Program objectives and coverage
- The guidelines implement the Pag-IBIG Fund Takeout Mechanism for Developer-Assisted Housing Program.
- The Program seeks to encourage developers to participate in providing housing inventory for sale to Pag-IBIG member-buyers via a Pag-IBIG housing loan.
- The Program defines parameters for allocation and disbursement of funds for developer-assisted housing loans.
- Coverage is optional for accredited Developers for six (6) months from date of effectivity.
- Within the six (6) months optional period, accredited Developers may still be evaluated and subject to the terms of Circular Nos. 259, 287 and 298.
- After six (6) months from effectivity, coverage becomes mandatory.
- The Fund accredit Developers that participate to ensure the Program objectives are met.
Core mechanics: MOA, takeout, and releases
- The Fund and the accredited Developer must enter into a Memorandum of Agreement (MOA).
- The MOA must provide that the Fund provides a funding allocation upon Developer compliance with Fund terms and conditions.
- The MOA must provide that the Developer will pre-process and deliver Pag-IBIG member-buyer applications for purchase of a lot/house and lot/condominium unit in the Developer’s subdivision/condominium project.
- The MOA must provide that the Fund approves applications that meet the Fund’s criteria under the prevailing Pag-IBIG Fund Housing Program.
- The MOA must provide that the Fund and Developer execute the required sale instruments:
- The parties must execute a Deed of Absolute Sale (DOAS) for the residential unit chosen by the Pag-IBIG member-buyer, with the Fund executing accordingly in favor of the proper transferee structure under the Program.
- The Fund must execute a Deed of Conditional Sale (DCS) in favor of the Pag-IBIG member-buyer.
- When the member-buyer requests in writing and the loan-to-value ratio does not exceed fifty percent (50%), the HL account may be a REM account; the Developer must execute the DOAS in favor of the member-buyer, and the member-buyer must execute a mortgage in favor of the Fund.
- The MOA must require that the Developer processes and shoulders the cost of transferring the certificate of title from the Developer’s name to the Fund’s name.
- The MOA must provide that proceeds release follows the guidelines’ terms and conditions.
- The MOA must require that the Developer buybacks accounts affected by breach of warranties.
- The MOA must be subject to crossdefault as defined in existing pro-forma loan documents prescribed by the Fund.
- The Developer must submit member-buyer applications for purchase of units to the Fund.
- The first submission of applications must be carried out not later than sixty (60) calendar days from the date of signing of the MOA.
Application processing, notice periods, and evaluation
- Accredited Developer-delivered applications must be processed within fifteen (15) working days from submission of the documents in the Checklist of Requirements.
- A Notice of Approval (NOA) must be issued if the member-buyer meets eligibility criteria under the prevailing housing program.
- The NOA is valid for ninety (90) days only, reckoned from the date of receipt.
- If the requirements for takeout are not submitted within the prescribed period, the member may re-file the application upon payment anew of the filing fee.
- If negative findings can be rectified, a Notice of Deficiency must be issued, and the Developer must be given ten (10) working days from receipt to make corrections.
- If the affected application is re-submitted beyond the 10-day period given to the Developer, the application is treated as a new application, and the member-buyer must pay the re-filing fee.
- If an application is disapproved, the Fund must issue a Notice of Disapproval stating the grounds.
- The Developer may request advance evaluation of borrowers or inspection of completed units by submitting a written request to the Fund and paying the corresponding filing fee.
- The Credit Investigation Report (CIR), Buyer Validation Sheet (BVS), and proof of filing fee must be submitted when filing the member-buyer housing application.
- The CIR and BVS are valid for six (6) months only.
- Developer-assisted accounts must be supported by a DCS on the subject property.
- The Fund may allow an account to be secured by Real Estate Mortgage when the loan to collateral ratio does not exceed fifty percent (50%).
- The Senior Management Committee sets or adjusts limits on housing packages that adopt DCS documentation.
Accreditation: who may participate and how
- The Fund accredits Developers who will participate under the Program annually.
- Accreditation requires key officers and/or shareholders to meet blacklisting restrictions:
- Key officers or shareholders must not be among those blacklisted by the Fund from participating in any loan programs, or must not be key officers or shareholders of a Developer that has been blacklisted.
- The term key officers includes Board of Directors, president/general manager/chief executive officer, corporate secretary, corporate treasurer, and similar positions.
- Accreditation requires that the Developer be duly authorized to operate, evidenced by a Certificate of Registration from the Securities and Exchange Commission (SEC) or the Bureau of Domestic Trade (BDT).
- Accreditation requires satisfactory financial performance evidenced by the latest audited financial statements stamped received by the Bureau of Internal Revenue, with no adverse opinion/disclaimer.
- Accreditation requires that the Developer must not be in the “banksa or financial institutionsa Negative List.”
- The Developer must satisfy or disclose related real estate entities:
- Related real estate entities include the parent company and subsidiaries and business entities engaged in real estate business, whether or not currently transacting with the Fund, as developer, seller, or marketing agent of another developer or individual, where the Developer or any key officer is also a key officer or shareholder.
- If related real estate development entities exist, the performance of one related entity determines approval or non-approval of accreditation and classification, and likewise vice versa.
- The Pag-IBIG Fund Housing Business Center evaluates accreditation applications based on the Developer’s principal place of business.
- The Business Development Sector evaluates and determines classification when the Developer has a project in the National Capital Region, regardless of principal place of business.
Project evaluation and funding allocation
- Subdivision/Condominium Projects must be evaluated based on:
- Permits and licenses issued by the Local Government Unit and other regulatory agencies for the covered project.
- No outstanding Cease and Desist Order issued by HLURB against the developer or any related real estate entities.
- Project development status showing at least model units for subdivision projects or a showroom for condominium projects.
- The Fund provides a Funding Allocation for takeout of approved applications of eligible Pag-IBIG members.
- The Funding Allocation amount is based on the Developer’s projected submission of applications for each subdivision/condominium project for the year of signing of the MOA.
- Funding Allocation approval follows the Fund’s prevailing approving/signing authorities.
- The Developer must submit a corresponding monthly schedule of projected submission of applications, with the first submission scheduled not later than sixty (60) calendar days from the date of signing of the MOA.
- The Funding Allocation is available from execution of the MOA to December of the same year (called the “year of signing”).
- The funding allocation is deemed utilized based on the loan amount of applications submitted for the given quarter, not the loan value approved by the Fund.
- Any unutilized allocation at the end of each quarter automatically adds to the succeeding quarter allocation.
- Any unutilized allocation by December of the year of signing is forfeited.
- The Developer must apply for a new Funding Allocation for the succeeding year and every year thereafter.
- The subsequent Funding Allocation is evaluated using the same criteria on accreditation and classified pursuant to the guidelines on classification and incentives.
- A Commitment Fee is imposed if the Developer fails to fully utilize the budget allocation in a given quarter.
- As a rule, the Developer is not charged a commitment fee; however, if at the end of a quarter the Developer is unable to utilize at least eighty percent (80%), the Developer is charged a commitment fee equivalent to one-half percent (1/2%) of the budget allocation for the succeeding quarter.
- In computing the commitment fee, the unutilized budget of the preceding quarter that was added to the succeeding quarter is not considered.
- If, by the end of the succeeding quarter, the Developer utilizes at least 80% of that quarter’s budget allocation (excluding unutilized budget of the previous quarter added), the commitment fee collected is refunded and no commitment fee is charged in the following quarter.
- Takeout proceeds for housing loans that passed evaluation must be released within three (3) working days from submission of complete documents enumerated in the NOA.
- The NOA’s complete-document package must include the following items:
- Deed of Absolute Sale executed by the developer in favor of the Fund or the Pag-IBIG member-buyer, as applicable.
- Individual Transfer Certificate of Title (TCT) in the name of the Fund or the Pag-IBIG member-buyer, as applicable.
- Deed of Conditional Sale between the Fund and the Pag-IBIG member-buyer if the TCT is in the name of the Fund, or Loan and Mortgage Agreement if the TCT is in the name of the Pag-IBIG member-buyer.
- Notarized Promissory Note.
- Tax Declaration on the land in the name of the Fund or Pag-IBIG member-buyer, as applicable.
- Tax Declaration on the improvements in the name of the Fund or Pag-IBIG member-buyer, as applicable.
- Updated Real Estate Tax Receipt for the quarter.
- Occupancy Permit.
- Certificate of Acceptance.
- Transfer Tax Receipt for lot and building.
- If the Developer requests split payment of proceeds, the Developer is charged a service fee per additional check.
- Additional Funding Allocation is allowed when the Developer’s funding allocation for the year of signing is fully utilized before end of year, subject to these requirements:
- The Developer’s overall performance from all Pag-IBIG Fund branches it transacts with as of the request meets or exceeds the criteria for its classification under the guidelines on classification and incentives.
- The Developer has no buyback obligation beyond the prescribed buyback period.
- The Fund has available funds for the additional allocation.
- The Developer has not been downgraded.
Developer warranties and remedial buyback
- The Developer must provide warranties covering documentation validity, ownership, development, construction, delivery, representation, and legal compliance.
- Documentation warranty requires that all documents submitted relative to the Program, including individual TCTs/CCTs and corresponding DOAS, are valid, binding, and enforceable in all respects that they purport to cover.
- Title/ownership warranty requires that:
- The Developer is the lawful owner, or in joint venture, that the purported owner lawfully owns and authorized the Developer to develop and sell individually titled saleable units.
- The property is free from all liens, encumbrances, and adverse claims.
- Title/ownership papers have no vitiating defects.
- Project development and house construction warranty requires completion according to government-approved developmental plans and regulatory and local ordinance requirements, including construction compliance with approved plans/specifications and standards.
- The Developer must answer for defects in house construction (except normal wear and tear) discovered by the Pag-IBIG member-buyer and/or the Fund within 6 months from acceptance by the member-buyer, provided defects are communicated to the Developer and/or HLURB within a reasonable period after discovery.
- The Developer must rework/repair defective units at its own account within sixty (60) calendar days from receipt of the notice or complaint, even after title transfers to the Fund or the member-borrower.
- Actual delivery warranty requires the Developer to turn over properties to Pag-IBIG member-buyers upon release of the takeout proceeds, and member-buyers may occupy immediately.
- Misrepresentation warranty requires that no person or agent employed by the Developer, or allowed to transact in its behalf, committed any act of misrepresentation, and the Developer must answer for damages caused by misrepresentation by employees or agents or shown in marketing brochures.
- Compliance with laws warranty requires that the Developer complied with all pertinent laws, rules, and regulations.
- Buyback of accounts is governed as follows:
- The Fund may, without prejudice to criminal, civil, or administrative remedies, require buyback when the Developer fails to correct or cure a breach within the period given.
- The Fund issues a Notice of Buyback stating the period for Developer buyback.
- Buyback value must include:
- Outstanding principal balance.
- Unpaid interest of the Pag-IBIG member-buyer.
- Penalties as of date of receipt of the Notice of Buyback due to breach of warranties.
- The buyback value must also bear interest at 8.5% per annum, computed from date of receipt of the Notice of Buyback due to breach of warranties up to actual settlement.
- A penalty is charged at 1/20 of 1% of the amount due per day of delay from expiration of the prescribed buyback period up to date of actual settlement.
- Buyback may be settled by:
- Over-the-counter Payment: direct payment to the Fund inclusive of penalties if any.
- Offsetting from Takeout Proceeds (OTOP): if the Developer fails to buy back within the Notice period, the Fund immediately offsets the amount due from takeout proceeds or any other amount due the Developer, continuing until fully paid.
- The Developer may appeal buyback obligation to the Vice President of the Group concerned solely on the ground that computation is not in accordance with Pag-IBIG Fund policies and procedures.
- The appeal must be resolved within thirty (30) working days from receipt.
- The buyback period is suspended during the pendency of the appeal, and no penalties accrue on the outstanding buyback obligation during that period.
- After the appeal resolution, the Developer gets the remainder of the period stated in the Notice to settle.
Collection servicing agreement: eligibility, CSA terms, and fees
- Only Developers meeting all criteria may enter into a Collection Servicing Agreement (CSA):
- They must have a collection infrastructure.
- They must have internet access.
- They must have at least a satisfactory financial condition.
- The Fund reserves the right to reject CSA applications or CSA renewals.
- The CSA must include that:
- The Developer provides collection assistance covering outstanding housing loan accounts within its housing project.
- Accounts to be enrolled are agreed prior to CSA execution and listed in the collection schedule.
- New accounts taken out after CSA execution are enrolled for collection only upon mutual agreement between Developer and Fund.
- The Fund provides an updated collection schedule monthly.
- The Fund pays the Developer a Collection Servicing Fee (CSF) for collecting services as collecting agent.
- A surety bond is required from a reputable bonding company acceptable to the Pag-IBIG Fund and licensed by the Insurance Commission, subject to:
- The bond covers amounts that may be collected for one (1) month but not remitted by the Developer.
- The bond amount is based initially on the Collection Schedule provided by the Fund.
- The Fund may increase the bond amount or require replacement security if circumstances warrant.
- The bond remains in full force and effect until CSA termination.
- The bond allows the Fund to call it after ten (10) calendar days from non-remittance of collections without need of prior demand.
- In lieu of surety bond, the Developer may assign:
- Certificate of Time Deposit from any of the Top 30 Banks in the Philippines in terms of assets.
- Trust/Escrow Accounts.
- Government Securities.
- Other assignable instruments acceptable to the Fund.
- The assigned instrument value must not be less than the amount stated in the bond condition covering one (1) month.
- The Fund issues Pag-IBIG Fund Receipt (PFR) booklets to the Developer, and the Developer is responsible for issuance of corresponding PFRs to collecting Pag-IBIG member-buyers monthly.
- The PFRs issued must be stamped with the Developer’s name for identification and monitoring.
- Remittance schedules to the Fund’s designated bank account are required:
- Cash (Monday to Sunday): not later than 5pm of the first working day of the week following the collection period.
- Check (Monday to Tuesday): not later than 5pm of the first working day of the week following the collection period.
- Check (Wednesday to Sunday): not later than 5pm of Thursday of the week following the collection period.
- The Developer must submit collection reports by email to the Treasury Department not later than 12 noon of the working day following the collection date.
- CSF is computed using Collection Performance:
- Collection Performance = Actual Number of Accounts that paid / Total Enrolled Accounts at the start of each month.
- CSF rates are set by collection performance:
- >95%: 2.5%
- >90% - 95%: 2.0%
- >85% - 90%: 1.5%
- 80% - 85%: 1.0%
- If a member whose account is endorsed to the collection agent pays amortizations directly to the Developer, the Developer receives the corresponding collection incentive for the month, but the payment is not included in the computation of collection performance.
- Failure to remit collections on the scheduled date subjects the Developer to a penalty of 12/365 of 1% per day of delay, compounded daily, or PHP 500, whichever is higher.
- The penalty is reckoned from actual date of payment of the member-buyer to the Developer up to actual remittance to the Fund, or up to the date the surety bond proceeds sufficient to settle the unremitted amount are received by the Fund if a bond call is made.
- In addition to the penalty charges, the Fund may impose sanctions, singly or collectively:
- Cancel the CSA.
- Suspend acceptance of housing loan applications, while the member-buyer may file his housing loan application directly to Pag-IBIG Fund.
- Cancel the Developer’s accreditation and bar the Developer, including key officers, from future participation in Pag-IBIG lending programs.
- CSA validity is one (1) year from execution.
- CSA renewal is allowed annually if:
- The Developer meets the CSA eligibility criteria.
- The Developer’s collection performance for the preceding year is at least 80%.
Repeal, escalation, amendments, and consistency
- All memoranda, rules, regulations, and other issuances inconsistent with the Circular are repealed.
- Circular Nos. 259, 287 and 298 continue to be in force for six (6) months from effectivity of these guidelines.
- The repeal does not affect contracts entered into by the Fund prior to issuance of these guidelines.
- Interpretation issues are resolved by the Department Manager III, or escalated to the next higher level of authority as much as possible.
- The Senior Management Committee may amend, modify, revise, and/or update the guidelines as needed, provided amendments further the Program objectives and are consistent with the Fund’s charter mandate and existing laws.