Section 14
SEC. 14. (a) 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 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. (b) For the purpose of the above sub-section (a), the value of the mortgage shall be determined, in accordance with the rules and regulations prescribed by the Commission, by adding to the amount of the original principal obligation of the mortgage which was unpaid on the date of the institution of foreclosure proceedings, or on the date of the acquisition of the property after default other than by foreclosure, the amount of all payments which have been made by the mortgagee for taxes, ground rents, and water rates, which are liens prior to the mortgage, special assessments which are noted on the application for insurance or which become liens after the insurance of the mortgage, insurance on the mortgaged property, and any mortgage insurance premiums paid after either of such dates, and by deducting from such total amount any amount received on account of the mortgage after either of such dates and any amount received as rent or other income from the property, less reasonable expenses incurred in handling the property, after either of such dates. (c) Debentures issued under this chapter shall be in such form and denominations in multiples of P50, shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Commission, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed P50, shall be adjusted by the payment of cash by the Commission to the mortgagee from the Fund as to mortgages insured under this chapter. (d) 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 exempt from taxation, attachment, execution or seizure redeemable at the option of the Commission 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 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 as approved by the monetary board in an amount equivalent to the average yield to maturity, so revealed by market quotations, on all outstanding marketable obligations of the Republic of the Philippines having a maturity date of ten or more years from the first day of the next preceding month and by adjusting such average annual yield to the nearest one eight year per centum. 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, and the debentures shall mature ten years after the date on which the debentures were issued or three 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 insurance premiums due the Commission. (e) The certificate of claim issued by the Commission to any mortgagee shall be for an amount which the Commission determines to be sufficient, when added to the face value of the debentures issued and the cash adjustment paid to the mortgagee, to equal the amount which the mortgagee would have received if, at the time of the conveyance to the Commission of the property covered by the mortgage, the mortgagor has redeemed the property and paid in full all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the Commission. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with respect to the amount of such certificate, an interest at a rate to be determined by the Commission. The amount to which the holder of any such certificate shall be entitled shall be determined as provided herein. (f) If the net amount realized from any property conveyed to the Commission under this section and the claims assigned therewith, after deducting all expenses incurred by the Commission 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 divided as follows: If such excess is greater than the total amount payable under the certificate of claim issued in connection with such property, the Commission shall pay to the holder of such certificate the full amount so payable, and any excess remaining thereafter shall be paid to the mortgagor of such property; and If such excess is equal to or less than the total amount payable under such certificate of claim, the Commission shall pay to the holder of such certificate the full amount of such claim. (g) 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