Question & AnswerQ&A (SHFC CORPORATE CIRCULAR HDH NO. 14-002)
The IRR is formulated to implement Building Construction and Site Development Loans under the High Density Housing (HDH) Program pursuant to SHFC Corporate Circular No. 13-026.
Site development refers to improvements on the project site related to establishing roads, constructing drainage and sewerage systems, and installing water and electrical systems.
Building construction is the process of building or assembling infrastructure primarily used to provide shelter.
Community associations that are registered owners of land or have existing usufructuary arrangements with landowners or have availed of the lot acquisition loan under the HDH program, and have complied with the requirements for loans under the program.
The maximum loanable amount per ISF is P450,000 inclusive of land acquisition, building construction, and site development loans, subject to increase by HUDCC.
The loan amount is the lowest among: (a) the sum of loan entitlements of community association member-beneficiaries, (b) project cost, or (c) the appraised value of the property.
The interest rate is 4.5% per annum with a maximum loan term of 30 years.
They must inform SHFC of their choice of tenurial arrangement which may be through Usufruct, individual Condominium Certificate of Title (CCT), or other similar tenurial arrangements.
SHFC assesses financial stability, managerial capability, organizational structure, technical expertise, delivery capability, and experience as per the Contractor's Evaluation (HDH-CEP Form). Contractors must meet minimum PCAB license requirements and developers must be members in good standing of CREBA, SHDA, or OSHDP.
A performance security in the form of a surety bond equivalent to 10% of the contract price, callable in favor of SHFC and issued by a certified surety or insurance company.
It is 10% of the contract price retained by SHFC to cover repairs of defective work, released within six months from project completion upon acceptance of repair works by the community association.
Mortgage Redemption Insurance (MRI) and Fire and Allied Perils Insurance (FAPI) covering the house and its improvements equivalent to the loan amount.
The loan shall be secured by a real estate mortgage (REM) annotated on the back of the community association's land titles.
Technical plans (floor plans, elevations, layout designs), building and development permits, contractor/developer certifications, cost estimates, bidding reports, and related legal, financial, and technical documents as specified in Annex B.
SHFC must verify that the collateral value, including land and improvements, sufficiently covers the loan based on progress reports from the HDH team.