Arroyo to sign new housing loan restructuring law on Monday
abs-cbnNEWS.com | 10/12/2008 2:04 AM
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A new law intended to respond to the pressing need to address unpaid loans for low-cost housing is set to be signed by President Arroyo on Monday.
The new law which when signed would be Republic Act (RA) 9507 aims to establish a socialized low cost-housing loan restructuring program for poverty-stricken Filipinos in the wake of the global financial crisis.
Called the “Socialized and Low-Cost Housing Loan Restructuring Act of 2008,” the new law will cover loans from government financial institutions (GFI) and agencies involved in the National Shelter Program not exceeding the amount of P2.5M and would be effective October 28
Members of GFIs need to have at least three months of unpaid monthly amortizations at the moment of the act’s effectivity. This includes accounts that have availed of a previous condonation in order to qualify for the restructuring program.
Housing law to benefit govt
Oriental Mindoro Rep. Rod Valencia, also the chairman of the committee on housing, said that the beauty of this law when signed lies in the fact that unlike other restructuring programs, all penalties and surcharges will be condoned.
“The beauty of this [new] law is processing fees are removed. No downpayment would also be required because the other restructuring programs contained downpayments which still could not be afforded. Very important is all penalties and surcharges would be condoned,” he said in the vernacular in DZMM’s show “Para sa ‘yo Bayan.”
He stressed, however, that funds to be used in this program will be coming from the monthly contributions from members of GFIs, and not from the government’s budget.
He added that the government would actually benefit more from this program since it is more expensive to foreclose accounts than to resuscitate them.
“…the cost to foreclose P50,000 to P136,000 yan. Institutions do not wish to foreclose since it is labor and time consuming,” he said in the vernacular.
Lawyer Romero Quimbo, Home Development Mutual Fund (Pag-ibig) President and Chief Executive Officer, said that their biggest fear is the program’s dependence on the funds it can obtain from its members. He stressed that should even a small percentage of members be unable to pay, everyone will be greatly affected.
“Once 10 percent of those paying (contributions) today fail to pay, the funds that could be loaned would be affected since the contributions is the source of the funds,” said Quimbo.
Rewards for prompt payers
Edgar Solilapsi, Executive Vice President of the Social Security System, said that as those who are unable to pay on time are given leeway because of the new housing law, members who religiously pay their dues are provided with rewards as well.
“There is that section 7 of the [new] law, incentive for prompt payment of monthly amortization. Reasonable discount of loan interest. Kunyari 12 percent ka ngayon, ang pera natin if we go to government securities kikita lang iyan ng 7 o 8 percent. Siguro iyong difference na 5 percent pwede na nating paghatian,” he said.
The Pag-ibig CEO added that the law’s provision at section 7 which compensates prompt payers was built on Vice President Noli de Castro’s Early Bird Agreement, a program implemented last 2006 as a part of the country’s housing programs.
