Coverage, timing, and eligibility thresholds
- The program covers all delinquent housing loan borrowers whose accounts are at least three (3) months in arrears, except Window 1 accounts.
- The program is implemented beginning January 1, 2012.
- Penalty condonation may be availed of only until June 30, 2012.
- Applications filed after June 30, 2012 are eligible only for loan restructuring.
- Upon effectivity of the guidelines, accounts of delinquent borrowers who fail to file an application for loan restructuring—with or without penalty condonation—must be endorsed to foreclosure or their corresponding Contract-to-Sell (CTS) must be cancelled within thirty (30) days from receipt of the appropriate notices (General Provisions, Item I-C(4)).
Objectives and borrower support
- The program is designed to help delinquent borrowers/installment buyers preserve their properties from foreclosure or CTS cancellation by enabling them to update or restore their accounts under affordable terms (General Provisions, Item I-A).
- The program provides relief through condonation of accumulated penalties, subject to program conditions and filing deadlines (General Provisions, Item I-A).
- The program updates delinquent accounts and requires full payment of delinquent accounts under the restructured arrangement (General Provisions, Item I-A).
Application processing and required documents
- The Fund processes only applications with complete documents/requirements (General Provisions, Item I-D(1)).
- Borrower eligibility depends on capacity to pay the restructured loan while keeping the monthly amortization within the required affordability limit (General Provisions, Item I-D(2.1)).
Capacity-to-pay rule and co-borrower liability
- The borrower must have capacity to pay the restructured loan such that the monthly amortization of the restructured loan does not exceed forty percent (40%) of the family’s net disposable income (NDI) (General Provisions, Item I-D(2.1)).
- Family NDI is computed as gross monthly family income minus statutory deductions and monthly amortizations on outstanding obligations (General Provisions, Item I-D(2.1)).
- For NDI computation, the monthly income of family members up to the second civil degree of consanguinity and the first civil degree of affinity is considered (General Provisions, Item I-D(2.1)).
- Family members whose income is considered in NDI computation are treated as co-borrowers and must sign the necessary loan application documents (General Provisions, Item I-D(2.1)).
- Co-borrowers signing for NDI are jointly and severally liable for the loan, and their combined capacity to pay must remain within the NDI requirement throughout the term of the loan (General Provisions, Item I-D(2.1)).
Legal heir rules and membership reactivation
- For a legal heir, the eligibility requirement on capacity to pay the restructured loan is waived (General Provisions, Item I-D(2.2)).
- A legal heir is defined under the law of intestate succession (General Provisions, Item I-D(2.2)).
- If the legal heir is not a Pag-IBIG member, the legal heir must register with the Fund; membership contributions are paid simultaneously with monthly housing loan repayments (General Provisions, Item I-D(2.2)).
- An inactive delinquent borrower/installment buyer must reactivate membership and update contributions from the time the member became inactive until filing the loan restructuring application (General Provisions, Item I-D(2.3)).
- After membership reactivation, succeeding membership contributions must be paid simultaneously with monthly housing loan amortization payments (General Provisions, Item I-D(2.3)).
Required updates of taxes and insurance premiums
- Borrowers must update Real Estate Tax payments and pay one year insurance premiums as part of program participation (General Provisions, Item I-D(3)).
- If the borrower cannot update Real Estate Tax payments, the Fund may advance the payment.
- Advanced Real Estate Tax payments form part of the interest-bearing principal, provided the borrower can present an updated computation of the real estate tax due (General Provisions, Item I-D(3)).
CTS conversion to REM and conversion cost allocation
- A CTS account whose borrower meets the eligibility criteria must be converted to REM upon approval of the loan restructuring application (General Provisions, Item I-D(4)).
- Conversion expenses are for the borrower’s account and are paid upon approval of the application (General Provisions, Item I-D(4)).
- If the borrower previously paid retention fees for conversion, the Fund uses those retention fees for conversion to REM (General Provisions, Item I-D(4)).
- If retention fees are insufficient, the borrower must shoulder the difference between conversion expenses and retention fees paid (General Provisions, Item I-D(4)).
One-time restructuring and down payment rules
- A borrower may avail of loan restructuring only once under these guidelines (General Provisions, Item I-D(5)).
- A down payment is required from borrowers whose applications are approved (General Provisions, Item I-E).
- Down payment is computed based on the following categories:
Down payment category A (10% minimum)
- Category A borrowers must pay a down payment of at least ten percent (10%) of total arrearages (General Provisions, Item I-E(1)).
- Category A includes borrowers whose mortgages:
- Remain with the Billing and Collection Department/Housing Loans Divisions despite delinquency and are not yet endorsed for foreclosure; or
- Are endorsed for filing of petition for extra-judicial foreclosure; or
- Are foreclosed where the winning bidder is the Fund but foreclosure occurred prior to registration of the COS with the Registry of Deeds (RD) (General Provisions, Item I-E(1.1)).
- Category A includes borrowers whose loans are secured by assignment of CTS, provided the CTS is not yet cancelled by notarial act (General Provisions, Item I-E(1.2)).
- Category A includes installment buyers under the Magaang Pabahay, Disenteng Buhaya Program (and related revised guidelines), and CTS Generic transactions, provided the CTS is not yet cancelled by notarial act (General Provisions, Item I-E(1.3) and I-E(1.4)).
- Category A includes legal heirs of deceased borrowers/installment buyers with unpaid loan balances/installments after application of MRI/SRI and Total Accumulated Value (TAV) (General Provisions, Item I-E(1.5)).
- Category A includes accounts surrendered to the Fund through dacion en pago where the title had not been consolidated or transferred in the Fund’s name (General Provisions, Item I-E(1.6)).
- Category A includes accounts under Folio I and the Unified Home Lending Program (UHLP) regardless of the status of the accounts (General Provisions, Item I-E(1.7)).
Down payment category B (20% minimum)
- Category B borrowers must be issued a Notice of Foreclosure and have thirty (30) days from receipt to apply for loan restructuring; otherwise, the Fund proceeds with foreclosure (General Provisions, Item I-E(2)).
- Category B includes borrowers who availed loan restructuring under Circular No. 248 (General Provisions, Item I-E(2.1)).
- Category B includes accounts restructured at least three (3) times from original loan takeout under previous guidelines (General Provisions, Item I-E(2.2)).
- Category B includes accounts with no single payment since takeout, including those where the only payment resulted from deduction from takeout proceeds (General Provisions, Item I-E(2.3)).
- Category B includes accounts where the housing unit was abandoned by the borrower for more than one (1) year from the date of delinquency (General Provisions, Item I-E(2.4)).
- Category B includes accounts where the housing unit is occupied by a third party other than the original registered beneficiary or his legal heirs (General Provisions, Item I-E(2.5)).
- Category B borrowers who avail of the program must pay a down payment of at least twenty percent (20%) of total arrearages (General Provisions, Item I-E(2)).
Down payment category C (NDI adjustment)
- If the actual amount for restructuring results in a monthly amortization that exceeds the 40%-NDI requirement, the loan amount must be adjusted to satisfy the NDI requirement (General Provisions, Item I-E(3)).
- The borrower must pay as down payment the difference between the actual amount for restructuring and the adjusted loan amount (General Provisions, Item I-E(3)).
- The borrower may use the dividends portion of Total Accumulated Value (TAV) to pay past due obligations or as down payment for the restructured loan (General Provisions, Item I-E(3)).
Penalty condonation and its cutoff
- All penalties incurred by the borrower are condoned upon approval of the application for the program, if the application is filed not later than June 30, 2012 (General Provisions, Item I-F).
Restructured loan amount components
- The restructured loan amount includes interest-bearing and non-interest-bearing components (Section II-A).
Interest-bearing components
- Interest-bearing components include:
- Principal including outstanding principal balance and principal arrearages;
- Insurance premium arrearages;
- Real Estate Taxes advanced by the Fund, if applicable; and
- Unpaid HCF / HFC / MOF / LAF / MAF / SAF (Section II-A(1.1)).
Non-interest-bearing components
- Non-interest-bearing components include:
- Unpaid Interest;
- Uncondoned penalties, if applicable; and
- Foreclosure expenses, if any, and other expenses (Section II-A(1.2)).
Adding foreclosure expenses pre-COS registration
- For a delinquent account in the process of foreclosure but prior to registration of the COS, the following foreclosure expenses are added to the amount to be restructured (Section II-A(2)):
- Filing Fee, computed based on outstanding loan obligation in accordance with the Schedule of Fees issued by the Office of the Clerk of Court;
- Cost of publication of the extrajudicial foreclosure of mortgage;
- Sheriff’s Fee;
- Notarial Fee; and
- Attorney’s fees for branches with retainers handling accounts for foreclosure.
- The Fund does not collect attorney’s fees for foreclosure actions handled by internal lawyers of the Fund (Section II-A(2)).
- The borrower may either fully pay all foreclosure preparation/sale/custody expenses incurred by the Fund or pay these expenses over a fixed period (Section II-A(2)).
Cut-off date for computation
- The cut-off date for computing the outstanding loan obligation is the date of approval of the loan restructuring application (Section II-A(3)).
Interest rate, conversion to single structure
- The interest rate on the loan prior to application is maintained and charged on the restructured loan amount (Section II-B(1)).
- For an account originally taken out or previously restructured under a two-interest structure, a single interest structure applies upon loan restructuring using the applicable rate based on the non-prompt interest rate of the original loan (Section II-B(2)).
- For accounts taken out under Circular No. 148 not restructured under a single interest rate scheme, with loan amount between P150,000 to 180,000, the weighted average interest rate applies based on:
- P150,000 at 9% interest per annum; and
- Any amount on top of P150,000 up to P30,000 at 12% interest per annum (Section II-B(3)).
- For previously restructured loans classified as separate and distinct from the original loan, a weighted average interest rate also applies (Section II-B(4)).
Repricing schedule and limits
- Restructured loans with original loan values over P400,000.00 are repriced every three (3) years, reckoned from the date of approval of loan restructuring (Section II-B(5)).
- At the beginning of the thirty-seventh (37th) month and every scheduled repricing date thereafter, the Fund reprices the interest rate based on prevailing market rates, if the following are satisfied (Section II-B(5)):
- Repriced rates are not lower than those in Section II-B(1-4);
- The initial repriced rate is not more than a two percent (2%) increase from the rates in Section II-B(1-4); and
- Subsequent repriced rates are not higher than the immediately preceding repriced rate by more than two percent (2%) (Section II-B(5)(b)-(c)).
- The borrower must be notified two (2) months prior to repricing (Section II-B(5)).
Restructured loan term and amortization ceiling
- The restructured loan is payable within thirty (30) years but not beyond the difference between the borrower’s present age and age seventy (70) (Section II-C).
- For tacked loans, the loan is payable within thirty (30) years but not beyond the difference between the age of the youngest co-borrower’s present age and age seventy (70).
- Even for tacked loans, throughout the term the monthly amortization must not exceed 40% of the family’s NDI (Section II-C).
Security and collateral continuity
- The restructured loan is secured by the same collateral that secured the original loan (Section II-D).
Membership contributions and arrears requirement
- The borrower/installment buyer/legal heir must pay mandatory membership contribution subject to the loan guidelines existing at the point of loan takeout (Section II-E(1)).
- The borrower/installment buyer/legal heir must also pay upgraded membership contribution required under the original loan until full payment of the restructured loan (Section II-E(2)).
- If membership contributions arrears exist (mandatory and/or upgraded), the borrower must update the arrears or submit a plan of payment for the arrears prior to approval of loan restructuring (Section II-E(3)).
Loan payment mechanics and schedules
- The restructured loan is paid through equal monthly amortizations over the loan period in amounts that fully cover principal, interest, insurance premiums, and other loan obligations (Section II-F(1)).
- Monthly amortizations are due monthly, with the first payment made one month from approval date of the loan restructuring (Section II-F(2)).
- If the borrower is still employed, payments are made through a salary deduction scheme under a collection agreement with the employer, using an Authority to Deduct and obtaining the employer’s conformity (Section II-F(3)).
- Upon approval, the borrower must pay the first monthly amortization in advance, directly to the Fund (Section II-F(3)).
- If salary deduction is not feasible, monthly payments may be made through:
- Post-dated checks issued by the borrower, co-borrower, or relatives up to the first civil degree of affinity or consanguinity, initially covering the first twelve (12) monthly amortizations; and the PDCs must be dated on the date coinciding with the date of approval of loan restructuring (Section II-F(4.1));
- Over-the-counter (Section II-F(4.2));
- Accredited collecting agents/banks (Section II-F(4.3));
- Auto-debit arrangement with bank (Section II-F(4.4)); or
- Any collecting system that Pag-IBIG Fund may adopt in the future (Section II-F(4.5)).
Due dates and penalties for holidays
- If the due date falls on a holiday or non-working day, monthly payments are paid on the first working day after the due date; otherwise penalty charges apply (Section II-F(5)).
Application order of monthly payments
- Monthly amortizations apply in this order of priorities (Section II-F(6)):
- Mandatory membership contribution (for directly-paying members);
- Upgraded membership contribution (if applicable);
- Penalty (if applicable);
- MRI/SRI/Fire and Allied Perils Insurance;
- HCF/HFC/MOF/LAF/MAF/SAF;
- Interest;
- Non-interest bearing principal;
- Interest bearing principal.
Deficiencies after payment
- If there is a deficiency after application of payment, it is satisfied by subsequent monthly payment(s), with any remaining amount applied according to the same order of priorities (Section II-F(7)).
When mandatory/upgraded contributions must be bundled
- Both mandatory and upgraded contributions are paid together with the monthly payment if:
- The member-borrower is self-employed upon application for loan restructuring; or
- The member-borrower becomes unemployed within the loan term—except that for employed borrowers, only upgraded contributions are paid together with the monthly payment (Section II-F(8)).
Delayed payment penalty
- A borrower who fails to pay monthly amortization/installment on or before the due date is charged a penalty of one-twentieth of one percent (1/20 of 1%) of the amount due for the month per day of delay (Section II-F(9)).
Prepayment rules
- A borrower may prepay the loan in full or in part without prepayment penalty (Section II-G(1)).
- For accelerated payments, amounts beyond the monthly amortization due are treated as future amortization; upon request, if the amount is at least equivalent to one monthly amortization, the amount is applied to non-interest bearing principal (Section II-G(2)).
- If the non-interest bearing principal is already fully paid, excess payments are applied to interest bearing principal (Section II-G(2)).
- The borrower’s preferred treatment of excess payments is disclosed on the Pag-IBIG Fund Receipt (PFR) (Section II-G(2)).
Default and when it is deemed to occur
- The borrower is considered in default when the borrower or any co-borrower fails to pay any three (3) consecutive monthly amortizations and/or monthly membership contributions and other obligations under the loan (Section II-H).
Effects of default and restoration of penalties
- At the point of default, all penalties that were condoned are restored and become due and demandable together with:
- outstanding loan,
- accrued interest,
- penalties,
- fees, and
- other charges (Section II-I(1)).
- Unpaid monthly payments after default continue to incur a penalty equal to 1/20 of 1% of the amount due for every day of delay (Section II-I(1.1)).
- The obligation continues to bear interest at the stipulated rate from the time the outstanding loan becomes due and demandable (Section II-I(1.2)).
- The member’s TAV is applied to the outstanding loan obligation prior to the filing of extrajudicial foreclosure of mortgage or prior to execution of a Dacion en Pago Agreement in favor of the Fund (Section II-I(2)).
- For tacked loans, the co-borrowers’ TAV is applied in the same manner if the principal borrower’s TAV is insufficient (Section II-I(3)).
- If outstanding balance is fully paid after applying member TAV and co-borrower TAVs (if applicable), the mortgage executed in favor of the Fund is released; otherwise, the Fund forecloses the mortgaged property (Section II-I(4)).
- The account is endorsed for foreclosure upon default (Section II-I(5)).
- The borrower may settle outstanding loan obligation by assigning the mortgaged property in favor of the Fund through Dacion en pago (Section II-I(6)).
Insurance coverage and premium requirements
- All restructured accounts must be covered by these insurances (Section II-J(1)).
Mortgage/Sales Redemption Insurance (MRI/SRI)
- The principal borrower/installment buyer must be covered by MRI/SRI based on the total restructured loan amount (Section II-J(1.1)).
- For loans tacked into a single loan, only the principal borrower is covered by MRI/SRI to the full extent of the loan (Section II-J(1.1)).
- If the restructured loan exceeds P2 Million and/or the borrower’s age is over 60 but not more than 65 years old, underwriting requirements must be met and the borrower must pay appropriate premiums.
- For the amount in excess of P2 Million, the borrower must obtain external insurance and the policy proceeds are assigned to the Fund (Section II-J(1.1)).
Fire Insurance and Allied Perils
- Fire Insurance and Allied Perils premium is based on the premium of the original loan (Section II-J(1.2)).
First year MRI/SRI premium
- The borrower must pay the first year’s MRI/SRI premiums upon approval of the loan restructuring application (Section II-J(2)).
Loan documentation and executed instruments
- A Health Statement Form is required from:
- those over 60 years old at the point of application whose loan term has not yet expired; and
- those with outstanding loan obligation over P2,000,000 up to P3,000,000 (Section III-1).
- The Health Statement Form must be accomplished in the borrower’s own handwriting, signed, dated, and witnessed by one person (Section III-1).
- If insurance coverage is disapproved, the borrower must secure external insurance coverage with a policy assigned to the Fund (Section III-1).
Restructuring Agreement, Promissory Note, and consolidated records
- The borrower must execute a Restructuring Agreement and a new Promissory Note (PN) (Section III-2).
- The original loan and restructured loan are consolidated under these guidelines (Section III-2.1).
- If there are co-borrowers, they must signify conformity on the Promissory Note and Restructuring Agreement (Section III-2.2).
- The Loan and Mortgage Agreement executed between the Fund and the original borrower becomes an integral part of the Restructuring Agreement by reference (Section III-2.3).
- The borrower’s ledgers for the original loan and/or restructured loan must be consolidated, including the restructured obligation arising from these guidelines (Section III-4).
CTS cancellation revocation and title transfer facilitation
- For CTS accounts with an issued Notice of Cancellation, a Deed of Revocation on the notice must be executed provided the 30-day period from date of receipt of the Notice of Cancellation has not yet lapsed (Section III-3).
- After approval of loan restructuring, the Fund facilitates transfer of title and tax declaration for CTS accounts in the borrower’s name and registration of the real estate mortgage in favor of the Fund (Section III-5).
- Costs in excess of the retained amount for conversion are borne by the borrower (Section III-5).
Amendments, repeals, and effectivity
- The Senior Management Committee may amend, modify, or revise the guidelines to further program objectives and remain consistent with the Fund charter and existing laws (Section IV).
- All HDMF circulars, clarificatory memoranda, rules, regulations, and issuances inconsistent with these guidelines are repealed, amended, or modified accordingly (Section V).
- The guidelines take effect on January 2, 2012 (Section VI).