Objectives of the Act
- Integrate all laws on housing credit guaranty for:
- Continuous funding for urban/rural housing, resettlement, site development, and renewal of blighted areas.
- Support low-income groups to access decent housing via proper mechanisms.
- Create a strong sustainable housing finance program.
- Increase private sector participation in housing finance.
- Promote flow of private funds through mortgage and credit guaranty.
- Encourage local governments' active participation in socialized housing.
- Strengthen capital/resources of National Government and Corporation.
- Serve underprivileged and employed non-members of certain funding agencies.
- Promote aided self-help homeownership approach.
Home Guaranty Corporation Establishment
- Renames Home Insurance and Guaranty Corporation to Home Guaranty Corporation.
- Principal office in Metro Manila; existence for 50 years from December 15, 2000.
- Authority to establish branches/offices anywhere in the Philippines.
Corporate Powers and Functions
- Promote homebuilding and land ownership, prioritizing homeless and underprivileged.
- Guarantee loans/mortgages exclusively for residential purposes and support facilities.
- Assist private developers in socialized, low, medium-cost mass housing projects.
- Develop secondary mortgage market programs.
- Underwrite, purchase, sell securities related to housing finance.
- Borrow funds locally and internationally with presidential and Monetary Board approval.
- Promote aided self-help housing with technical support.
- Legal capacity: enter contracts, sue/be sued, manage property.
Authorized Capital Stock
- Authorized capital stock of Php 50 billion divided into 50 million shares at Php 1,000 par value.
- Initial government subscription of Php 7.5 billion appropriated.
- Capital stock cannot accrue to any government agency or corporation.
Use of Net Worth
- Allocation: 40% socialized housing, 30% low-cost housing, 20% medium-cost housing, up to 10% open housing.
- Investments subject to limitations and equity restrictions.
Governance - Board of Directors
- Composed of 7 members: Secretary of Finance (Chairman), HUDCC Chair (Vice Chairman), NEDA Director General, Corporation President, and 3 appointed members.
- Members to serve five-year terms, appointed for integrity and relevant expertise.
- Decisions by majority vote.
- Board responsible for corporate management and compensation plans.
Board Powers and Duties
- Adopt and amend bylaws.
- Direct management, approve expenditures.
- Formulate policies and issue rules subject to Monetary Board concurrence.
- Create positions with competitive compensation system exempt from Salary Standardization Law.
- Establish Provident Fund.
- Exercise powers for effective enforcement of the Act.
President of the Corporation
- Appointed by the President of the Philippines for five years.
- Must have integrity, patriotism, and 10 years’ relevant experience.
- Executes Board policies, represents the Corporation.
Executive Vice President and General Manager
- Appointed by Board.
- Acts as President in President's absence.
Credit Guaranty Eligibility Requirements
- Developmental loans cover up to 70% bond or 60% cash guaranty of production cost.
- Single family loans up to 100% appraised value for socialized housing, scaling down to 70% for open housing.
- Loans secured by first lien on real estate or rights in rem for at least 20 years.
- Loans must have amortization provisions affordable to borrower, with maturity up to 30 years.
- Security may be held by government entities, private institutions, or individuals.
Guaranty Premiums and Fees
- Minimum premiums pegged per housing category, starting 0.5% up to 1.5%.
- Payable by mortgagee in cash or Corporation debentures.
- Corporation may also charge appraisal and inspection fees.
Guaranty Coverage and Account Distribution
- Guarantees balance outstanding plus interest capped per category (socialized to open housing).
- Allocations fixed: 40% socialized, 30% low-cost, 20% medium-cost, max 10% open housing.
- Allocations equitable among regions.
Guaranty Limitations
- Guaranty for one institution not to exceed 3 times its net worth.
- Compliance with Bangko Sentral ng Pilipinas single borrower limits required.
- Corporation's guaranteed obligations capped at 20 times capital and surplus.
- 5% reserve fund from net operating revenues before interests required.
Payment of Guaranty Calls
- Upon default and conveyance of secured property and claims to Corporation, guarantees become payable.
- Corporation may pay in cash and/or issue debentures.
- Debentures are negotiable, tax-exempt, with up to 10-year maturity.
- Excess proceeds from sale after expenses return to mortgagor.
Guarantee of the Republic of the Philippines
- Unconditional guarantee of Corporation debts and guarantee obligations.
- Guarantee expressed on certificates and debentures.
- Limits consistent with Corporation’s authorized amounts.
Tax Exemption
- Interest and yields on securities issued or guaranteed by Corporation exempt from all taxation except estate, inheritance, and gift taxes.
- Corporation may increase exemption limits subject to Presidential and Monetary Board approval, no more often than every 5 years.
Building and Loan Associations
- Corporation may issue guaranty contracts for accounts of such associations.
- Associations to lend on first liens for housing development.
- Corporation may subscribe to preferred shares to support local financing.
- Associations guaranteed by Corporation are exempt from taxation.
Open-End Mortgages
- Corporation may guaranty advances for property improvements under open-end mortgage provisions.
- Guaranty for advances to improve basic utility of the property.
- Guaranty not counted in aggregate guaranty limits.
Investment of Funds
- Excess funds may be deposited in government banks or invested in government-guaranteed securities.
- Corporation may purchase and cancel its debentures in the open market.
Key Definitions
- Clarifies terms such as bond and cash guaranty, developmental loans, prudent production cost, types of housing, mortgage definitions, and parties involved.
Warranties of Developers/Builders and Sellers
- Requires warranty that dwelling conforms to approved plans.
- Warranty valid for 2 years from delivery or occupancy.
- Amendments to plans require Corporation approval.
Participation of Financing Institutions and Investors
- Authorizes banks, government institutions, and other entities to invest in and guarantee housing loans.
- Government financing institutions may create secondary market instruments.
Transfer of Powers Over Homeowners' Associations
- Powers transferred from Corporation to Housing and Land Use Regulatory Board.
- Corporation to assist HLURB for up to one year during transition.
Penalties
- Punishes false statements, forgery, overvaluation for obtaining guarantees with fines and imprisonment up to 10 years.
- Additional penalties for forgery of obligations and false statements derogatory to Corporation.
Funding and Exemptions
- Bangko Sentral ng Pilipinas authorized to extend advances or loans to Corporation.
- Corporation exempt from BSP quasi-banking function regulations.
Legal Counsel and Auditing
- Office of Government Corporate Counsel designated legal counsel.
- Resident Auditor appointed by Commission on Audit with independent personnel.
- Annual audit report to President, Congress, NEDA, and COA Chairman.
Reporting Requirements
- Quarterly reports to President and Congress within 45 days after quarter ending.
Transitional and Implementation Provisions
- Existing policies to be submitted to Monetary Board for concurrence within 6 months.
- Reports on secondary mortgage market development to be submitted by HUDCC and Corporation.
- Annual Congressional sunset review of Corporation's performance.
- Corporation Code applies supplementarily.
- Rules and regulations to be promulgated jointly by Corporation, Finance, HUDCC, and Budget and Management.
Repeals and Amendments
- Repeals certain previous laws and Executive Orders inconsistent with this Act.
Separability Clause
- Invalidity of any provision does not affect others.
Effectivity
- Effectivity 15 days after publication in Official Gazette or two newspapers.