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HDMF Circular 259

HDMF Circular 259

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Published by Jay O Calubayan

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Published by: Jay O Calubayan on Oct 05, 2011
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Corporate HeadquartersThe Atrium of MakatiMakati Avenue, Makati City
Pursuant to the approval of the HDMF Board of Trustees in its 256
Meeting held last20 April 2009, the
Amended Omnibus Guidelines Implementing the Pag-IBIGTakeout Mechanism under the Developers’ CTS/REM Scheme
are hereby issued:
1. To enhance the asset quality of the Pag-IBIG mortgage loan portfolio byinstituting a credit risk sharing mechanism with housing developers;2. To define parameters in the allocation and disbursement of funds allocatedfor housing, specifically for developer-assisted member-loans;3. To recognize performance of developers in their dealings with HDMF;4. To provide motivation and incentives to developers to continuously deliver quality mortgages to HDMF;5. To fast track the government’s housing program by providing an expresstake-out window for accredited developers who meet the standards set byHDMF.
These guidelines shall apply to developers who shall deliver housing loanapplications to HDMF beginning
20 April 2009.
These HL applications aresecured by Contracts to Sell (CTS)/Real Estate Mortgage (REM) on theresidential property to which the loan proceeds are applied at the point of loantake-out.Developer-assisted housing loan applications filed through the Pag-IBIG retailwindow shall not be covered by these guidelines
1. HDMF shall accredit developers who shall participate in the program toensure that its objectives are met. Accredited developers shall be further 
classified into the following categories in accordance with the criteria set inItem II-A hereof:
1.1 Window 1 (Regular) CTS/REM with Buyback Guaranty1.2 Window 1 (Elite) – CTS/REM with Buyback Guaranty
1.3 Window 2 CTS without Buyback Guaranty2. The Fund and the accredited developer shall enter into a FundingCommitment Agreement (FCA) providing for among others2.1 That the Fund shall extend a funding commitment line (FCL) to thedeveloper upon compliance with the terms and conditions set by theFund;2.2 That for a developer under Window 1 (Regular) or 
, the followingshall apply:2.2.1 That the developer shall receive, evaluate, pre-process andapprove the housing loan applications of the Fund’s member-borrowers in accordance with the applicable Guidelines of thePag-IBIG Housing Loan Program
That the developer shall buy back CTS/REM accounts thatdefault or are affected by breach of warranties during the firsttwo years of the loan.
In the case of a developer under theWindow 1 (Elite) scheme, he shall buy back CTS/REMaccounts with loan values over Seven Hundred and FiftyThousand Pesos (P750,000.00) to One Million Pesos(P1,000,000.00) that default or are affected by breach ofwarranties during the first three years of the loan.2.2.3 That the developer under Window 1 (Elite) scheme shallbe responsible for any liability arising from RA No. 6552,otherwise known as the Maceda Law, for accounts withloan values over Seven Hundred and Fifty ThousandPesos (P750,000.00) to One Million Pesos (P1,000,000.00).
3. For accounts covered by Contract to Sell (CTS)
3.2 The developer shall execute a Contract-to-Sell with the Pag-IBIGmember to cover the purchase of the residential property or lot used ascollateral for the Pag-IBIG housing loan of the member.3.3 The developer shall execute a Deed of Assignment assigning the CTSin favor of the Fund, which shall be annotated in the title of theproperty.3.3 Conversion of CTS Accounts3.3.1 The developer shall convert the security of eligible accountsfrom CTS to REM not later than the 24
month from date of loan takeout and in accordance with Item VIII hereof.
For adeveloper classified as Window 1 (Elite),
conversion ofCTS with loan values over P750,000.00 to P1,000,000.00 toREM shall take place not later than the 36
month fromdate of loan takeout.
3.3.2 All expenses relative thereto shall be for the account of thedeveloper. For this purpose, the Fund shall deduct an amountcorresponding to the following percentages of the total loanvalue from the takeout proceeds of the developer.LOANVALUEUp toP180,000Over P180,000 toP500,000Over P500,000to P1 MOver P1 Mto P2 M
Over P2 Mto P3 M
BIR 2.5% 3.5% 4.5% 5.0%
RD 1.5% 1.5% 1.5% 1.5%
LGU 1.0% 1.0% 1.0%1.0%
5.0% 6.0% 7.0% 7.5%
The said rates shall be based on the original loan takeoutvalue regardless of the selling price or zonal valuation of theproperty.3.3.3 Retention for BIR or LGU expenses may be waived, refundedor reduced prior to the conversion period. It shall be carriedout only upon presentation of the original supportingdocuments, such as, but not limited to the following:a. Certificates/documents issued by a regulatorygovernment agency expressly granting exemption frompaying taxes to the developer [
creditable withholdingtax (BIR) and the transfer tax (LGU)]
that are relative tothe conversion of CTS accounts to REM.
Developers granted with tax incentives by the Board of Investments must still present a Certificate of TaxExemption from the BIR.b. DST Declaration/Return (BIR Form No. 2000) andPayment Form (BIR Form No. 0605).A copy of each document certified by the issuing agency shallbe kept by HDMF.3.3.4 The Fund may, from time to time, review the rates mentionedabove and make the necessary adjustments thereon whencircumstances warrant, as when new laws, ordinances, rules,regulations or circulars are passed/issued by the concernedgovernment body/agency that may affect existing rates.3.3.5 The following developers shall be allowed to substituteretention for conversion purposes with other assignableinstruments:a. A developer under Window 1 (Regular)b.
A developer under Window 1 (Elite)
 c. A developer who opted to participate under Window 2despite meeting the classification criteria provided for in Item II – A.2 of the abovementioned guidelines,except for the Buyback Performance criterion

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