QuestionsQuestions (Republic Act No. 8763)
RA 8763 is known as the “Home Guaranty Corporation Act of 2000.” The State policy is to undertake, in cooperation with the private sector, a continuing nationwide housing program to make available at affordable cost decent housing; and to strengthen, promote, and support housing production and finance.
The Home Insurance and Guaranty Corporation is renamed as the Home Guaranty Corporation (the Corporation). Its principal office is in Metropolitan Manila, and it shall exist for 50 years from December 15, 2000.
Examples include: (1) guaranty payment of mortgages/loans/credit receivables exclusively for residential purposes; (2) assist private developers in socialized/low/medium-cost mass housing; (3) develop a secondary mortgage market; (4) underwrite/purchase/sell/mortgage/dispose of stocks, bonds, debentures, and other indebtedness evidences connected to its purposes (but not direct mortgage lending); (5) borrow/issue obligations in local currency subject to Presidential approval; (6) promote aided self-help housing by technical guidance and guarantying loans on first liens.
Authorized capital stock is P50,000,000,000 divided into 50,000,000 shares at P1,000 par value per share. Of the increased authorized capital stock of P47,500,000,000, P7,500,000,000 must be subscribed and paid in cash by the Government upon approval of the Act, appropriated from the National Treasury.
At least 40% for socialized housing, at least 30% for low-cost housing, at least 20% for medium-cost housing, and not more than 10% for open housing; allocations must be distributed equitably among regions to the extent practicable.
The Board has 7 members: (1) Secretary of the Department of Finance as ex officio Chairman; (2) Chairman of HUDCC as ex officio Vice Chairman; (3) NEDA Director General; (4) President of the Corporation; and (5)-(7) three other Presidential appointees. The Secretary of Finance is Chairman; the HUDCC Chairman is Vice Chairman.
They must be subject to the concurrence of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP), even if other provisions may seem contrary.
The President is appointed by the President of the Philippines for a term of 5 years unless sooner removed for cause, and must be of good moral character, unquestionable integrity, known probity and patriotism, with at least 10 years’ experience in business, finance, and the professions.
Socialized: up to 100% of appraised value; Low-cost: up to 90%; Medium-cost: up to 80%; Open housing: up to 70%.
It must 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 20 years from the date the guaranty was executed, and the mortgage rights/rights in rem must be duly annotated on the title or effectively protected.
Amortization provisions must require periodic payments by the borrower not in excess of his reasonable ability to pay and must comply with the required loan-to-collateral ratio set by the Corporation. Maturity must be satisfactory to the Corporation but not to exceed 30 years.
No less than: 0.5% (1/2 of 1%) for socialized; 0.75% (3/4 of 1%) for low-cost; 1% for medium-cost; and 1.5% for open housing, of the amount of outstanding principal obligation.
The Corporation guarantees payment of balance outstanding plus interest/yields up to: 11% per annum for socialized; 10% for low-cost; 9.5% for medium-cost; and 8.5% for open housing.
At least 40% for socialized packages, at least 30% for low-cost, at least 20% for medium-cost, and not more than 10% for open housing.
Examples: (1) Developmental projects for any one institution/entity cannot exceed 3 times its net worth at any time; (2) extension of guaranty does not exempt BSP-regulated banks from single borrower limits; (3) aggregate outstanding obligations cannot exceed 20 times the Corporation’s capital and surplus; (4) sets aside 5% of annual net operating revenues before interests as reserve/sinking fund; and ceilings require BSP Monetary Board concurrence.
Upon default and in accordance with Corporation regulations, the guaranteed entity receives the benefit of guaranty after (1) prompt conveyance to the Corporation of the right to the property securing the guaranteed obligations; and (2) assignment to the Corporation of all claims of the mortgagee against the mortgagor under the guaranteed obligation. After conveyance/assignment, the entity’s obligation to pay premium charges ceases and the Corporation pays cash and/or issues debenture bonds equivalent to the guaranteed obligation (at its option).
The Republic fully and unconditionally guaranties payment by the Corporation of principal sums and interest of its issued obligations under the Act if the Corporation fails. It also guaranties the Corporation’s guaranty obligations as to principal and interest up to the caps per housing category. The aggregate amount of such obligations must not exceed the limits referenced in the Act (including the cap under Section 5(f) and the 20-times capital and surplus limit under Section 18(b)).
Section 27 penalizes: (1) making/publishing false statements with intent to obtain credit/guaranty or influence HGC action; (2) altering/forging/counterfeiting documents/instruments; (3) willfully overvaluing security/assets/income; (4) falsely making or circulating forged obligations/coupons; (5) circulating untrue derogatory rumors affecting HGC’s financial condition/solvency. Penalties range from fines and imprisonment terms (e.g., up to 10 years for first type, up to 5 years for forged obligation/coupon type, and up to 1 year for rumor-related felony, plus fine floors tied to the loan amount).