NREA-HUDCC National Convention & Trade Exhibits “Philippine Real Estate & Local Governance”

NREA-HUDCC National Convention & Trade Exhibits“Philippine Real Estate & Local Governance”September 20-21, 2012

Historical Background◦ Mandates

Credit Guaranty Program◦ Benefits and Incentives◦ Understanding the Industry

Guaranty on Microfinance Housing Loans Bankers Builders Buyers Program

What to Expect

Historical Background

1950 1978 1986 2000

R.A. No. 580Home Financing Commission

E.O. No. 535 Became Corporation & placed under the Ministry of Human Settlements

E.O. No. 90Renamed Home Insurance and Guaranty Corporation

R.A. No. 8763 Renamed Home Guaranty Corporation

To mobilize private funds for home lending

To guaranty the payment of housing loans in the event of borrowers default

To ensure sustainability of housing finance particularly for low-income families.

Mandates

FinancingInstitution

Credit Guaranty Diagram

Developers

Homebuyers

Guaranty

Risk Cover 100% of the outstanding principal

balance Guaranteed interest of up to 11%.

Tax incentive Interest income on housing loans up to the extent of 11% is exempt from all forms of taxation.

Sovereign Guaranty HGC guarantees carry the sovereign guaranty

Easing of Administrative Burden Collection and foreclosure are shifted to HGC

Benefits of the HGC Guaranty

Zero-Risk Classification HGC-guaranteed loans have zero risk weight. Banks are exempt from providing risk capital on HGC-guaranteed loans

Higher Loan Value The Bangko Sentral ng Pilipinas allows a higher loan value, specifically 90% of appraised value of the collateral if it will be covered by an HGC guaranty. Otherwise, the loan is limited to 80% of appraised value.

Exemption from REL and SBL HGC guaranteed accounts are exempted from the BSP’s requirement on maximum Real Estate Loan Limit and Single Borrowers Limit

Benefits of the HGC Guaranty

BanksBuildersBuyers

The Real Estate Business as we understand it …

GUARANTY PROGRAM FOR MICROFINANCE HOUSING LOANS

Enrollment For Guaranty Coverage

COG

HGC Account Officer encodes loan information in the data base

HGC issues the Certificate of

Guaranty (COG) to MFI

MFI submits batch list of accounts

and warrants on their processes

Post Audit of Guaranteed Loans

HGC inspects housing unit of the borrower

HGC validates sufficiency and orderliness of loan documentation with the MFI

To strengthen the role of the Corporation in mobilizing private funds for housing;

To actively match the requirements of the key players in the industry; and

To address the gaps in home ownership.

Objectives

Banks: To extend more financing to builders and buyers with minimum risk

Builders: To build and sell more fast at minimum cost.

Buyers: To be able to buy a house in a convenient and cost efficient way.

BBB Program

“BBB” Program =

“Housing made Easy“

How? What shall I do next?

Where can I find useful information?

Who can I trust?

Other useful Websites..

Where can I…

Thank You!