Pag-IBIG tightens up on housing loan applications

THE state-owned Home Development Mutual Fund or Pag-IBIG Fund is tightening up on housing loans to ensure its viability amid an overwhelming demand for home financing, its top official said Tuesday.

The agency will grant housing loans only to members who have been active for at least a year, and to those who have paid in a lump sum equivalent to 24 monthly contributions, Pag-IBIG Fund chief executive Jaime Fabiana told reporters.

“We saw the need to impose this rule because… housing is a planned activity,” Fabiana said.

“You have to plan for it since it is your biggest investment.”

The one-year membership rule would help the agency stay viable and build up funds for re-lending, he said.

The membership requirement was two years 10 years ago, but it was lifted in 2001 because there were only a few borrowers at the time. Instead, members were simply required to pay the equivalent of 24 monthly contributions to take out a housing loan.At the time, the total housing loans approved reached only P3.5 billion.

“Following the reduction in interest rates and the lengthening of loan term to 30 years, Pag-IBIG experienced immense growth in loan approvals, recording an average growth rate of 42 percent for the last three years—P22 billion in 2007, P34 billion in 2008, and P46 billion in 2009,’’ Fabiana said.

“At this rate, it is no longer sustainable for Pag-IBIG to finance the growing demand for housing.”

The new rules come into effect Sept. 30.

Fabiana said waiving the membership requirement was prone to abuse, adding one housing project in Pampanga showed 400 approved accounts where the borrowers denied having taken out the loans.

In that case, he said, the Pag-IBIG members were tricked into signing housing loan documents in exchange for P800 to P1,000.

Pag-IBIG is also looking at tightening the rules for the “fast lane” window for developers of good standing. Developers who qualify may get their loan proceeds released seven days after filing documents with the agency. Monitoring and verification take place only after the loan is released.

In the case of the 400 spurious accounts in Pampanga, the loan proceeds were disbursed under the fast lane because the developer, Globe Asiatique, was in good standing with the agency.

“Pag-IBIG Fund is not accusing Mr. Delfin Lee of Globe Asiatique of the spurious accounts that are being monitored,” said Fabiana, adding Lee, who owns the developer Globe Asiatique, confirmed his company might have been infiltrated by people who had been securing doubtful loan accounts.

By law, housing loans are guaranteed by the developer’s housing unit. In cases of default, Pag-IBIG has the option to demand that the loan proceeds be reimbursed or to acquire the housing unit that was the subject of the loan.

Pag-IBIG data show it has surpassed its mandate to provide 70 percent of its funds for housing.

“In 2009, 78 percent of the P256 billion total assets of the Fund were housing-related,’’ Fabiana said.

“For the first five months of the year, this has already reached 80 percent representing P204 billion out of the P271 billion total assets.’’

“We cannot put all our funds in housing as we must be able to pay our members’ provident claims on time,’’ said Emma Linda Faria, deputy chief executive for support services.

“Plus, we must always be liquid.”

Bansan Choa, chairman of the Subdivision and Housing Developers Association, said developers favored an even longer two-year residency requirement.

“The minimum contribution and residency should be two years since you cannot invest short and borrow long,” Choa said.

“It cannot be sustainable.” –Elaine R. Alanguilan, Manila Standard Today