Pag-IBIG Fund tightens lending rules

State-run Home Development Mutual Fund (Pag-IBIG Fund) said it would tighten lending rules for new and incoming members to maintain the agency’s viability. “When before, a member could just pay a lump-sum equivalent to P4,800, which is likewise payable for 24 months to get a loan of P500,000, now a new member should wait for a year in order to avail of the loan notwithstanding its full payment of [the] 24 months contribution,” Jaime Fabiana, Pag-IBIG Fund chief executive officer, said.

The official said the agency changed the rules as allowing otherwise would undermine the viability of the fund.

The agency’s assets stand at P272 billion, 72 percent of which had been invested in various property developments.

Under the Home Development Mutual Fund Memorandum Circular 247, Pag-IBIG Fund would have to impose the one-year residential requirement on top of the payment of the 24-month contribution either by lump sum or installment.

To date, the state-lending firm has 7.9 million members, but is expected to end the year with nine million members.

The tighter provision would be imposed on the additional 1.1 million new members and those who have yet to reach the one-year residency requirement, Pag-IBIG Fund said.

However, the implementation of the new policy has been deferred to September 30 instead of July 30 after home developers sought for the deferral on the ground that this would adversely affect new projects.

Citing the experience of a similar agency in Germany, Fabiana said that a member should consistently pay its contribution for seven consecutive years before getting a loan.

In Singapore, he said, “The member can only borrow up to the extent of his or her contribution.”

The change in Pag-IBIG Fund’s rules was made amid two compelling factors, the official said.

The first is the surge in applications by overseas Filipino workers, who immediately after becoming a member, would avail the loan since they are the ones who have the money to put up houses.

The second pertains to an investigation Pag-IBIG Fund is conducting on 387 accounts in Pampanga that are “dubious and suspicious,” with each loan averaging P750, 000 for a total of P290 million.

“When we conducted an investigation, we found out that the names under these accounts are not the real borrowers. Thus, their names were fictitious in a sense that they were not the real debtors who availed the loans to us, but as borrowers their names were used,” Fabiana said. –Katrina Mennen A. Valdez reporter, Manila Times