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Manila Standard

President Arroyo yesterday signed a law against housing foreclosures in a move that was seen preventing an outbreak of mortgage crisis similar to that besetting the United States and Europe.

The new law, RA 9507 or the housing loan restructuring program, protects low-income families from losing their homes due to unpaid housing loan amortizations.

Mrs. Arroyo said the crafting of the law was timely for the nearly 370,000 families with delinquent loans, especially during this time of global economic crisis.

Vice President Noli de Castro, the administration’s housing czar, said the law does not threaten the viability of home lending agencies and lenders because they can collect from the borrowers later on.

De Castro emphasized that the law empowers the governing boards of the lending institutions to give reasonable discounts on loan interest as an incentive to borrowers who pay their amortizations on time.

Senator Juan Miguel Zubiri, chairman of the committee on urban planning, housing and resettlement, said the new law provides for a win-win scheme, as it will help out the delinquent borrowers and eventually, the lenders.

Under the new law, housing loan borrowers who have at least three months of unpaid monthly amortizations with Government Financial Institutions and housing agencies may apply for loan restructuring and condonation.

The law covers housing loan accounts with institutions like GSIS, SSS, Pag-IBIG Fund, National Home Mortgage Finance Corporation, Social Housing Finance Corporation, Home Guaranty Corporation and National Housing Authority, with principal loan amounts not exceeding P2.5 million.

The program is open to accounts that have already availed of a previous restructuring and condonation program.

All penalties and surcharges of a loan approved for restructuring under this program shall be condoned. A reasonable portion of the accrued interest may also be condoned at the discretion of the respective boards of the concerned GFIs or housing agencies.

The remaining accrued interest will be treated as a non-interest bearing principal to be equally paid during the term of the restructured loan.

The restructured loan will also be charged an interest rate equal to that of the original loan, or not more than 12 percent, whichever is lower.

To lower the monthly amortizations, the payment period may be extended up to the borrower’s 70th year.

The law waives the processing fees or down payment for loan restructuring and condonation.

The program will be implemented for 18 months from the issuance of the implementing rules and regulations, but the governing boards of the respective institutions are given the authority to continue the program beyond that period.

Fel V. Maragay

Philippine Daily Inquirer

This pertains to the June 11 column of Honesto C. General (“Winston Garcia’s housekeeping chores”), particularly on the case of Nane Bacani, which Amado Cabaero of the Philippine Association of Retired Persons raised.

General said the move of the Government Service Insurance System (GSIS) reducing the interest rate on loans under its new housing program to 6.0 percent is “good news to the borrowers but terrible news to over a million members who will not borrow under the program.” He added that “in effect, members who will not borrow for low-cost housing will be subsidizing those who will.”

He also said the premiums paid by government employees and government agencies that are held in trust and invested by the GSIS would earn only 4.8 percent in net returns (when supposedly factoring in a 20 percent overhead expense of the GSIS) because of the low interest rate.

General’s views are flawed:

1. The very friendly rate of 6.0 percent has a negative effect on the net returns of our entire investment portfolio. Real property investment represents only eight percent of the entire GSIS investment portfolio and the GSIS can still achieve the 12 percent hurdle rate imposed by our actuary because of the compensatory effect of other higher-yielding investments like equities, long-term placements, etc.

2. Members who do not borrow under the low-cost housing program will not be subsidizing those who borrow. Investments should be viewed in their totality. The GSIS is a trustee of its members’ funds and not only of the real property portfolio.

3. The 4.8 percent net yield of the housing loan that General assumed is inaccurate. The GSIS’ overhead expense is much smaller than 20 percent; expense loading of the GSIS is considered not individually but in its totality; and some other fees (service fee) are additionally imposed to defray the cost of administering the loan.

4. General ignores the social relevance of our new housing loan program. Investment in real property has a great social impact because shelter is a basic need. The lowering of the interest rate is a sign of the GSIS’ unwavering commitment to the government’s drive to address the shortage in housing.

5. General also questioned whether or not Bacani is still entitled to a monthly pension after she received P26,694.91 in refund of retirement premiums as processed and paid by the GSIS office in Tacloban City. As stated in an earlier letter to Cabaero, Bacani is no longer eligible to receive annuity pension benefit under Republic Act 660 after she availed herself of the retirement benefit under RA 1616, otherwise known as “take-all” benefit. A government employee is entitled to only one retirement benefit under any of the GSIS retirement laws.

The law allows a “gratuitant” one year after his/her retirement within which to file for a conversion of the retirement option—from Republic Act 1616 to RA 660. In the case of Bacani, the one-year window had lapsed when she availed of the “take-all’ benefits of RA 1616 two years after her retirement.

ELLA E. VALENCERINA, vice president, Public Affairs, Government Service Insurance System, Financial Center, Pasay City

Manila Standard

THE Metro Manila Development Authority is finalizing its rate adjustment for its newly opened workers’ dormitory in Tondo to include power charges for airconditioning.

Chairman Bayani Fernando, in his weekly radio program, said a hike was inevitable to guarantee the comfort of clients.

“Maybe P25 is not enough to cover the power cost of providing an air-conditioner inside the rooms,” he noted.

The improved Gwapotel inn on Jose Abad Santos Avenue has 800 Japanese-style individual pods or capsule beds with built-in luggage compartment, control panel for spotlight, airduct and piped-in music.

But Fernando said the ventilator was insufficient.

“We plan to install air-condition units. That’s why we are considering to ask a fee adjustment.”

The inn opened on June 12, the 110th anniversary of Independence Day.

Last year, the agency renovated the old National Power Corp. building in Port Area, Manila and converted it into the first Gwapotel as a non-wage benefit for workers.

Rio N. Araja

Manila Standard

THE Metro Manila Development Authority said its second workers’ inn in Tondo will open in time for the celebration of the 110th anniversary of Independence Day.

Executive director Angelito Vergel de Dios said President Arroyo will lead the inauguration of the Gwapotel on Jose Abad Santos Street after the ceremonies at the Luneta Park.

“For the first time, there is no military and civil parade, instead a flag-raising ceremony. After this, we will proceed to Tondo to formally launch the inn,” he said.

Vergel de Dios said the facility had three-deck beds to accommodate 800 people with compartments for luggages, air duct for ventilation, and piped-in music.

“Our primary concern is the privacy.”

Occupants of the first Gwapotel which is located near the Manila Hotel in Port Area have complained about the ward-like conditions.

“Snoring was a no. 1 problem of the guests [who] get distracted in their sleep,” said Vergel de Dios, noting that the P25 overnight rate included an eight-minute shower.

Gwapotel 2 is the abandoned Emmanuel Hospital turned over to the Privatization Management Office of the Finance Department which the authority renovated for P10.7 million.

For now, Vergel de Dios was discounting the possibility of any rate increase, indicating that Gwapotel was part of the non-wage benefits of the labor sector.

Rio N. Araja

Manila Standard

THE National Anti-Poverty Commission and Gawad Kalinga have signed a memorandum of agreement to build houses in 700 poorest towns and cities.

At a news conference, Secretary Domingo Panganiban, commission head, thanked GK founder Antonio Meloto in behalf of executive director Jose Luis Oquiñena for efforts to “galvanize their relationship and give the much-needed help of slum dwellers” as part of the government program to uplift the lives of the marginalized segment of the society.

“We are glad to have such partnership with GK,” he told reporters.

Meloto said the commission and GK, officially the Gawad Kalinga Community Development, were in the process of identifying poor communities in the Bicol region, Southern Leyte and the Visayas.

He said GK has invited architects, engineers and other volunteers to lend a hand in putting up decent housing facilities for informal settlers.

“The problem of poverty is so immense and intense that the government cannot work alone without help from others.”

Meloto said GK has a lot of experts and local and international partners to promote the spirit of community by building homes for the poor.

“[The problem with us is that] We leave everything to the government and always blame the government.”

He appealed to the eight million migrants and migrant Filipino workers to pitch in toward creating opportunities for the impoverished. Meloto also called for a stop to political bickering and set aside religious differences to alleviate “extreme poverty in the Philippines.”

Rio N. Araja

Manila Standard

The Metro Manila Development Authority is putting up two budget inns for workers in Quezon City following its first Gwapotel near the Manila Hotel at Port Area.

Amante Salvador, chief of the Metropolitan Social Service Office, said Chairman Bayani Fernando identified one site on Quezon Avenue corner D. Tuazon Street in Barangay Doña Josefa, and the other on West Point Street along Aurora Boulevard, Cubao.

He said he recently met with the owners of the 1,800-square-meter three-story Shianghio building who were willing to go on a lease agreement for P100 per sqm monthly.

“Fernando is offering the agency’s resources to renovate the place. The owners, in return, must not charge us any. They could continue the operation after five years,” Salvador told Standard Today.

He said China Trust Bank occupied the ground level but the second and third have been deserted for sometime.

“We can convert two floors into a workers’ inn to house 720.”

Salvador said a study indicated a significant occupancy potential for another lodge.

“About 2,000 workers within the auto spare parts district of Banaue reside in Barangay Doña Josefa, while the rest are from other parts of Metro Manila and its nearby provinces.”

He also counted as clients night workers from 24-hour fast-food chains, security guards, hospital employees of the National Orthopedic Hospital and transients accompanying patients.

At the Araneta Center, Salvador said the 1,020-sqm West Point Hotel has been offered by owner Salvador Chan, a lawyer, from the second to the fourth floor with about 600-bed capacity.

A survey showed employees of establishments led by Rustan’s companies come from Bulacan and Rizal.

Fernando renovated the National Power Corp. building on Bonifacio Drive, into the first Gwapotel inn as Malacañang’s present to workers in May 2007.

The transformation of the Emmanuel Hospital on Jose Abad Santos Avenue in Manila is under way for a second Gwapotel which would be launched on Labor Day.

Salvador said the agency is targeting at least 10 inns to open before 2010.

Rio N. Araja

Fel V. Maragay
Manila Standard

Up to 49,531 families will be spared from eviction from their homes if Congress will enact another law that will condone all penalties for delinquent housing loans and allow the borrowers to restructure their loans with government financing institutions.

The proposed condonation is embodied in Senate Bill 1987 which was recommended for approval by Senator Juan Miguel Zubiri, chairman of the committee on urban planning, housing and resettlement.

Zubiri said the intended beneficiaries of the proposal have been delinquent in their monthly amortization payments for at least six consecutive months and their lots and housing units are now subject to foreclosure proceedings by the lending government financing institutions.

They comprise 41.5 percent of the total housing loan accounts (202,061) of the covered GFIs and housing agencies. With an average family size of six people per family, an estimated 1.5 million Filipinos will be driven out of their homes if he state fails to provide them debt relief.

But Zubiri stressed that the approval of this proposal “does not mean that we are encouraging non-payment of loans.”

“If they are driven away from their homes not by war, conflagration or natural calamities but from non-payment of housing loans, it will further aggravate the housing and resettlement problems. At the end of the day, it is society and the government that will bear the burden of their problems,” he said.

Under House Bill 1987, the delinquent borrowers will be entitled to condonation and restructuring of their loans upon approval of their application by the housing and GFIs concerned.

They will be allowed to avail of the condonation within a period of three years from effectivity of the law. The bill provides that the original principal amount of the housing loan to be restructured shall not exceed P2.5 million. But the Housing and Urban Development Coordinating Council is authorized to adjust the amount every year after the effectivity of the law.

If the borrower fails to pay six consecutive monthly amortizations during the term of the restructured loan, the GFI or housing agency concerned may pursue foreclosure proceedings on the property.

Covered by the proposed law are the Government Service Insurance System, Social Security System, Home Development Mutual Fund or Pag-Ibig, National Home Mortgage Finance Corp., Social Housing Finance Corp., Home Guaranty Corp., and the National Housing Authority.

Francis Earl A. Cueto, Reporter
Manila Times

Vice-President Noli de Castro announced over the weekend the earmarking of P30 billion that the Home Mutual Development Fund will make available for home financing next year to Pag-Ibig fund members.

De Castro, who is also the chairman of the Housing and Urban Development Coordinating Council, vowed to make more homebuyers out of Pag-Ibig members.

Speaking during the grand launching of the Fiesta Communities at the Fontana Convention Center in Pampanga, de Castro said he is determined to use the fund for the home financing needs of Pag-Ibig members, particularly those belonging to the low-income and middle-income categories.

“Pag-Ibig has a fat budget for home financing next year and I hope that Pag-Ibig members will take advantage of this,” he said.

Besides the P30-billion allocation, De Castro reiterated the benefits of the back-to back adjustments made on the housing loan rates of Pag-Ibig which was implemented last year.

With the new rates and maximum repayment period of 30 years, de Castro said the government made house acquisition more affordable for Pag-Ibig members.

“So this is really the best time to own your dream house. I urge all Pag-Ibig members to take this opportunity,” he said.

De Castro likewise lauded the developers for supporting the housing industry in the country.

“As I have been saying time and again, these reforms would not be meaningful if we did not have the inventories to meet the growing demand,” he said.

In return, de Castro said the government is serious in extending help to make the housing sector grow by fast tracking the processing of business permits and licenses.