban, suburban, or rural, upon which there is located a dwelling, designed principally for a single-family residence which is approved for mortgage insurance prior to the beginning of construction: Provided, That no mortgage shall be insured under this paragraph unless the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property, in cash or its equivalent, at least five per centum of the appraised value thereof.
Have a maturity satisfactory to the Commission but not to exceed twenty years from the date of the insurance of the mortgage in the case of mortgages under paragraph (1) (A) and not to exceed twenty-five years in the case of those under paragraphs (1)(B) and (1)(C) hereof.
SEC. 11.
The Commission is authorized upon application by the mortgagee, to insure, in accordance with the provisions of this Act, any mortgage offered to it which is eligible for insurance as hereinafter provided and upon such terms as the Commission may prescribe (including advance on such mortgages during construction), if the mortgage covers property held by—
The National Government, provincial, city or municipal governments, or government-owned or controlled corporations and agencies.
Private corporations, associations, cooperative societies which, are legal agents of owner-occupants, or trusts formed or created for the purpose of rehabilitating slum or blighted areas, or providing housing for rent or sale, and which possess powers necessary therefor and incidental thereto, and which, until the termination of all obligations of the Commission under such insurance, are regulated or restricted by the Commission as to rents or sales, charges, capital structure, rate of return, and methods of operation to such extent and in such manner as to provide reasonable rentals to tenants and a reasonable return on the investment. The Commission may make such contracts with, and acquire for not to exceed one hundred pesos such stock or interest in, any such corporation, association, cooperative society, or trust as it may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out of the Fund, and shall be redeemed by the corporation, association, cooperative society, or trust at par upon the termination of all obligations of the Commission under the insurance.
An individual owner or joint-owners.
Such mortgages may cover the installation of improvements involving—
A rental project not to exceed one hundred units and involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Commission shall approve) in an amount not to exceed one million pesos.
A rental project not to exceed one thousand units and involve a principal obligation (including such initial service, charges, appraisal, inspection, and other fees as the Commission shall approve) in an amount not to exceed five million pesos.
To be eligible for insurance under this section a mortgage shall—
Involve a principal obligation not to exceed eighty per centum, for projects under subsection (b) (1) ; and not to exceed ninety per centum, for projects under subsection (b) (2), of the amount which the Commission estimates will be the value of the property or project when the proposed improvements are completed, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architect's fees; taxes and interest accruing during construction; and other miscellaneous charges incident to construction and approved by the Commission.
Have a maturity satisfactory to the Commission but not to exceed twenty years from the date of the insurance of the mortgage under subsection (b) (1), and not to exceed thirty years from the date of insurance of the mortgage under subsection (b) (2).
SEC. 12. To be eligible for insurance under this section—
A mortgage on any property or project shall—
involve a principal obligation in an amount not to exceed one million pesos.
not to exceed sixty per centum of the amount the Commission estimates will be the value of the property or project when the proposed improvements, consisting of utilities, are completed, including the land.
The mortgage shall—
provide for complete amortization by a schedule of payments within such term as the Commission shall prescribe, not to exceed five years.
No mortgage shall be accepted for insurance under
this section unless—
the Commission has approved the type of improvements to be installed, the plan of sub-division, and the contract of sale, or deed, under which the lots may be sold.
the Commission has approved the tract of land for insured mortgages in accordance with the provisions of this Act.
SEC. 13. In order to assist in relieving the acute shortage of housing which now exists and to promote the production of housing at moderate prices or rentals, through the application of modern industrial processes, the Commission is authorized to insure loans to finance the manufacture of housing or the materials to be used in the construction of houses, when such loans are eligible for insurance as provided in the rules and regulations to be prescribed by the Commission, with the approval of the President of the Philippines.
SEC. 14. In order to assist in developing rural areas and to encourage development of agricultural areas by individuals and associations, the Commission is authorized to insure loans as hereinafter provided:
All loans insured under this section, whether in the form of notes secured by mortgages or in the form of debentures secured by mortgages, shall be subject to all of the conditions set forth in subsection (a)-(1), (2) and (3) of section eleven.
Such loans may cover the installation and operation of improvements involving:
Subdividing and developing tracts into small farms, including housing, for subsequent sale: Provided, That such projects shall be limited to one hundred units and involve a principal obligation in an amount not to exceed one million pesos nor in any case ninety per centum of the amount which the Commission estimates will be the value of the property or project when the improvements are completed, including the land, and that the mortgage shall have a maturity satisfactory to the Commission not to exceed twenty years from the date of the insurance of the mortgage.
Acquisition or installation of facilities and equipment for increasing the productivity of land and the marketing of crops: Provided, That the borrower or mortgagor shall be a corporation owning land or association of landowners; that the loan or mortgage shall involve a principal obligation in an amount not to exceed ten million pesos and shall not exceed fifty per centum of the amount the Commission shall estimate to be the value of the property and project including the land, above all other encumbrances, when the improvements have been installed and are functioning; and, that the mortgage shall have a maturity satisfactory to the Commission not to exceed twenty years from the date of the insurance of the mortgage.
Irrigation projects, including. hydro-electric power, when in the opinion of the Commission it shall benefit agricultural development: Provided, That the borrower or mortgagor shall be a corporation owning land or association of landowners; that the loan or mortgage shall involve a principal obligation not to exceed ten million pesos, and shall not exceed the cost of the improvement project, including the cost of preliminary surveys and initial operating fund; and that the mortgage shall have a maturity satisfactory to the Commission not to exceed twenty years from the date of the insurance of the mortgage: And provided, further, That disbursements hereon shall be made against progress reports verified by the Commission.
The Commission is authorized to require that a portion of the crops or produce of any project insured under this section be allocated to the Commission to assure the amortization of such loan or mortgage.
GENERAL PROVISIONS
SEC. 15.
Notwithstanding the foregoing provisions, the Commission may, as a matter of sound business policy, set a limit on the total amount to be insured under each section of this chapter and in no case shall the aggregate amount of the outstanding principal obligations of mortgages insured under this chapter exceed five hundred million pesos at any one time,
The Commission shall fix, in accordance with sound actuarial practice and the risk characteristics involved, the rates of insurance premiums for each class of loans or mortgages as prescribed under each section of this chapter: Provided, however, That no insurance premium for any particular class of loans or mortgages shall be fixed at less than one fourth of one per centum nor more than one per centum of the amount of the outstanding principal obligation.
The Commission may, in accordance with the provisions of the mortgage, or in the absence thereof, upon such terms and conditions as it may prescribe, release part or parts of the mortgaged property from the lien of the mortgage.
The Commission may charge and collect such amounts as it deems reasonable for the appraisal of a property or project offered for insurance and may likewise charge and collect such amounts as it deems reasonable for the inspection of such property or project during construction: Provided, That such charges for appraisal and inspection shall not aggregate more than one per centum of the principal face amount of the mortgage.
SEC. 16. To be eligible for insurance under this chapter, a mortgage shall—
Have been made to, and be held by, a qualified mortgagee approved by the Commission as responsible and able to service the mortgage properly;
Contain complete amortization provisions satisfactory to the Commission requiring periodic payments by the mortgagor not in excess of his reasonable ability to pay as
determined by the Commission;
Bear interest (exclusive of premium charges for insurance) at not to exceed five per centum per annum on the amount of the principal obligation outstanding at any time,
or not to exceed six per centum per annum if the Commission finds that in certain areas or under special circumstances the mortgage market demands it: Provided, That
loans made under section nine may be made at a discount of five pesos per annum per one hundred pesos;
Provide, in a manner satisfactory to the Commission for the application of the mortgagor's periodic payments (exclusive of the amount allocated to interest and to the
premium charge which is required for mortgage insurance as hereinafter provided) to amortization of the principal obligation of the mortgage; and,
Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Commission may in its discretion prescribe.
PAYMENT OF INSURANCE
SEC. 17.
In any case in which the mortgagee in a mortgage insured under this chapter shall have foreclosed and taken possession of the mortgaged property in accordance with regulations of the Commission, the mortgagee shall be entitled to receive the benefit of the insurance as hereinafter provided, upon (1) the prompt conveyance to the Commission of rights to the property, and (2) the assignment to it of all claims of the mortgagee against the mortgagor or others. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the Commission shall subject to the cash adjustment hereinafter provided, issue to the mortgagee debentures having a total face value equal to the value of the mortgage and a certificate of claim, as hereinafter provided.
The debentures issued under this chapter to any mortgagee with respect to mortgages or loans insured under Chapters II and III shall be executed in the name of the Home Financing Commission as obligor, and signed for the Commission by the Chairman-General Manager by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date the foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default, and shall bear interest from such date at a rate to be determined by the Commission, with the approval of the President after consultation with the Monetary Board, but not to exceed three per centum per annum, payable semi-annually on the first day of January and the first day of July of each year, and shall mature ten years after the date on which the debentures were issued.
The aggregate amount at any one time of all such debentures issued to mortgagees with respect to mortgages or loans insured under this Act shall be fixed by the Commission with the approval of the President after consultation with the Monetary Board, which shall in no case exceed the aggregate amount of the outstanding principal obligations of all mortgages insured under this Act.
INVESTMENT OF FUNDS
SEC. 18. Moneys in the Fund, not needed for the current operations of the Home Financing Commission, shall be deposited with the Treasurer of the Philippines to the credit of the Fund, or invested in bonds or other obligations issued or guaranteed as to principal and interest by the Government. The Commission may purchase in the open market debentures issued under the provisions of this Act. Debentures so purchased shall be cancelled and
not reissued.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
