QuestionsQuestions (BSP CIRCULAR NO. 600, S. OF 2008)
It was issued pursuant to Monetary Board Resolution No. 68 dated 17 January 2008 to amend Section 1397 of the Manual of Regulations for Banks (MORB) by updating the limits on real estate loans of Universal Banks/Commercial Banks.
The total real estate loans of UBs/KBs, excluding specified categories, shall not exceed twenty percent (20%) of the total loan portfolio, net of interbank loans.
Excluded are: (a) loans to individual households for financing acquisition/construction/improvement of housing units and associated land occupied by the borrower, regardless of amount; (b) loans to land developers/construction companies for development/construction of socialized and low-cost residential properties intended for sale to individual households; (c) loans to the extent guaranteed by the Home Guaranty Corporation (HGC); and (d) loans to the extent collateralized by non-risk assets under existing regulations.
It implies that such qualifying household housing loans are excluded from the 20% calculation, so their size will not affect the bank’s compliance with the 20% cap under the excluded category.
Real estate loans include (a) loans to individual households for acquisition, construction, and/or improvement of housing units and acquisition of associated land occupied by the borrower (including certain loans to bank officers/employees covered by an approved fringe benefit plan); and (b) loans to land developers/construction companies and other borrowers for acquisition/development of land and/or construction of buildings/structures, including housing units for sale/lease or for retail/wholesale/manufacturing/other income-generating purposes, including land development and residential construction.
Loans for the construction of highways, streets, bridges, tunnels, railways, and other infrastructure for public use are excluded from “real estate loans” under the definition.
Yes. Purchases of receivables under CTS executed between real estate developers and home buyers on a with recourse basis are considered loans to real estate developers and classified as commercial real estate loans.
It indicates that the bank’s exposure is effectively like a lending risk to the developer; thus, the purchased receivables are treated as loans to the real estate developer for classification and compliance purposes.
Loans to bank officers and employees for the same housing purposes are included within the excluded “household” category only if they are covered by the bank’s fringe benefit plan and the plan was approved by the Monetary Board.
They are defined by housing package loan ceilings under HUDCC guidelines: Level 1-A (Socialized) = P300,000 and below; Level 1-B = Above P300,000 to P500,000; Level 2 = Above P500,000 to P1,250,000; Level 3 = Above P1,250,000 to P3,000,000.
Loans to land developers/construction companies for development and/or construction of socialized and low-cost residential properties (as defined by HUDCC guidelines) intended for sale to individual households are excluded from the 20% computation.
Real estate loans are excluded from the 20% limit to the extent they are guaranteed by HGC.
Loans are excluded from the 20% limit to the extent collateralized by non-risk assets under existing regulations.
No. The limit is “net of interbank loans,” meaning interbank loans are excluded from the denominator computation of the total loan portfolio for the purpose of determining compliance.
The trust departments of UBs/KBs are exempted from the prescribed limit on real estate loans.
It takes effect fifteen (15) calendar days following its publication in either the Official Gazette or in a newspaper of general circulation.
It is the revised template of the “Report on Real Estate Exposure,” which forms part of the Financial Reporting Package issued under Circular No. 512 dated 03 February 2006, as amended, for UBs/KBs and TBs.