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Pag-IBIG FundCorporate Headquarters
Petron MegaPlaza358 Sen. Gil Puyat Avenue.,
Makati City
Circular No. 351
TO: ALL CONCERNED
SUBJECT: AMENDED GUIDELINES ON THE IMPLEMENTATION OF THEPAG-IBIG NON-PERFORMINGASSET RESOLUTION PROGRAM
Pursuant to the approval of the Senior Management Committee, the followingAmended Guidelines on the Implementation of the Pag-IBIG Fund Non-PerformingAsset Resolution Program (NPARP) are hereby issued:
A. OBJECTIVES
The program aims to achieve the following objectives:
1. To assist highly delinquent borrowers to maintain their possession or use of theproperty under modified terms and conditions; and
2. To immediately dispose of non-performing assets at the highest value possiblethrough cash and installment sale.
B. DEFINITIONOF TERMS
1. Book Value - shall be the sum of the outstanding principal balance, three(3) months accrued interest and insurance premiums advanced by theFund, if any, as of the submission date of the borrower's application foravailing NPARP.
2. Group Land Acquisition and Development (GLAD) Accounts - refers to theindividual accounts of beneficiaries of a GLAD project.
3. MCR (Mortgage Contract Receivable) Accounts Secured by Real EstateMortgage (REM) - these are housing loan accounts taken out under theREM Scheme.
4. SCR (Sales Contract Receivable) Accounts Secured By Contract-to-Sell(CTS) - these are housing loan accounts taken out under the CTS Scheme.Under the CTS scheme, the account is processed for conversion to aregular REMwithin the seasoning period, except for Generic account whichwill remain under the CTS scheme for the entire term of the loan.
5. SCR Accounts Secured By Deed of Conditional Sale (DCS) - these arehousing loan accounts taken out under the DCS Scheme. Under the DCSScheme, specifically for developer-assisted housing loans, the title of theproperty subject of the loan shall be transferred in the name of the Fund byexecution of a Deed of Absolute Sale (DOAS) between the Fund and the
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developer. In turn, a Deed of Conditional Sale shall be entered between theFund and the borrower. Transfer of ownership in favour of the borrowershall be initiated only after full settlement of obligation with the Fund forthe said subject property.
C. COVERAGE
The program shall cover the following:
1. Mortgage Contract Receivable (MCR) / Sales Contract Receivable (SCR)Account that has undergone the full cycle of remediation activities, asdefined in the existing business rules of the Pag-IBIG Fund (the Fund), as of dateof filing of application for settlement of obligation under NPARP; provided that:
1.1 For SCR accounts that are secured by a Contract-to-Sell (CTS) or Deedof Conditional Sale (DCS), the CTS or DCS has not yet been cancelled;
1.2 For MCR accounts that are secured by a Real Estate Mortgage (REM)and are referred to foreclosure or with filed petition for extra judicialforeclosure, the Fund is the winning bidder and the Certificate of Saleis not yet registered.
2. MCR / SCR Account where no single payment has been made after thetakeout date of the original loan or after loan restructuring date; providedthat, the chosen mode of settlement is either through cash or installmentpayment.
3. Group Land Acquisition and Development (GLAD) / Homeowners' Associationloan accounts that are more than two (2) years in arrears as of date of filing ofapplication for settlement through NPARP; provided, there are individual ledgersfor the GLAD beneficiaries and the titles are already unitized.
D. EXCLUSIONS
The following shall be ineligible to avail of the program:
1. A borrower or the heir of a deceased borrower, or the borrower's successor-in-interest who has filed or has a pending case against the Fund relative to theforeclosure of REM or cancellation of CTS/DCS;
2. A borrower or the heir of the deceased borrower whose case against the Fundrelative to the foreclosure of REM or cancellation of CTS/DCS has been decidedin favor of the Fund;
3. A borrower whose loan account has been the subject of a Notice of Buybackfor breach of warranties due to fraud on loan documentation and bymisrepresentation.
4. A borrower who has not made a single payment after the takeout date ofthe original loan or after loan restructuring date and the would-be mode ofsettlement for availing NPARP is through housing loan revaluation.
5. Borrowers who have already availed of NPARP.
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E. MECHANICS
1. A delinquent housing loan shall be revalued based on the appraised valueof the property less applicable discount or its book value, whichever ishigher. The revalued loan may be settled through any of the following:
1.1. Housing Loan,
1.2. Cash Payment; or
1.3. Installment payment, payable in a maximum period of six (6) or twelve (12)months depending on the borrower's choice.
2. The Fund shall grant a discount on the appraised value of the propertydepending on the chosen mode of settlement of the borrower:
Mode of Settlement DiscountCash 30%
6 - month lnstallment 20%12 - month lnstallment 10%
Housing Loan 5%
However, if the discounted amount falls below the book value, the sellingprice to be adopted shall be the book value.
3. The borrower or his heir or the borrower's successor-in-interest shall berequired to pay the following costs incurred by the Fund:
• Insurance premiums advanced by the Fund; and
• Expenses incurred by the Fund relative to the filing of a petition forforeclosure, if any.
The aforesaid costs, if any, shall be paid as follows:
a. If the mode of settlement chosen is cash basis, the said cost shall beadded with the net resulting consideration derived in Section E.2 and theaggregate amount shall be paid within thirty (30) calendar days fromreceipt of the Approval of Settlement;
b. If the mode of settlement chosen is on installment basis, the said costshall be paid on the due date of the first monthly installment;
c. If the mode of settlement chosen is through housing loan, the saidcost shall be capitalized and shall form part of the revalued loanamount to be amortized over the loan period together with themonthly amortization for the housing loan.
4. GLAD/Homeowner Association Loan Accounts
4.1. For GLAD/Homeowner Association Loan borrowers, the followingadditional requirements must be satisfied to qualify for NPARP:
a. The community/association is active and duly registered at theSecurities and Exchange Commission (SEC), Housing and LandUse Regulatory Board (HLURB) or the Cooperative DevelopmentAuthority (CDA);
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b. The updated real estate property tax receipt must be presented andsubmitted at point of application.
4.2. For the conversion of the GLAD share to individual Pag-IBIG housingloan, the following terms and condition shall apply:
a. The borrower's housing loan shall bear an interest rate based onthe Fund's pricing framework;
b. The loan shall be secured by the property mortgaged with Pag-IBIGFund covering the housing loan of the beneficiary;
c. The Loan-to-Appraised Value Ratio shall be one hundred percent(100%);
4.3. All expenses that will be incurred in the registration of mortgageand/or transfer of title shall be shouldered by the borrower.
4.4. If the beneficiary opts to convert his proportionate share in the GLADobligation to Pag-IBIG housing loan, the community/homeownersassociation shall execute an accommodation mortgage or Third-PartyMortgage covering the property subject of the housing loan in favor ofPag-IBIG Fund.
In case the beneficiary is financially capable to immediately undertakethe conversion to individual housing loan and to transfer the TCT inhis name, a direct Real Estate Mortgage (REM) may be executedbetween the beneficiary and Pag-IBIG Fund upon the issuance of theDeed of Absolute Sale (DOAS) by the community/homeownersassociation.
F. PROCESSINGOF APPLICATIONS
1. The borrower or the heir(s) or the successors-in-interest shall submit his letterof intent stating his chosen mode of settlement. Within fifteen (15) working daysfrom submission of complete requirements, the borrower or the heir(s) or thesuccessors-in-interest shall be notified of the approval/disapproval of his/herapplication for settlement.
2. Only applications with complete documents/requirements will be processed.
G. MODESOF SETTLEMENT
1. Housing Loan
1.1. Borrower's Eligibility
1.1.1. The borrower or the heir(s) or the successors-in-interest maysettle the revalued loan through housing loan, provided that:
a. For housing loan not exceeding P1,250,000.00 - the monthlyamortization of the revalued loan shall not exceed thirty-fivepercent (35%) of the borrower's gross monthly income.
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b. For housing loan exceeding P1,250,000.00 - the monthlyamortization of the revalued loan shall not exceed thirty percent(30%) of the borrower's gross monthly income.
c. In case of tacked loans, the individual gross monthly income ofat most three (3) borrowers shall be considered.
For the borrower's heir or the successors-in-interest, theeligibility requirement of capacity to pay shall be waived. An heirshall be defined under the law of succession.
1.1.2. The borrower or the heir(s) or the successors-in-interest, haspaid the Real Estate Taxes due on the property and hasdeposited an amount with Pag-IBIG Fund to pay one yearinsurance premiums.
In case the application for housing loan is disapproved, theFund shall refund the amount paid by the borrower for the oneyear insurance premium within fifteen (15) working days fromthe issuance of the Notice of Disapproval; provided, theborrower has already vacated the subject property.
1.1.3. The borrower or the heir(s) or the successors-in-interest is anactive Pag-IBIG Fund member. If the borrower or the heir(s) or theborrower's successor-in-interest is inactive or has arrearages inhis membership contributions, he shall be required to reactivate hismembership with the Fund. If the heir or the successor-in-interestis not a Pag-IBIG member, he shall be required to register with theFund.
1.2. The revalued loan shall be charged with interest rates based on the Fund'spricing framework. Said interest rates shall be re-priced periodicallydepending on the chosen fixed-pricing period of the borrower.
1.3. The revalued loan shall be secured by the same collateral that secured theoriginal loan.
1.4. The borrower or the heir(s) or the successors-in-interest shall berequired to pay the upgraded monthly savings, if applicable, thatcorrespond to the revalued loan amount on a monthly basis until fullpayment of the loan.
Pag-IBIG Monthly Revalued Loan AmountSavings50 Up to P125,000
100 Over P125,OOOto P250,OOO150 Over P250,OOOto P375,OOO200 Over P375,000 to P500,000250 Over P500,000 - P600,000300 Over P600,000 - P700,000350 Over P700,000 - P800,000400 Over P800,000 - P900,000450 Over P900,000 - P1,000,000500 Over P1,000,000 - P1,100,000550 Over P1,100,000 - P1,200,000600 Over P1,200,000 - P1,300,000650 Over P1,300,000 - P1,400,000700 Over P1,400,000 - P1,500,000750 Over P1,500,000 - P1,600,000800 Over P1,600,000 - P1,700,000
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Pag-IBIG Monthly Revalued Loan AmountSavings
850 Over P1,700,000 - P1 ,800,000900 Over P1 ,800,000 - P1 ,900,000950 Over P1 ,900,000 - P2,000,000
1,000 Over P2,000,000 - P2, 100,0001,050 Over P2, 100,000 - P2,200,0001,100 Over P2,200,000 - P2,300,0001,150 Over P2,300,000 - P2,400,0001,200 Over P2,400,000 - P2,500,0001,250 Over P2,500,000 - P2,600,0001,300 Over P2,600,000 - P2,700,0001,350 Over P2,700,000 - P2,800,0001,400 Over P2,800,000 - P2,900,0001,450 Over P2,900,000 - P3,000,0001,500 Over P3,000,000 to P3,1 00,0001,550 Over P3,100,000 to P3,200,0001,600 Over P3,200,000 to P3,300,0001,650 Over P3,300,000 to P3,400,0001,700 Over P3,400,000 to P3,500,0001,750 Over P3,500,000 to P3,600,0001,800 Over P3,600,000 to P3,700,0001,850 Over P3,700,000 to P3,800,0001,900 Over P3,800,000 to P3,900,0001,950 Over P3,900,000 to P4,000,0002,000 Over P4,000,000 to P4,100,0002,050 Over P4, 100,000 to P4,200,0002,100 Over P4,200,000 to P4,300,0002,150 Over P4,300,000 to P4,400,0002,200 Over P4,400,000 to P4,500,0002,250 Over P4,500,000 to P4,600,0002,300 Over P4,600,000 to P4,700,0002,350 Over P4,700,000 to P4,800,0002,400 Over P4,800,000 to P4,900,0002,450 Over P4,900,000 to P5,000,0002,500 Over P5,000,000 to P5,1 00,0002,550 Over P5, 100,000 to P5,200,0002,600 Over P5,200,000 to P5,300,0002,650 Over P5,300,000 to P5,400,0002,700 Over P5,400,000 to P5,500,0002,750 Over P5,500,000 to P5,600,0002,800 Over P5,600,000 to P5,700,0002,850 Over P5,700,000 to P5,800,0002,900 Over P5,800,000 to P5,900,0002,950 Over P5,900,000 to P6,000,000
1.5. Payment Through Housing Loan
1.5.1. The revalued loan that is to be settled through housing loan, shallbe payable within a maximum term of thirty (30) years from date ofapproval, but not to exceed the difference between the borrower'spresent age and age seventy (70). The same shall apply to theheir or borrower's successor-in-interest.
In case of tacked loans, the loan shall be payable within a maximumterm of thirty (30) years but not to exceed the difference between theyoungest borrower's (principal borrower or co-borrower) presentage and age seventy (70).
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1.5.2. The revalued loan shall be paid in equal monthly amortizations overthe loan period in such amounts as may fully cover the principal,interest, insurance premiums, monthly savings (if applicable),upgraded savings (if applicable), foreclosure expenses, if anyand other loan obligations as specified in Item E Section 3 of theseguidelines. The first monthly amortization shall be due one (1) monthfrom approval date of loan revaluation and shall be paidnotwithstanding the one-month advance payment under Item G,Section 1.5.3 hereof.
1.5.3. If the borrower or the heir(s) or the successors-in-interest is stillemployed, payments shall be made through a salary deductionscheme pursuant to a collection agreement with his employer. Theborrower or the heir(s) or the successors-in-interest shallexecute an Authority to Deduct the monthly loan amortization fromhis salary, and shall secure the conformity of his employer for thepurpose.
Upon approval of loan revaluation, the borrower or the heir(s) orthe successors-in-interest shall pay in advance an amountequivalent to one (1) monthly amortization, the amount of which isbased on the approved revalued loan, directly to the Fund.
1.5.4. In case a salary deduction scheme is not feasible, monthlypayments on the revalued housing loan may be collected throughany of the following modes:
a. Post-dated checks (PDCs) to cover at least the first twelve (12)monthly amortizations. PDCs must be dated on the date thatcoincides with the date of approval of loan revaluation and maybe issued by any of the following:
a.1 Member-borrower or co-borrower; or
a.2 A third-party paying for the account of the borrower;
b. Over-the-counter;
c. Through accredited collecting banks/agents;
d. Auto-debit arrangement with banks; or
e. Through any collection system which the Pag-IBIG Fund mayadopt in the future.
1.5.5. The monthly amortization shall be applied according to the followingorder of priorities:
a. Mandatory Savings (for directly-paying members);
b. Upgraded Savings (if applicable);
c. Penalty (if applicable);
d. MRIISRIlFire and Allied Perils Insurance;
e. Interest; and
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f. Principal.
1.5.6. A borrower or the heir(s) or the successors-in-interest who failsto pay the monthly amortization/installment on the revalued loan onor before the due date shall be charged a penalty of one-twentieth ofone percent (1/20 of 1%) of the amou nt due for every day of delay.
1.5.7. In case of accelerated payments, any amount in excess of themonthly amortization due shall be treated as future amortization andshall be applied when due. However, upon request of the borrowerand provided the amount to be applied is equivalent to at least onemonthly amortization, said amount shall be applied to principal.
The preferred treatment of the excess payment by the borrower orthe heir(s) or the successors-in-interest shall be notedon/properly disclosed on the Pag-IBIG Fund Receipt (PFR).
1.5.8. The borrower or the heir(s) or the successors-in-interest shall beconsidered in default if he, or any of his co-borrowers, in case of atacked loan:
a. Fails to pay any three (3) monthly amortizations;
b. Incurs arrearages in an amount equivalent to at least 3 months ofamortizations; or
c. Violates or fails to perform any of the obligations in thecontract entered into with Pag-IBIG Fund.
In case of multiple loans, should one (1) of the housing loanaccounts becomes in default, the defaulting loan account andall of the other housing loans shall be considered in default aswell.
1.5.9. Loan Documentation
a. For MCR accounts that are secured by REM, the borrower orthe heir(s) or the successors-in-interest shall execute a Loanand Mortgage Agreement (LMA) and a new Promissory Note(PN). In case of heir, he and his co-heirs shall execute anextrajudicial settlement and transfer the title in their names. Theyshall execute the LMA, although the PN may be signed by theheir assuming the revalued loan. The cost of the transfer fromthe borrower to the heirs shall be for the latter's account.
b. For revalued loans involving SCR accounts that are securedby CTS, the following shall apply:
b.1 In case the CTS is in the process of conversion to REM,the Fund shall proceed with the conversion processand transfer the title in the name of the borrower. Costsin excess of the retained amount for conversion shall be forthe account of the borrower.
b.2 If the conversion process has not yet started, the Fundshall transfer the title of the property in its name.Conversion cost shall be shouldered by the Fund. The
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retained amount originally intended for converting theCTS to REM in favor of the borrower shall then be usedand applied, at the option of the borrower, as principalpayment or as future amortization payment. A Deed ofConditional Sale (DCS) for the property shall beexecuted between the Fund and the borrower with therevalued loan as the purchase price. The borrower shallexecute a new PN for the revalued loan.
b.3 When the borrower dies during the conversion, orbefore the conversion has started, the Fund shalltransfer the title to the property in its name. Cost ofconversion shall be for the account of the Fund.
A Deed of Conditional Sale (DCS) shall be executedbetween the heir or successor-in-interest and the Fund.The retained amount for converting the CTS to REMshall then be used and applied, at the option of theheir(s)/successor-in-interest, as principal payment or asfuture amortization payment.
c. For revalued loans involving SCR accounts that are securedby DCS, an amended DCS and a new PN shall be executedbetween the Fund and the borrower.
2. Cash payment shall refer to the full payment of the amount due within thirty (30)calendar days from receipt of the Approval of Settlement. No interest shall becharged for cash payments.
3. Installment
3.1 If the amount due will be paid for a period exceeding thirty (30) calendardays up to a maximum of twelve (12) months, it shall be charged with theprevailing interest rate at the time of application.
3.2 The revalued loan shall be paid in equal monthly payments throughout thechosen term. The first monthly installment shall commence on the monthimmediately following the signing of Promissory Note.
3.3 The buyer shall be subject to a penalty of 1/20 of 1% of the amount due forevery day of delay.
4 Change in Mode of Settlement
4.1 The borrower is allowed to request for a change of mode of settlement:
From To
Cash Installment
Cash Housing Loan
Installment Housing Loan
4.2 The request must be filed not later than ten (10) working days prior toexpiration of the approved payment period.
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4.3 The discount shall be recomputed based on the new mode of payment.
4.4 The buyer shall be required to pay an interim interest, based on prevailingmarket-based interest rates, on the amount of consideration from date ofapproval of new mode of payment up to the signing of the PromissoryNote. Payment of the interim interest must be made on the date of signingof the Promissory Note.
H. OTHER PROVISIONS
1. For MCR accounts that are secured by REM, if the borrower or the heir(s) orthe successors-in-interest did not qualify for housing loan or is unable to payfor the property in full or by installment, the Fund may allow them to surrenderthe property that secured the original loan with the Fund by executing a dacionen pago in accordance with existing guidelines.
2. The Fund may proceed with foreclosure of REM or cancellation of CTS/DCS,whichever is applicable.
I. ESCALATION CLAUSE
Any issue in the interpretation and implementation of these guidelines shall, asmuch as possible, be resolved by the concerned officer. Matters that are notthereby satisfactorily resolved shall be escalated to the next higher approvingauthorities.
J. REPEALING CLAUSE
The existing Pag-IBIG Fund Circular Nos. 311, 327, 336, as well as othermemoranda, rules, regulations and other issuances inconsistent herewith are herebyrepealed.
K. AMENDMENTS
The Management may amend, modify, revise and/or update the guidelines asneeded; provided, the amendments, modifications, revisions and updatesthereof, are in furtherance of the objectives of this Program and are consistentwith the mandate of Pag-IBIG Fund under its charter and existing laws.
L. EFFECTIVITY
These guidelines take effect immediately.
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ATTY. DARLENE MARIE B. BERBERABEChief Executive Officer
Makati City,NOV 262014
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