Requirements for Guaranty.
Section 13
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.