Requirements for Guaranty.
SEC. 13. Requirements for Guaranty. - To be eligible for credit guaranty, the account shall:
(a) For developmental loans, involve a principal obligation not to exceed: (i) seventy percent (70%) of the prudent production cost of the project for bond guaranty coverage; and (ii) sixty percent (60%) of the prudent production cost of the project for cash guaranty coverage.
Such obligations may cover the installation of improvements involving: (a) a project by a developmental builder for the construction of not less than twenty (20) dwellings at one time under a single-mortgage with a release clause permitting the subsequent sale of each individual completed house together with land. Loans for advances of funds used for purchase of materials in anticipation of mass construction and standardization of parts may be guaranteed in the discretion of the Corporation; and (b) a rental project of at least twenty (20) units and involve a principal obligation, including such initial service charges, appraisal, inspection, and other fees as the Corporation shall approve.
The prudent production cost of the project shall be determined in accordance with the prevailing industry standards: Provided, That the builder shall submit certified bills of sale and other evidences of prudent production cost of the project and the Corporation shall be the sole judge of the prudence of the expenditure as necessary to comply with the plans and specifications.
(b) For single family residence, involve a principal obligation not to exceed: (i) one hundred percent (100%) of the appraised value of the property for socialized housing packages; (ii) ninety percent (90%) of the appraised value of the property for low-cost housing packages; (iii) eighty percent (80%) of the appraised value of the property for medium-cost housing packages; and (iv) seventy percent (70%) of the appraised value of the property for open housing packages.
The Corporation as a matter of sound business policy may set downward limits on the total amount to be guaranteed for the aforestated programs which limits may be adjusted to conform with the prevailing economic and financial conditions subject to the concurrence of the Monetary Board of the Bangko Sentral ng Pilipinas;
(c) Be secured by a first lien on real estate or other rights in rem including leasehold rights under a contract of lease for not less than twenty (20) years to run from the date the guaranty was executed, held by a qualified lender or trustee determined by the Corporation as responsible and able to service the guaranteed account: Provided, That such mortgage rights, or other rights in rem are duly annotated on the title to the real estate; or otherwise effectively protected;
(d) Be intended for production and/or acquisition of residential lot or house and lot, improvements, repairs and mass housing construction projects;
(e) Contain complete amortization provisions satisfactory to the Corporation requiring periodic payments by the borrower not in excess of his reasonable ability to pay the loan which shall comply with the required loan to collateral ratio as determined by the Corporation;
(f) Have a maturity satisfactory to the Corporation but not to exceed thirty (30) years;
(g) Contain such terms and provisions with respect to insurance, repair, alterations, payment of taxes, default, reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Corporation may in its discretion prescribe; and
(h) Shall involve real properties held by the following:
(1) The National Government, provincial, city or municipal governments or government-owned or -controlled corporations and agencies;
(2) Private corporations, banking institutions, trust companies, personal finance companies, mortgage companies, building and loan associations, savings and loan associations, installment lending companies, insurance companies, developmental builders, associations and 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
(3) An individual owner or joint-owners.
Guaranty Premiums, Appraisal Fees and other Charges.
SEC. 14. Guaranty Premiums, Appraisal Fees and other Charges. - (a) The Corporation shall fix in accordance with sound actuarial practice and the risk characteristics involved, the rates of guaranty premiums to be imposed: Provided, however, That no guaranty premium shall be fixed at less than one-half of one percent (1/2 of 1%) of the amount of the outstanding principal obligation for socialized housing; three fourths of one percent (3/4 of 1%) for low-cost housing; one percent (1%) for medium-cost housing; and one and one-half percent (1.5%) for open housing. Such guaranty premiums shall be payable by the mortgagee or guaranteed entity, either in cash or in debentures issued by the Corporation at its present value, in such manner as may be prescribed by the Corporation. In addition, the Corporation may charge and collect from the mortgagee or guaranteed entity, such fees and amounts as may be reasonable to implement its guaranty programs.
(b) In addition, the Corporation may fix, charge and collect such fees and amounts as may be reasonable for the appraisal of a property or project offered for guaranty and may likewise charge and collect such fees and amounts as may be reasonable for the inspection of such property or project during construction.
Guaranty Coverage and Composition of Guaranteed Accounts.
SEC. 15. Guaranty Coverage and Composition of Guaranteed Accounts. - (a) The Corporation shall guaranty payment of the balance outstanding and due on the guaranteed principal obligation, plus interest and yields thereon up to eleven percent (11%) per annum for socialized housing packages; ten percent (10%) per annum for low-cost housing packages; nine and one-half percent (9.5%) per annum for medium-cost housing packages; and eight and one-half percent (8.5%)per annum for open housing packages;
(b) The Corporation shall guarantee accounts under this Act, as follows:
(1)At least forty percent (40%) of guaranty accounts shall be allocated for socialized housing packages;
(2) At least thirty percent (30%) of guaranty accounts shall be allocated for low-cost housing packages;
(3) At least twenty percent (20%) of guaranty accounts shall be allocated for medium-cost housing packages; and
(4) Not more than ten percent (10%) of guaranty accounts may be allocated for open housing packages.
For the foregoing purpose, the respective ceilings for socialized, low-cost, medium-cost, and open housing shall be jointly determined by the Housing and Urban Development Coordinating Council and the National Economic and Development Authority: Provided, That at any time, but not more often than once every two (2) years, such ceilings may be reviewed or revised to conform to prevailing economic conditions.
(c) The Corporation shall as much as possible and practicable, allocate its guaranty obligations fairly and equitably among all the regions of the country.
Guaranty Limitations.
SEC. 16. Guaranty Limitations. - Any and all guaranties issued by the Corporation shall be subject to the following limitations, anything to the contrary notwithstanding:
The extension of guaranty or guaranties for developmental projects for the account of any one institution or entity shall not, at any time, exceed three (3) times the net worth of such institution or entity;
The extension of guaranty shall not exempt banks and other financial institutions regulated by the Bangko Sentral ng Pilipinas from complying with the pertinent single borrowers limit as provided by the Monetary Board of the Bangko Sentral ng Pilipinas;
The aggregate amount of the outstanding obligations shall not, at any time, exceed twenty (20) times the capital and surplus of the Corporation;
All guaranteed bonds, debentures, commercial papers and other securities issued by individual persons which are sold to the public shall still be subjected to the registration requirements under the Revised Securities Act;
The Corporation shall set aside five percent (5%) of its annual net operating revenues before interests as reserve or sinking fund to answer for guaranty calls; and
All rules and regulations on ceilings and limitations under this Act shall be subject to the concurrence of the Monetary Board of the Bangko Sentral ng Pilipinas.
Payment of Guaranty Calls.
SEC. 17. Payment of Guaranty Calls. - (a) In the event of a default on the guaranteed obligation in accordance with the regulations of the Corporation, the guaranteed entity shall be entitled to receive the benefit of the guaranty as herein provided, upon (1) the prompt conveyance to the Corporation of the right to the property securing the guaranteed obligations; and (2) the assignment to the Corporation of all claims of the mortgagee against the mortgagor under the guaranteed obligation. Upon such conveyance and assignment, the obligation of the guaranteed entity to pay the premium charges for guaranty shall cease and the Corporation shall, at its option, pay in cash and/or issue to the guaranteed entity, debenture bonds equivalent to the guaranteed obligation;
(b) For the purpose of the above subsection (a), the balance outstanding and due on the guaranteed mortgage shall be determined in accordance with the rules and regulations prescribed by the Corporation;
(c) Debentures issued under this Section shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Corporation, and may be in coupon or registered form;
(d) Debentures issued under this Section to any mortgagee with respect to mortgages or loans guaranteed under Chapters III and IV shall be executed in the name of the Home Guaranty Corporation as obligor, and signed for the Corporation by the President of the Corporation, either by his written or engraved signature, and shall be negotiable, exempt from taxation to the extent specified in this Act, attachment, execution or seizure, redeemable at the option of the Corporation at or before maturity and fully guaranteed as to principal and interest by the Republic of the Philippines. All such debentures shall be dated as of the date the mortgagee conveys and assigns to the Corporation its rights under the mortgage and valid claims against the mortgagor and shall bear interest not exceeding the interest rate established for the principal obligation. The interest on the debentures shall be payable semi-annually on the first day of January and the first day of July of each year. The debentures shall mature ten (10) years after date on which the debentures were issued or three (3) years after July first following the maturity of the mortgage on the property in exchange for which the debentures were issued whichever is the shorter period, and may be used at the option of the mortgagee in the payment of guaranty premium due the Corporation;
(e) If the net amount realized from the sale or disposition of any property conveyed to the Corporation under this Section and the claims assigned therewith, after deducting all expenses incurred by the Corporation in handling, dealing with, and disposing of such property and in collecting such claims, exceeds the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be paid to the mortgagor of the property;
(f) The aggregate amount at any time of all such debentures, securities, and other evidences of indebtedness issued under this Section, shall be determined by the Corporation with the approval of the President of the Philippines after consultation with the Monetary Board of the Bangko Sentral ng Pilipinas, which shall in no case exceed the aggregate amount of the outstanding principal obligations of all mortgages insured under this Act; and
(g) The Corporation 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.
SEC. 18. Guaranty of the Republic of the Philippines. -(a) The Republic of the Philippines hereby fully and unconditionally guaranties to payment by the Corporation both of the principal sums and interest of the bonds, debentures, collateral, notes, or other such obligations of the Corporation, issued or incurred by virtue of this Act and shall pay such principal sums and interest in the event that the Corporation fails to do so: Provided, That such guaranty shall be expressed on the face of the certificate of indebtedness: Provided, further, That the aggregate amount of such bonds, debentures, collateral, notes or other such obligations of the Corporation does not exceed at any time, the limit prescribed under Section 5 (f) of this Act.
(b) The Republic of the Philippines hereby fully and unconditionally guaranties the guaranty obligations of the Corporation incurred in accordance with this Act both as to principal, and as to interest up to eleven percent (11%) for socialized housing, ten percent (10%) for low-cost housing, nine and one-half percent (9.5%) for medium-cost housing, and eight and one-half percent (8.5%) for open housing: Provided, That such guaranty shall be expressed on the face of the debenture bonds: Provided, further, That the aggregate amount of the outstanding obligations shall not, at any time, exceed twenty (20) times the capital and surplus of the Corporation.
The Republic of the Philippines shall succeed to all the rights of the holders of such bonds, debentures, collateral, notes or other instruments to the extent of the payments made, unless the sums so paid by the Republic of the Philippines shall be refunded by the Corporation within a reasonable time.
Tax Exemption.
SEC. 19. Tax Exemption. - Interests and yields earned or accumulated on mortgage, debentures, bonds, notes, mortgage and asset-backed securities, interest under a lease, and other credit instruments, whether issued by the Corporation or covered by its guaranty in favor of natural or juridical person, in cash or in bonds, shall be exempt from all taxation to the same extent provided in Section 15 (a) hereof: Provided, however, That the Corporation shall have the authority to increase the limit of such exemption in such varying amounts as shall be reflective of the social concerns of the State: Provided, further, That the exercise of said authority shall be subject to the approval of the President of the Philippines upon the recommendation of the Monetary Board of the Bangko Sentral ng Pilipinas: Provided, finally, That the Corporation shall not exercise such authority more often than once every five (5) years.
CHAPTER IVBUILDING AND LOAN ASSOCIATIONS
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
