Question & AnswerQ&A (Republic Act No. 222)
The main purpose of Republic Act No. 222 is to authorize the Government of the Philippines, through the People's Homesite and Housing Corporation, to guarantee not more than fifty percent of the losses which banks and credit institutions may incur on loans granted specifically for the repair, improvement, construction, and/or purchase of residential homes.
Banks, banking institutions, trust corporations, building and loan associations, and insurance companies duly incorporated under Philippine laws or licensed to do business in the Philippines can have their loans guaranteed under this Act.
Each individual loan to be guaranteed shall not exceed the sum of ten thousand pesos.
The term of payment shall be between five to fifteen years; the rate of interest shall not be more than eight percent per annum; the loan amount must be between sixty to eighty percent of the fair market value of the real estate given as security; and only one loan shall be granted per borrowing homebuilder.
Ownership is proven if the borrower shows that the property has been assessed for taxation in his name or that of his predecessors in interest for not less than ten years, taxes have been paid, and that the borrower has had open, uninterrupted, and adverse possession for a similar length of time.
The amount of loss the Government may guarantee on a loan shall not be more than fifty percent of the uncollectible portion of that loan.
The Loan Guarantee Fund is a trust fund established with an appropriation of five million pesos from the Treasury to cover obligations arising from the Government's guarantee. It also accrues interest from premiums paid by lending institutions.
Depending on the interest rate charged, portions of interest accruing to the Loan Guarantee Fund are: 1% if the interest is 8%; 0.75% if between 6% and less than 8%; and 0.25% if less than 6%. These premiums are assumed by the lending institutions and cannot be passed to the borrowers.
Any person knowingly contracting a fictitious or fraudulent loan, as well as responsible officers or employees of lending institutions or the People's Homesite and Housing Corporation, shall be fined up to five thousand pesos, or imprisoned up to two years, or both.
The People's Homesite and Housing Corporation, with the approval of the President of the Philippines, is authorized and directed to promulgate necessary rules and regulations for the proper administration and enforcement of this Act.