Another frequently asked question I often receive is “Can I buy bank foreclosed properties with financing through a Pag-IBIG housing loan?” and the quick answer I give is “It depends…”. Obviously, if you buy a foreclosed property from Pag-IBIG, you can finance it through a Pag-IBIG housing loan.

But how about foreclosed properties from banks,  can they be purchased and financed through a Pag-IBIG housing loan? Please continue reading below to find out.

Financing for bank foreclosed properties

If you happen to be interested in either bidding for a bank foreclosed property that is to be sold through public auction or through negotiated sale, try asking if you can have financing through a Pag-IBIG housing loan. I’d bet the answer you’d get won’t be a positive response. This was the answer I always got when I asked the same question to several banks many years ago.

Nowadays I don’t even bother to check if a housing loan from Pag-IBIG is an acceptable form of financing as I know what response I would get. Banks will not let you buy foreclosed properties with financing from Pag-IBIG.

Does this mean I will never be able to use a housing loan from Pag-IBIG for bank foreclosed properties? The answer again is “It depends.” According to my research, you can still use your Pag-IBIG housing loan for a bank foreclosed property once you already have it under contract. In a nutshell, refinancing an existing loan for a bank foreclosed property is possible.

Refinancing through a Pag-IBIG housing loan

I learned about these details recently when I visited the Pag-IBIG headquarters at the Atrium in Makati City and asked about this at their information counter at the ground floor. It turns out that I can get refinancing for a bank foreclosed property through Pag-IBIG under the following scenarios:

1. If you bought a bank foreclosed property and it is  currently under a Contract-To-Sell (CTS)
2. If you bought a bank foreclosed property and it is mortgaged with the bank

The staff from Pag-IBIG mentioned that if I bought a bank foreclosed property and it is under a CTS, Pag-IBIG will treat it as a retail purchase and I can already apply for a housing loan for it immediately.

In contrast, if I had bought a foreclosed property from a bank and it was mortgaged, I can still transfer it to Pag-IBIG but they will consider this as refinancing. Furthermore, the loan should be in good standing for the past twelve months prior to date of application for refinancing and mortgage payments should have been made for at least 2 years.

I did some more research to confirm this and found more information in section 2.5 of HDMF Circular No.247 as follows:

2.5. Refinancing of an existing mortgage with an institution acceptable to the Fund, provided that:

2.5.1. The loan is not in default within twelve months prior to date of application;

2.5.2. Said loan has a repayment history of at least two (2) years with the original mortgagee

Remember, in either case above, the bank where one either has a CTS or mortgage contract should be willing to have the loan transferred to Pag-IBIG and one would also have to qualify for a housing loan by satisfying the Pag-IBIG housing loan requirements under section 3 of HDMF Circular No. 247 which I have reprinted below in its entirety:

HOME DEVELOPMENT MUTUAL FUND
Corporate Headquarters
The Atrium of Makati
Makati Avenue, Makati City

HDMF Circular No. 247

TO : ALL CONCERNED

SUBJECT : GUIDELINES ON THE PAG-IBIG FUND END-USER HOME FINANCING PROGRAM

____________________________________________

Pursuant to the approval of the HDMF Fund Board of Trustees in its 255th Board Meeting held last 30 March 2009, the Pag-IBIG Fund End-User Home Financing Program are hereby issued:

1. COVERAGE

These guidelines shall apply to the following:

1.1. All accounts taken out beginning 1 April 2009 and onwards. Take out date shall refer to the date of the payee’s actual receipt of the DV/check.

1.2. All accounts with proceeds not yet fully released (staggered releases) as of 1 April 2009, except for accounts with retention due to lacking requirements (i.e. uncompleted units/development, etc.)

2. LOAN PURPOSE

The Pag-IBIG housing loan may be used to finance any one or a combination of the following:

2.1. Purchase of a fully developed lot not exceeding one thousand square meters (1,000 sq. m.), which should be within a residential area;

2.2. Purchase of a residential house and lot, townhouse or condominium unit, inclusive of a parking slot, which may be:

2.2.1. Old or brand new;

2.2.2. A property mortgaged with the Fund; or

2.2.3. An acquired asset, which is disposed of through sealed public bidding, negotiated sale, or Rent-to-Own Program.

2.3. Construction or completion of a residential unit on a lot owned by the member;

2.4. Home improvement, i.e. any alteration in an existing residential unit intended by a homeowner to be a permanent integral part thereof, which will enhance its durability and material value;

2.5. Refinancing of an existing mortgage with an institution acceptable to the Fund, provided that:

2.5.1. The loan is not in default within twelve months prior to date of application;

2.5.2. Said loan has a repayment history of at least two (2) years with the original mortgagee

2.6. Combination of loan purposes shall be limited to the following:

2.6.1. Purchase of a fully developed lot not exceeding one thousand square meters (1,000 sq. m.) and construction of a residential unit thereon;

2.6.2. Purchase of a residential unit, whether old or new, with home improvement;

2.6.3. Refinancing of an existing mortgage with home improvement;

2.6.4. Refinancing of an existing mortgage, specifically a lot loan, with construction of a residential unit thereon.

3. BORROWER’S ELIGIBILITY

To qualify for a Pag-IBIG housing loan, a member shall satisfy the following requirements:

3.1. On Pag-IBIG Membership

3.1.1. Must be a member under the Pag-IBIG I, Pag-IBIG II or Pag-IBIG Overseas Program (POP) for at least twenty-four (24) months, as evidenced by the remittance of at least 24 monthly contributions at the time of loan application.

3.1.2. A member, whether new or with existing monthly contributions that are still short of the 24-month membership requirement, shall be allowed to make lump sum payment based on the mandatory monthly membership contribution rates (both EE and ER share) to meet said requirement at point of loan application. Lump sum payment of membership contributions shall be considered a single contribution for the applicable month as of the payment date.

A member whose loan exceeds Five Hundred Thousand Pesos (P500,000.00) shall be required to pay the upgraded membership contribution rates upon housing loan approval and onwards.

3.1.3. A member who has contributed for at least two (2) years shall be required to pay the upgraded contribution rates upon housing loan approval and onwards.

3.1.4. For purposes of satisfying the residency requirement, the period corresponding to the Total Accumulated Value (TAV) applied earlier to a member’s outstanding loan (offsetting) shall be considered when counting the total number of monthly contributions, provided that the remaining TAV after offsetting does not fall below the equivalent amount of 24 monthly contributions.

3.2. Not more than sixty-five (65) years old at the date of loan application and must be insurable; provided further that he is not more than seventy (70) years old at loan maturity;

3.3. Has the legal capacity to acquire and encumber real property;

3.4. Has passed satisfactory background/credit and employment/ business checks of the developer and Pag-IBIG Fund;

3.5. Has no outstanding Pag-IBIG housing loan, either as a principal borrower or co-borrower;

However, should a co-borrower in a tacked loan signify an intention to avail of a Pag-IBIG housing loan for himself, he shall be allowed to do so provided the tacked loan is updated and the amount proportionate to his loan entitlement has been fully paid. Hence, the co-borrower shall be released from the original obligation and shall be allowed to avail of his own Pag-IBIG housing loan, subject to standard evaluation procedures.

3.6. Had no Pag-IBIG housing loan that was foreclosed, cancelled, bought back due to default, or subjected to dacion en pago, which shall include cases where the borrower is no longer interested to pursue the loan and surrenders the property;

3.7. Has no outstanding Pag-IBIG multi-purpose loan in arrears at the time of loan application. A member whose multi-purpose loan is in arrears shall be required to pay his arrearages over the counter to update his account.

4. LOAN AMOUNT

A qualified Pag-IBIG member shall be allowed to borrow an amount up to a maximum of Three Million Pesos (P3,000,000.00), which shall be based on the lowest of the following: the member’s actual need, his loan entitlement and the loan-to-collateral ratio.

4.1. Loan Entitlement based on Pag-IBIG Contributions

A member’s loan entitlement shall be proportionate to his Pag-IBIG contributions (inclusive of the employer counterpart contributions), which shall be based on the following schedule:

POP contributions made in foreign currency shall be converted to its peso equivalent on the date when payment was made, rounded off to the nearest peso. POP members may also opt to pay the required/upgraded contributions in its local currency (peso) equivalent.

For loans up to Seven Hundred and Fifty Thousand Pesos (P750,000.00) which shall either be secured by a First Real Estate Mortgage or a Deed of Assignment of Contract to Sell on the property, which is bought from a developer and is covered by a buyback guaranty, the member’s loan entitlement shall be based solely on his Pag-IBIG contributions.

4.2. Loan Entitlement based on Capacity to Pay

A member’s loan entitlement based on his capacity to pay shall be evaluated in the following cases:

a. The loan amount applied for is less than or equal to Seven Hundred and Fifty Thousand Pesos (P750,000.00), and the account is not covered by a buyback guaranty;

b. The loan amount applied for is over Seven Hundred and Fifty Thousand Pesos (P750,000.00).

A member’s loan entitlement shall be limited to an amount for which the monthly repayment on principal and interest shall not exceed forty percent (40%) of the member’s or family’s net disposable income, whichever is applicable; provided further that the member’s net take home pay does not fall below the minimum requirement as prescribed by the GAA or company policy, whichever is applicable, after deducting the statutory deductions, computed monthly repayment and other obligations.

These conditions shall be supported by the following documents:

4.2.1. For Locally Employed, any of the following:

a. Notarized Certificate of Employment and Compensation (Pag-IBIG format)

b. Notarized Certificate of Employment and Compensation (Employer’s format) and latest 1-month pay slip

c. Income Tax Return/Certificate of Tax Withheld (BIR Form No. 2316) and latest 1-month pay slip

The following, however, are not qualified for substituted filing and therefore still required to file BIR form 1700:

c.1. individuals with two (2) or more employers, whose taxes during the year did not result to tax withheld = tax due.

c.2. individuals whose income tax has not been withheld correctly.

c.3. individuals whose spouses fall under a.1 and a.2.

c.4. individuals deriving other non-business, non-professional-related income in addition to compensation income not otherwise subject to final tax.

4.2.2. For Self-Employed:

Income Tax Return and Audited Financial Statements and Official Receipt of tax payment from bank, DTI Registration, Mayor’s Permit

4.2.3. For POP Members

a. Employment Contract (EC), which shall be supported by an English translation if written in a foreign language other than the English language;

b. Other proofs of income duly validated and certified/initialed by the assigned Pag-IBIG Information Officer shall be accepted for evaluation.

The gross family income shall pertain to the income of the member, his parents, legitimate spouse and unmarried children, provided they are living with the borrower. On the other hand, the income of a relative within the second civil degree of consanguinity shall only be considered as part of the gross family income if he shall act as co-borrower to a tacked loan.

The net disposable income shall be the gross family income less statutory deductions and monthly amortizations on outstanding obligations.

4.3. Loan-to-Collateral Ratio

The ratio of the loan amount to the appraised value of the collateral shall not exceed the following rates:

4.4. A maximum of three (3) qualified Pag-IBIG members may be tacked into a single loan which is secured by the same collateral, provided they are related within the second civil degree of consanguinity or affinity.

5. INTEREST RATE

5.1. The Pag-IBIG Fund End-User Home Financing Program shall bear interest at the following rates per annum:

5.2. Prior releases for retail accounts with staggered release of takeout proceeds shall be subject to an interim interest rate based on HDMF Circular No. 243. Subsequent releases of takeout proceeds beginning 1 April 2009 onwards for said accounts shall be subject to the rates provided for in these guidelines.

5.3. Repricing

5.3.1. For loans up to Four Hundred Thousand Pesos (P400,000), Pag-IBIG Fund may reprice the interest rate every three years provided that it shall not exceed the original rate.

5.3.2. For loans over Four Hundred Thousand Pesos (P400,000.00) up to Three Million Pesos (P3,000,000.00), Pag-IBIG Fund shall reprice the interest rate of the loans every three years at rates based on prevailing market rates at point of repricing, which shall not be lower than the original rates provided under section 5.1 and shall not exceed the following:

6. LOAN TERM

6.1. The loan shall be repaid at a maximum term of thirty (30) years and shall, in no case, exceed the difference between the present age and age seventy (70) of the principal borrower.

6.2. The borrower shall be allowed to lengthen or shorten the loan term only once during the life of the loan.

6.3. Acquired assets disposed of through Pag-IBIG housing loans shall have a maximum loan term of thirty (30) years.

7. LOAN PAYMENT

7.1. The loan shall be paid in equal monthly amortizations in such amounts as may fully cover the principal and interest, as well as insurance premiums, over the loan period, and shall be made, whenever feasible, through salary deduction.

7.1.1. The borrower shall execute the Authority to Deduct the monthly loan amortization from his salary, and shall secure the conforme of his employer for the purpose.

7.1.2. Pag-IBIG Fund and the employer shall enter into a Collection Agreement stipulating, among others, that the deduction for the employee’s Pag-IBIG housing loan shall have priority over other obligations of the same nature after all statutory deductions have been effected.

7.2. The monthly amortizations may also be paid to Pag-IBIG Fund through any of the following modes:

7.2.1. Accounts covered by buyback guaranty

a. Post-dated checks issued by the borrower, co-borrower or relatives up to the first civil degree of affinity or consanguinity, initially to cover the first twelve (12) monthly amortizations. Developers with Collection Servicing Agreement (CSA) with Pag-IBIG Fund shall have custody of the PDCs. Meanwhile, PDCs for accounts of developers not covered by CSAs shall be kept in the Fund’s possession.

PDCs must be dated on the date that coincides with the date of loan takeout/final loan release.

b. if the developer has a Collection Servicing Agreement (CSA) with Pag-IBIG Fund, payments shall be remitted to the developer.

c. over-the-counter

d. auto debit arrangement with banks

e. any other collection system which the Fund may implement in the future

7.2.2. Accounts not covered by buyback guaranty

a. Post-dated checks issued by the borrower, co-borrower or relatives up to the first civil degree of affinity or consanguinity, initially to cover the first twelve (12) monthly amortizations.

PDCs must be dated on the date that coincides with the date of loan takeout/final loan release.

b. auto debit arrangement with banks

c. any other collection system which the Fund may implement in the future

7.3. The first monthly installment/amortization shall commence on the month immediately following loan takeout/final loan release. The monthly payments shall be paid on the date that coincides with the date of loan takeout/final loan release, e.g., every 17th.

7.4. For accounts affected by the issuance of these guidelines, the difference of the first amortization that was deducted from loan proceeds, which was based on HDMF Circular No. 243 rates, and the revised amortization based on the rates provided herein shall be automatically applied to the principal.

7.5. Should the due date fall on a non-working day, the monthly payments shall be paid on the first working day after the due date.

7.6. Staggered payments for an amortization/installment period shall be allowed provided the amortization is paid in full on or before the due date.

7.7. In case of tacked loans where a co-borrower is released from the original loan obligation, the principal borrower may request for the adjustment of his monthly amortization based on the outstanding balance of the loan, original interest rate and repayment period corresponding to the remaining term of the loan.

7.8. The borrower who fails to pay the full monthly amortization and/or other loan obligations when due shall pay a penalty of 1/20 of 1% of the amount due for every day of delay.

7.9. The upgraded membership contributions for loans exceeding Five Hundred Thousand Pesos (P500,000.00), net of the mandatory contributions (except in the case of individual payors / self-employed / POP who shall be shouldering both the EE and ER share) shall be paid together with the borrower’s monthly amortization and shall be considered as contributions for the applicable month.

7.10. A borrower’s monthly payments shall thus be applied according to the following order of priority:

a. Penalties

b. upgraded membership contributions

c. insurance premiums

d. interest, and

e. principal

8. COLLATERAL

The loan shall be secured by collateral consisting of the same residential properties to which the loan proceeds are applied.

8.1. For Developers’ Accounts

8.1.1. For loans that are covered by buyback guaranty and are secured by properties which are bought from developers, the security shall consist of a First Real Estate Mortgage or a Contract to Sell (CTS) on the subject properties, fully covering the payment of the obligation, as stipulated in the corresponding Promissory Note and Loan Agreement of the borrower (for REM), or the Deed of Assignment (for CTS).

8.1.2. For loans which are not covered by buyback guaranty and are secured by properties which are bought from developers, the security shall consist of a Contract-to-Sell on the aforesaid properties, fully covering the payment of the obligation, which shall likewise be stipulated in the Promissory Note and Deed of Assignment.

8.1.3. Instead of a CTS, the loan may be secured by a First REM and exempted from the buyback provision, provided any of the following conditions are complied with:

a. The borrower pays the advance amortizations for twenty-four (24) months; or

b. The loan-to-collateral ratio does not exceed seventy percent (70%).

8.1.4. For developer accounts, the properties subject of the loans shall be appraised by Pag-IBIG Fund in two stages:

a. A preliminary appraisal (PA) which may be undertaken prior to actual development and house construction upon the request of the developer, and payment of the corresponding appraisal fees; and

b. A collateral inspection/validation to be undertaken upon completion of the house construction and land development servicing the houses constructed, for which a Collateral Appraisal Report (CAR) shall be issued

8.1.5. The housing unit and the facilities fronting the unit for takeout must be 100% complete, and an occupancy permit presented by the borrower at the time of loan takeout, if the purpose of the loan is to purchase a residential unit (PRU)

8.1.6. Appraisal of developers’ accounts conducted by the Home Guaranty Corporation (HGC) shall be validated by the Fund

8.2. For Retail Accounts

8.2.1. For retail accounts, the security shall consist of a First Real Estate Mortgage on the subject properties fully covering the payment of the obligation as stipulated in the corresponding loan agreement and promissory note of the borrower.

8.2.2. Accommodation mortgages shall be allowed only for borrowers who are related up to the second civil degree of consanguinity or up to first civil degree of affinity, subject to the following requirements:

a. The owner shall constitute the first mortgage as accommodation mortgagor, to secure the borrower’s loan obligation or give the latter the special power to do so; and

b. The borrower shall undertake and sign as co-mortgagor, to fully cover the residential unit and improvements thereon

8.2.3. The real estate taxes on the property must be updated as of the quarter immediately preceding the date of loan application, and yearly thereafter during the term of the loan.

To ensure that the real estate taxes on the mortgaged property are updated, Pag-IBIG Fund shall require the borrower to submit a copy of the official receipt of the real estate taxes paid for the preceding year not later than April 30 of the succeeding year. Failure of the borrower to submit proof of payment of the real estate taxes for the year shall render the outstanding loan due and demandable.

8.2.4. The property subject of the loan shall be appraised by Pag-IBIG Fund.

8.3. The property must be covered by an Original Certificate of Title (OCT), Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) issued by the Register of Deeds, free from all liens and encumbrances; and must be registered in the name of:

8.3.1. Any one or more of the borrowers, (except in the case of accommodation mortgages), in the case of a real estate mortgage (REM)

8.3.2. The developer, in the case of a Contract to Sell (CTS), provided that the Deed of Assignment of the CTS is annotated in the title in favor of Pag-IBIG Fund.

8.3.3. In case of a joint venture where the land is owned by a third party, the developer must be authorized under a Joint Venture Agreement to execute a Deed of Assignment of CTS covering the property in favor of the Pag-IBIG Fund.

9. PARI-PASSU

A Pari-Passu arrangement with any institution acceptable to Pag-IBIG Fund, such as but not limited to provident funds, shall be allowed wherein said institution can extend its own loan (not for Pag-IBIG Fund takeout), in addition to the Pag-IBIG member housing loan, secured by the same collateral, on a pro-rata sharing of the mortgage lien, subject to the following conditions:

9.1. Pag-IBIG Fund shall have physical possession of the mortgages, regardless of the loan amount extended by the other institution

9.2. In computing the credit capacity of the borrower, the income already considered in determining the Pag-IBIG housing loan entitlement of the borrower shall be excluded.

9.3. In case of default, the following shall apply:

a. Cross-default – Default in the monthly payments for either amortization shall constitute default in both.

b. Foreclosure – When foreclosure becomes necessary or advisable, proceedings may be initiated either by the Fund or the originating institution upon mutual agreement by both parties.

c. Proceeds – Foreclosure proceeds shall be divided according to the ratio of loan exposure of the Fund and the originating institution after deducting all the legal and incidental expenses.

10. INSURANCE

The borrower shall be compulsorily covered by mortgage/sales redemption insurance and fire insurance:

10.1. Mortgage/Sales Redemption Insurance (MRI/SRI) – A borrower who is not beyond sixty-five (65) years old at the date of housing loan application shall be covered by the MRI/SRI, provided, that he shall not be over seventy (70) years old on his birthday nearest the date the original housing loan expires.

The MRI/SRI coverage of the borrower shall be subject to the schedule of insurance in the Pag-IBIG Fund Master Policy. In the case of borrowers who are tacked into a single loan, only the principal borrower shall be covered by the MRI/SRI to the full extent of the loan. Thus, the entire loan shall be extinguished by the MRI/SRI, should the principal borrower die. On the other hand, the principal borrower shall continue to amortize the entire loan, should one or both of his co-borrowers die.

10.1.1. Interim Coverage

The interim MRI/SRI coverage on the principal borrower under the automatic coverage system shall take effect on the date of the issuance of the Notice of Approval (NOA) or Letter of Guaranty (LOG) by Pag-IBIG Fund.

10.1.2. Regular Coverage

a. The regular coverage shall be a non-medical yearly renewable term insurance (YRT) for which Pag-IBIG housing loan borrowers shall pay a uniform premium rate effective on the date of loan-takeout.

b. The amount of coverage shall be the original amount of the loan.

10.2. Fire and Allied Perils Insurance – The borrower shall obtain fire and other allied perils insurance on the property mortgaged or subject of the Contract to Sell for an amount equivalent to the appraised value of the residential unit or the loan amount, whichever is lower.

10.3. Premium Payments – The annual premium for the first year of coverage shall be prepaid and shall be deducted from the loan proceeds upon loan takeout.

Premiums due for the second year, and every year thereafter that the insurance coverage is in force shall be prepaid on a monthly basis and shall be collected together with the monthly loan amortization.

10.4. All housing loan applicants registered under the Pag-IBIG Overseas Program and working overseas shall be charged an additional two pesos per thousand of coverage per year (P2.00/P1,000/annum).

10.5. No Evidence Limit (NEL) – The NEL shall be P2,000,000. As such, all borrowers up to 60 years old with loans of up to P2,000,000 shall no longer be subjected to underwriting approval.

10.6. Borrowers over 60 years old shall be required to submit a Health Statement Form (filled out by the applicant in his own handwriting, duly signed and dated, and witnessed by two persons) for underwriting approval.

10.7. FME for POP members over sixty (60) years old – The full medical examination (FME) report may be dispensed with for loan applicants under the Pag-IBIG Overseas Program who are over 60 years old. In its place, the Health Statement Form shall be submitted, filled out by the applicant in his own handwriting, and witnessed by two persons. The applicant shall also be required to submit a copy of the result of his medical examination conducted prior to his assignment overseas as required by his employment agency.

Should the applicant’s health be found “sub-standard”, the corresponding sub-standard rating shall be applied, and the applicant shall also be charged the additional extra premium.

11. PREPAYMENT

11.1. A borrower shall be allowed to prepay his loan in full or in part without prepayment penalty, pursuant to Republic Act 7394.

11.2. Accelerated payments – any amount paid in excess of the required monthly amortization shall be applied automatically to principal, unless otherwise expressly requested by the borrower upon payment.

The treatment of excess payment the borrower prefers must be noted on/properly disclosed in the Pag-IBIG Fund Receipt (PFR).

12. DEFAULT

12.1. The borrower shall be considered in default when he or any of his co- borrowers fails to pay any three (3) consecutive monthly amortizations and/or monthly membership contributions and other obligations on the loan.

12.2. At point of default, the outstanding loan, together with accrued interest, penalties, fees and other charges, shall become immediately due and demandable. The said amount shall likewise be subject to the following:

12.2.1. The unpaid monthly payments shall continue to be charged with a penalty equivalent to 1/20 of 1% of the amount due for every day of delay.

12.2.2. It shall continue to bear interest at the stipulated rate from the time the outstanding loan become due and demandable.

12.3. Pag-IBIG Fund may adopt the following remedies:

12.3.1. For Loans Secured By Contract to Sell (CTS)

a. Cancellation of the CTS;

b. Call against the warranty of the developer to buy back the defaulting account.

12.3.2. For Loans Secured By Real Estate Mortgage (REM)

a. The account shall be endorsed for foreclosure.

b. Default shall also constitute a lien on the Total Accumulated Value (TAV) of the member’s savings with Pag-IBIG Fund

13. LOAN CHARGES

The borrower shall pay a Processing Fee of Three Thousand Pesos (P3,000.00), which shall be paid as follows:

13.1. One Thousand Pesos (P1,000.00) upon filing of the loan application, which shall be non-refundable if the loan is disapproved;

13.2. Two Thousand Pesos (P2,000.00) upon loan takeout.

14. SECOND AVAILMENT

A Pag-IBIG member may avail himself of a second Pag-IBIG housing loan provided he has fully paid his first housing loan, whether as a principal borrower or as a co-borrower.

15. ADDITIONAL LOANS

15.1. Additional loan shall be herein defined as a housing loan availed while there is still an existing housing loan.

15.2. A member who is updated with his monthly contributions as well as his monthly housing loan amortizations as of date of application for additional loan shall be eligible for the said loan.

15.3. A qualified Pag-IBIG member who has an existing housing loan may avail himself of an additional housing loan for the following purposes:

15.3.1. House construction on a lot purchased/refinanced through a Pag-IBIG housing loan

15.3.2. Home improvement.

15.4. An eligible member shall be entitled to borrow an amount that will not exceed the difference between the member’s loan entitlement upon his application for an additional loan and his original loan availment.

15.4.1. If the original loan was taken out prior to 23 November 2006 and the additional loan was availed under these guidelines, the additional loan shall be treated as separate and distinct from the original loan.

Hence, the original loan shall be subject to the interest rates prevailing at the time said loan was taken out while the additional loan shall be charged with the interest rates provided in these guidelines.

15.4.2. The additional loan shall be consolidated with the original loan for the following accounts:

a. If the original loan was taken out under HDMF Circular No. 219 or any of the succeeding issuances; or

b. if the original loan was taken out under the “Magaang Pabahay” Program

Thus, the consolidated loan shall consist of the additional loan and the outstanding balance of the original loan as of the date of the additional loan’s final release. It shall be charged the corresponding interest rate provided in these guidelines.

The resulting monthly amortization, whether the original and additional loans are consolidated or treated separately, shall not exceed forty percent (40%) of the member-borrower’s net disposable income.

15.5. For consolidated loans, the borrower shall continue paying the original amortization until such time that the additional loan is completely released. However, upon full release of the additional loan, the new amortization shall be based on the consolidated loan as provided for in Section 15.4 hereof.

15.6. Inclusive of the value of improvements to be introduced, the loan-to- collateral ratio shall not exceed the corresponding rate stipulated in Section 4.3 hereof.

15.7. The consolidated loan shall be charged with the corresponding interest rate provided for in Section 5 of these guidelines.

15.8. The additional/consolidated loan shall have a loan term in accordance with the provisions stipulated in Section 6 hereof.

15.9. The additional loan shall be secured by the same collateral as that of the original housing loan. The borrower shall execute an Addendum to the First Real Estate Mortgage on the subject property to fully cover the payment of the additional/consolidated loan as stipulated in the corresponding loan agreement and promissory note of the borrower.

For a CTS account originally taken out under the “Magaang Pabahay” Program, the consolidated loan shall be secured by a First Real Estate Mortgage on the subject property to fully cover the payment of the obligation as stipulated in the corresponding promissory note of the borrower. In connection thereto, the borrower shall pay for the unpaid monthly payments that would cover the expenses to be incurred in the conversion of the CTS to REM. The consideration of the Deed of Absolute Sale shall be the contract price appearing in the CTS, while that of the Loan and Mortgage Agreement shall be the consolidated loan amount.

15.10. The member shall be charged with fees as provided for in Section 13 hereof.

16. EFFECTS OF MEMBERSHIP TERMINATION ON AN OUTSTANDING HOUSING LOAN

16.1. Application of Member’s TAV

A member whose housing loan is taken out under this Circular shall not be allowed to withdraw his TAV if he has an outstanding housing loan with Pag-IBIG Fund as of the date of membership/savings withdrawal, he shall be given the following options:

16.1.1. Pay off the outstanding housing loan balance and withdraw his accumulated savings;

16.1.2. Continue amortizing the loan until it is fully paid, provided that the account is updated. The member can withdraw his accumulated savings only upon full settlement of the loan; or

16.1.3. Apply the accumulated savings to the outstanding loan balance.

Meanwhile, withdrawal of TAV for a member whose account was taken out under earlier Pag-IBIG Fund housing programs shall be governed by the guidelines prevailing at the time of loan takeout.

16.1.4 For Accounts released from 1 March 1999 up to 8 November 2001 (taken out under HDMF Fund Circular Nos. 171 and 178)

In case of membership termination due to membership maturity, permanent departure from the country, retirement, total disability or insanity, Pag-IBIG Fund shall effect automatic application of the member’s TAV to the outstanding housing loan balance, regardless if the account is updated or in arrears.

16.1.5 For Accounts released from 9 November 2001 to 19 July 2004 (taken out under HDMF Circular Nos. 189, 189-A, and 189-B)

Upon membership termination on the grounds of membership maturity, permanent departure from the country, retirement, total disability or insanity, Pag-IBIG Fund shall automatically apply the member’s total accumulated savings to his outstanding housing loan, only if the account is in arrears.

In all cases, should there be any unpaid loan balance after the member’s total savings have been offset against the loan, Pag-IBIG Fund shall require the borrower to pay the balance either in full, or under a revised amortization scheme, for a period not longer than the remaining term of the loan. Should the borrower opt for the latter, he shall be required to pay his monthly membership contributions until the loan obligation is fully settled, in accordance with the terms and conditions of the loan agreement.

16.2. Application of Insurance Proceeds

In the event of death, Pag-IBIG Fund shall apply the proceeds of the member’s mortgage/sales redemption insurance (MR/SRI) to his outstanding housing loan balance, and the excess, if any, shall be paid to the member’s designated beneficiaries.

In case the insurance proceeds shall not be sufficient to pay the member’s housing loan balance fully, the Fund shall offset the remaining amount against the member’s TAV. Should the member’s TAV still not suffice, the Fund shall require the member’s heirs/beneficiaries to settle any remaining balance in full or under a revised amortization scheme for a period not longer than the remaining term of the loan.

17. OTHER PROVISIONS

17.1. Alignment of Pag-IBIG Fund Special Housing Loan Facilities with these guidelines

Provisions on the eligible borrower’s age, membership contributions, loan term and interest rate of Special Housing Loan Facilities shall be aligned with these guidelines. All other provisions as stated in the respective guidelines and Memorandum of Agreement of the Pag-IBIG Fund Special Housing Loan Facilities that are not inconsistent with these guidelines shall continue to be in effect.

17.2. Alignment of HDMF Circular No. 200 with these guidelines

With exception to the loan-to-collateral ratio, which is provided for in Section F.1 of HDMF Circular No. 200, all other provisions under these guidelines shall be used in processing housing loans to purchase Pag-IBIG Fund’s Real and Other Properties Owned or Acquired (ROPOA).

18. AMENDMENTS

These guidelines may be amended, revised or modified by the Pag-IBIG Fund Senior Management Committee in furtherance of the objectives of the program, provided that the amendments, revisions or modifications herein adopted are consistent with the mandate of the Fund under its charter and existing laws.

19. REPEALING CLAUSE

All memoranda, rules, regulations, and other issuances inconsistent herewith are hereby repealed, amended or modified accordingly.

20. PROGRAM ALLOCATION

The Management is hereby authorized to allocate P3 Billion Pesos for 2009 to finance the housing loan package of over P2,000,000 to P3,000,000.

21. EFFECTIVITY

These guidelines shall take effect beginning 1 April 2009.

JAIME A. FABIAÑA

Officer-in-Charge

Makati City

________________ 2009

Source: PAG-IBIG FUND END-USER HOME FINANCING PROGRAM (Pag-IBIG Cir. 247, Guidelines) (April 23, 2009)

Now why would one want to consider transferring an existing loan for a bank foreclosed property to Pag-IBIG?

In my opinion, financing through a Pag-IBIG housing loan comes with a lot of advantages and I’ll tackle these in an upcoming post.

To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Become a Fan in Facebook:Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2010 All rights reserved.

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Can I buy bank foreclosed properties with financing through a Pag-IBIG housing loan? is a post from: Foreclosure Investing Philippines

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This is the second installment of listings of foreclosed properties which I am posting for the benefit of those who were unable to attend the 4th Housing Fair which was held recently at SM Megamall and also for those who attended but were unable to get a copy. This installment features foreclosed properties from the Bangko Sentral ng Pilipinas (BSP) that are for sale as of November 30, 2009 along with Frequently Asked Questions (FAQ) about BSP acquired assets.

The BSP foreclosed properties for sale are from the following areas:

• Luzon
• Bataan
• Batangas
• Bulacan
• Cavite
• Isabela
• Laguna
• La Union
• Nueva Ecija
• Oriental Mindoro
• Palawan
• Pampanga
• Pangasinan
• Quezon Province
• Rizal Province

Please refer to the complete listing below which includes property details like location, TCT/CCT No., Area (sq.m.), description, and selling price.

Click here to download the complete listing for BSP foreclosed properties for sale as of November 30, 2009.

I got this listing from BSP’s booth at the 2009 Housing Fair. I have already checked their website and it appears that as I write this article, the list above is more updated than their online list which was last updated on July 31, 2009 .

Complete descriptions of the properties are available at the Asset Management Department, Rm. 313, Five-Storey Building, BSP Complex, A. Mabini St., Malate Manila or you may call the following numbers:

• Direct Lines: 523.3420; 523.3486; 524.9829; 525.0614

The “fine print”
The sale of the properties shall be “As is, Where is” and the awardee as may be approved by the Committee on Disposal of Real Properties or the Monetary Board shall undertake the responsibility to acquire and maintain peaceful possession and enjoyment of the property at his expense. Prices are subject to change without prior notice.

FAQ on BSP acquired assets

While I was checking BSP’s website, I stumbled on this FAQ which gives information about BSP’s foreclosed assets,  how to buy them, requirements, and a lot more. Please refer to their Frequently Asked Questions (FAQ) on acquired assets below.

1. How did the Bangko Sentral ng Pilipinas (BSP) obtain its acquired assets?

When availing of the loan facilities of the Bangko Sentral ng Pilipinas (BSP), private banks assign to BSP their receivables including the collaterals. Upon failure of these banks or their borrowers to pay their loans, the BSP forecloses these real properties. Another mode by which the BSP acquires these assets is when the banks pay their loans with properties under a dacion en pago agreement.

2. What is a foreclosure sale?

A foreclosure sale is a public bidding of loan collaterals. If the creditor is the highest bidder for the property, the supposed proceeds of the sale are applied as payment for the loan. Thus, the creditor extinguishes the loan of the debtor but in turn gets a real property, which is the collateral for the loan.

3. Can an owner of a property subject to foreclosure sale reacquire his property?

The law allows the registered individual owner or mortgagor to redeem the property subject to foreclosure sale within one year after the sale of the real estate. The reckoning date of the one-year period is the date of the registration on the certificate of foreclosure sale with the Register of Deeds. A juridical person, whose property is being sold pursuant to an extrajudicial foreclosure, shall also have the right to redeem the property before the registration of the certificate of foreclosure sale with the Register of Deeds but not more than three months after foreclosure, whichever is earlier.

4. How much is the redemption price?

The redemption price is computed based on the amount due, plus the interest rate specified, on the mortgage deed as well as all the costs and expenses incurred by the BSP due to foreclosure and custody of the property. However, as assistance to the borrower-mortgagee, the BSP allows a revision in interest rate and penalty rate, that is, the rate specified in the mortgage document or 12 percent and five percent per annum, respectively, whichever is lower, computed from the time of assignment of the borrower bank to the BSP, until the date of payment.

5. Can the redemption period be extended?

The BSP allows the extension of the redemption period up to a maximum period of five years subject to interest at 12 percent per annum until full payment. Any proposal for a longer redemption period of up to ten years shall be subject to the approval of the Monetary Board.

6. If the previous owner fails to exercise his right of redemption, what happens to the title of the property?

The BSP shall implement the transfer of the title from the previous owner to the BSP.

7. If the title is already in the name of BSP, can the previous owner still re-acquire his property?

The BSP being a government institution is required, as an initial mode of disposition, to sell through public auction, all acquired properties already in its name. The previous owner may, thus, participate in the auction or negotiate for the purchase of the property in case there is failure of bidding.

8. Does the previous owner have the first priority to purchase the property in the public auction?

As the public auction is open to all interested buyers, no priority is given to the previous owner.

9. When is the public auction held?

The auction is usually scheduled once every quarter. An Invitation to Bid (ITB) is published in a newspaper of general circulation no later than 15 days before the auction date. The ITB states when and where the auction will take place, shows the list of properties for sale and the minimum bid price for each property.

10. Who conducts the public auction?

The Committee on Disposal of Real Properties conducts the public auction. This is composed of:

Chairman – BSP Managing Director, Regional Monetary Affairs Sub-Sector
Co-Chairman – BSP Deputy General Counsel
Members – Heads of five different departments in the BSP

11. What is the basis of the selling price of acquired assets?

One of the values considered in determining the selling price of a BSP acquired asset is its latest appraised value.

12. Is a fee charged when one participates in the auction?

The complete description of the properties, rules and regulations on the bidding procedures and the prescribed bid forms are available for a minimal fee of P50.00. The bid form can be obtained from the Asset Management Department (AMD), Rm. 313, of the BSP’s Five-Storey Bldg. The deadline for submission of duly accomplished bid forms is published in a local or national daily. Bids should be enclosed in sealed envelopes. All bids are opened immediately after the deadline for submission.

13. Does a bidder need to be present during the public auction?

A bidder may or may not attend the public auction. He may send a representative to observe. However the presence of interested parties is highly encouraged so decisions can be made on any issues that may be raised during the auction.

14. What are the terms and conditions of the auction sale?

The auction will be conducted on a cash basis and shall be under a sealed envelope system. The basic terms and conditions of the auction sale are:

• Any qualified bidder shall accomplish a Bid Tender Form, clearly indicating the following, among others:

a. description of the items or lots with the corresponding bid offer clearly indicated in figures and words;
b. name and signature of bidder;
c. business or residence address of the bidder;
d. business license number, any government-issued ID number; or Tax Identification Number (TIN) of the bidder; and
e. terms and conditions offered regarding bidders bond, payment, default and delivery.

• The bidder shall accomplish the Bid Tender Form, in duplicate, preferably typewritten. Erasures or interlineations should be avoided and if unavoidable should be duly initialed by the bidder.
• The Bid Tender Form shall be sealed in an envelope with the TCT/CCT Number and location of the property written on the face of the envelope.
• The envelope shall contain only one bid corresponding to each property. It shall also contain all bid documents issued by the Asset Management Department (i.e., Bid Tender Form and Instruction to Bidders and Terms and Conditions of the Bidding), the Bid Bond, and other attachments, as may be required.
• All documents shall bear the bidder’s signature on each and every page. The signature of the bidder on the original Bid Tender Form and other bid documents constitutes acceptance of, and assent to, all conditions embodied therein.
• The envelope shall be deposited in the designated box on or before the opening of bids.

15. How much is the required bid bond?

The bid bond required from bidders is equivalent to at least 10 percent of the bid price, and shall be made in the form of cash, manager’s or cashier’s check payable to the Bangko Sentral ng Pilipinas.

16. Can a buyer bid less than the minimum bid price?

No. The bid should be equal to or more than the minimum bid price.

17. When does the highest complying bidder pay the balance of his bid?

The highest complying bidder, whose bid has been approved, shall pay the balance of his bid within 15 calendar days from receipt of the Notice of Award.

18. What is a failed bidding?

A bidding may be declared a failure in any of the following cases:

• There is no bidder; or
• All bidders failed to comply with the terms and conditions prescribed in the ITB.

19. What happens if there is failed bidding?

In the event of a failed bidding, the Committee will immediately start accepting offers for negotiation and continue to accept offers through the Asset Management Department. However, the Committee may at its discretion, elect to immediately conclude the negotiation after a failure of bidding whenever there is a highest complying offeror ascertained.

20. What happens if two or more bidders submitted the same bid amount?

When two or more complying bidders make identical offers constituting the highest bids, a public auction viva voce between those who submitted identical bids shall be resorted to at a price not lower than the highest offered bid.

21. What documents are required to negotiate purchase of a property?

The offeror shall accomplish and submit the following forms to the Asset Management Department:

• Negotiated Offer to Purchase form, in two copies;
• Negotiated Sale Rules and Procedures, in two copies, signed on all pages;
• Information Sheet;
• If the offeror is a representative of an individual, corporation, partnership or any form of entity, a written authority to represent the individual or Secretary’s Certificate for juridical entities; and
• The following documentary requirements as listed in the information sheet:

a. Individual:

• Proof of Income
• Employer’s Certificate
• Proof of Bank Accounts
• “2 x 2” ID Picture
• Photocopy of any government-issued ID
• Certification of good moral character and no pending case for government employees with permanent appointments buying a property falling under the socialized housing category, set by the Housing and Urban Development Coordinating Council (HUDCC)

b. Corporation:

• Securities and Exchange Commission (SEC) Registration, Articles of Incorporation, Business Permit
• Audited Financial Statements for the last two years
• Board Resolution authorizing the purchase and designated signatories and Secretary’s Certificate

22. How much deposit is required?

• For cash purchases, a deposit equivalent to at least ten percent of the offer price must be made upon submission of offer.
• For purchases on installment, a deposit of at least ten percent of the offer price is also required, five percent of which, however, must be made upon submission of the offer to purchase, and the additional five percent to be remitted within 15 calendar days from date of receipt of Notice of Approval.
• For purchases by government employees with permanent appointments of properties qualified under the socialized housing category, a minimum deposit of P5,000.00 is required.
• The deposit may be in the form of cash or manager’s/cashier’s check payable to the Bangko Sentral ng Pilipinas.

23. Does the deposit form part of the purchase price?

If the offer is approved, the deposit forms part of the purchase price.

24. What are the terms of payment?

• For cash purchases, the balance of the offer price (net of at least ten percent deposit) must be remitted within 30 calendar days from date of receipt of Notice of Approval.
• For purchases on installment basis, the balance of the down payment, if any, shall be completed within 15 calendar days from receipt of Notice of Approval. The balance of the offer price (net of at least ten percent down payment) shall be paid within a maximum period of 180 months or 15 years. However, for properties with a selling price of P400,000.00 and below classified as residential or agricultural, which fall under the socialized housing category, the maximum payment period is 25 years.
• Balance of the purchase price shall be subject to an interest rate fixed over the period as determined by the Committee. Properties classified as socialized housing shall be charged interest based on the rate defined by the Housing and Urban Development Coordinating Council as implemented by Pag-IBIG Fund.
• Payments may be made on a monthly, quarterly, or annual basis. The first amortization is due 30 days after receipt of Notice of Approval; and
• Payments may be made through availment of PAG-IBIG housing loan or bank loan subject to the condition that the Deed of Absolute Sale shall be executed and the title may be released, only upon receipt by the BSP of the documents evidencing payment guarantee issued by PAG-IBIG fund or the lender-bank;
• Offers payable within 90 days from receipt of the Notice of Approval are not subject to interest charges.

25. If a buyer offers to purchase a property at the BSP minimum selling price and submits all the required documents, is he guaranteed that the sale will be awarded to him?

No. The Guidelines on Sale of Acquired Assets require a 15-day waiting period within which to accept other offers which may be in the best interest of the BSP. The waiting period is reckoned from the time the first Negotiated Offer to Purchase Form is received by AMD and payment of the required down payment. However, this policy does not apply for negotiation offers accepted/approved by the Committee immediately after failure of auction.

26. After the 15-day waiting period, is the offer automatically approved?

No. All the offers received are evaluated by AMD after the 15-day waiting period and submitted to the Committee for decision. The Committee meets only once a month – usually every third Wednesday of the month. For properties valued at over P 20.0 million, the Committee will submit the offers to the Monetary Board for decision.

27. How will the proposed buyer know that his offer is accepted?

The Committee sends a Notice of Approval for accepted proposals.

28. What happens to the deposit for offers not accepted?

Deposits of prospective buyers whose offers are not accepted shall be returned without interest by crediting their bank account, as stated in the Negotiated Offer to Purchase Form, under the Electronic Peso Clearing and Settlement System.

29. What happens if the buyer fails to pay the balance of the required down payment within the prescribed period?

If the buyer, whose offer was approved by the Committee or the Monetary Board, fails to pay in full the required down payment within the prescribed period, the BSP will cancel the award and forfeit 50 percent of the deposit already made.

30. Can a buyer withdraw his offer to purchase after it has been approved and accepted by the BSP?

Withdrawal, for any cause whatsoever, of the offer to purchase approved by the BSP, within 30 days from receipt of the Notice of Approval or failure to comply with the conditions of the sale, shall mean forfeiture in favor of the BSP of 50 percent of the deposit made and cancellation of the Notice of Approval.

31. If there are two or more offers for the same property, to whom is the sale awarded?

Where there are two or more offers for the same property, the best offer shall be determined in accordance with the following order of priorities:

• First priority shall be given to offers payable in spot cash within 30 calendar days upon receipt of the Notice of Approval.
• Second priority shall be given to offers payable in 12 months or less; and
• Third priority shall be given to offers payable on installment over 12 months or up to 180 months.

The primary consideration, within the same priority, shall always be the highest offer price. Where the difference in the amount of the offers in the same priority is 5 percent or less, the offerors will be asked to resubmit on a designated date and time, improved offers in sealed envelopes to the designated officials of the AMD. In case the same offer price is received, the next consideration shall be the highest down payment. Finally in case the offers received have the same offer price and the same down payment, the shortest payment period will be accepted.

However, when there are two or more offers received, and one is a government agency or instrumentality, with the same offer prices, terms, and proposed down payment, preference shall be given to the government agency or instrumentality. However, where there are two or more government agencies or instrumentalities interested in the same property with the same offer prices, terms and proposed down payment, bidding shall be conducted by the Committee on Disposal of Real Properties to be participated only by such government agencies or instrumentalities.

32. What contract covers the sale transaction?

A Contract to Sell (CTS) is executed upon receipt of the required deposit/down payment. If the buyer fails to submit the signed CTS within three months or 90 days from receipt of the Notice of Approval, the BSP will cancel the award and forfeit the down payment. Upon receipt of the full payment of the purchase price, a Deed of Absolute Sale is executed.

33. Can a buyer pay the deposit and monthly amortizations at the BSP Regional Offices?

Payments may be made at the BSP Main Office or at any of the BSP Regional Offices or Branches nationwide. The Committee, however, encourages buyers to issue postdated checks.

34. Does BSP give a discount?

Discounts are granted on a case-to-case basis and depending on the condition of the property.

35. If a buyer purchases on wholesale, can they get a discount?

Yes, a buyer may avail of graduated rates of discount if he purchases on a wholesale basis.

36. What is considered as a wholesale purchase?

Offers to purchase may be considered as a wholesale transaction under any of the following circumstances:

• Total area of the property or group of properties is at least five hectares;
• At least five properties are purchased at the same time, regardless of the offer price or area; or
• The offer price for the property or group of properties is at least P50.0 million.

37. Can a buyer shorten his payment period or prepay the principal without being penalized?

The BSP allows prepayments without charging penalties.

38. Can a buyer who has lost his Filipino citizenship still acquire BSP properties?

Yes, provided he complies with the limits set by law on land acquisition and issues a sworn statement to that effect.

39. If there are unauthorized occupants of the property, who is responsible for their eviction?

The sale of the properties is on an “As is, Where is” basis and the buyer shall undertake the responsibility to acquire and maintain peaceful possession and enjoyment of the property without seeking the assistance of the BSP.

40. Can the buyer assign his rights and obligations under the Contract to Sell?

Yes, the buyer can assign his rights over the purchase of a property but with the prior written consent of the BSP.

41. Who shoulders the taxes and fees for the transfer of title to the name of the buyer?

The payment of the tax due the Bureau of Internal Revenue is subject to agreement between BSP and the buyer. If the BSP shoulders the tax, this shall only be up to 6 percent of the selling price. In case the zonal value or market valueper tax declaration is higher than the selling price, any tax due on the difference between the selling price and the zonal value/market value shall be for the account of the buyer. The buyer shall, however, pay for all applicable local taxes, fees and assessments, such as documentary stamp tax, transfer taxes, registration fees, and all other expenses incidental to the sale. Real estate taxes and insurance premiums shall be for the account of the buyer accruing from the date of receipt of the Notice of Approval and full settlement of the down payment.

42. Does BSP allow the sale of properties through a broker?

Yes, the BSP allows the sale of properties through brokers who are accredited with the BSP through the Asset Management Department, and who have been issued an authority to sell on a non-exclusive basis. However, brokers cannot represent a client in a public auction.

43. If a buyer agrees to assume the payment of capital gains tax or creditable withholding tax, can he remit the tax due directly to the Bureau of Internal Revenue (BIR)?

No. The buyer should remit to the BSP the amount of tax due and the BSP in turn, would pay the BIR through a credit transfer to the account of the Treasurer of the Philippines. The credit advice covering the payment and the pertinent BIR form shall be presented by the buyer to the concerned Revenue Regional Office. A copy of the documents, duly stamped received by the BIR, should be returned by the buyer to the BSP.

44. Can a broker represent a proposed buyer who initially negotiated with BSP?

No. If a prospective buyer initially negotiated with BSP, he can no longer be represented by a broker later in the negotiation.

45. Can a buyer who was assisted by a broker in the purchase of a property from the BSP be assisted by the same or any other broker in the purchase of another unit or property located in the same condominium building complex, row house or subdivision regardless of phase?

No. A buyer who was assisted by a broker in the purchase of a property from the BSP shall not be allowed assistance by the same or any other broker in the purchase of another unit or property located in the same condominium building complex, row house or subdivision regardless of phase.

46. How can one be accredited by the BSP?

The broker has to be licensed and must submit the following documents:

• Photocopy of valid Real Estate Broker’s License, duly certified by Department of Trade and Industry (DTI);
• Photocopy of valid HLURB Certificate of Registration (for those selling subdivision lots and condominium units)
• Certificate of Good Standing from a Broker’s Association;
• Photocopy of Certificate of Registration Issued and Certified by the DTI;
• Notarized Certification of no pending case (for corporations/partnerships);
• Photocopy of Income Tax Return (ITR) for two years;
• Photocopy of TIN Card;
• National Bureau of Investigation (NBI) or Police Clearance;
• Two recent “2 x 2” pictures;
• Value Added Tax (VAT) or non-VAT Certificate of Registration.

47. What qualifications are required from brokers?

The Broker shall have the following minimum qualifications:

• duly licensed;
• in good standing;
• of good moral character; and
• must not have been charged with any crime or offense involving moral turpitude.

48. What are the duties and responsibilities of a broker?

Brokers are required to:

• Inform prospective buyers of the BSP terms and conditions of the sale.
• Obtain documents from the BSP to be furnished to clients.
• Coordinate with the BSP Account Officer to be updated on new developments.
• Ascertain and disclose to buyers all pertinent facts concerning every property.

49. Can the BSP revoke accreditation previously conferred on brokers?

Yes. The accreditation as a broker is a privilege and may be withdrawn anytime by the BSP, upon due notice. The grounds for revocation of accreditation are as follows:

• The broker is no longer a member of good standing of the Association/Organization of which the broker is a member;
• The broker has been found by AMD to have violated the Broker’s Code of Ethics;
• The broker did not perform the duties as stated in the Notice of Accreditation;
• The broker is a defendant/respondent in a case involving moral turpitude filed in court or quasi-judicial body; and
• The broker has been convicted of a crime penalized by the Revised Penal Code or special criminal laws.

50. How much commission does BSP give its brokers?

A broker is entitled to a graduated rate of commission based on the selling price of the property; however, for sales to government employees of properties qualified under the socialized housing category, the commission is fixed at P2,500.00.

51. Under what conditions will a broker not be entitled to a commission?

• The broker has no Authority to Sell from the BSP;
• If the right to purchase will later on be assigned to the broker;
• The sale is to: a) a government institution; b) a buyer who had purchased another unit or property located in the same condominium, rowhouse, or subdivision, regardless of phase; c) a BSP employee or a relative of the BSP employee within the first degree of consanguinity or affinity; and d) the former owner(s) or present occupant(s) of the property subject of sale; and
• The broker did not perform all the duties and responsibilities stated in the Letter of Accreditation.

52. Will a BSP employee who brokered the sale be entitled to a commission?

No, BSP employees are not entitled to commission.

53. When is commission paid?

Commission is paid as follows: 1) cash sales- upon full payment of the purchase price and execution and return to Asset Management Department of Deed of Sale; 2) installments sale- upon full payment of the required down payment and execution and return to AMD of the Contract to Sell.

54. Does the BSP allow the lease of its properties?

Yes, the BSP allows the lease of its properties.

55. How long can the properties be leased?

Leases are mostly on a short-term basis. However, long-term leases are allowed on a case-to-case basis, specially for commercial properties.

56. How often do you increase your lease rate?

A multi year lease contract normally provides for an escalation rate of five percent based on the previous year’s basic rate, starting on the second year. However, for lease transaction covered by a contract on a month-to-month basis or for extension, the lease rate will be based on the prevailing rental rate.

57. Who shoulders the Value Added Tax?

The payment of the VAT is for the account of the lessee.

58. What other conditions do you require?

The lessee is required to pay two months security deposit and one month advance rental.

59. Is renovation of the property being leased allowed?

Yes, as properties are being leased on an “as-is, where-is” basis, the lessee is allowed to introduce renovations to the property subject to the approval of the BSP.

60. Who shoulders the cost of the renovation?

The lessee shoulders the cost of the renovation without remuneration after the end of the term of the lease.

61. Do you allow free rent during the renovation period?

Yes, the BSP allows on a case-to-case basis free rent for a limited period while the renovation of the property is on-going, provided condominium/association dues and utility costs shall be for the account of the lessee.

62. Who shoulders the cost of utilities and condominium/association dues during the rent period?

The lessees shoulder the payment of the condominium/association dues, in addition to the cost of utilities.

63. What happens if the property being leased is sold to another party?

If the property is leased on a month-month basis, the lessee is requested to vacate the property once the property is sold. However, for long term leases, the BSP requests the new owner to honor the existing lease contract.

64. Do you give discounts for prompt payments?

Yes, the BSP gives discount equivalent to one month if one year advance rent is paid within the first five days of the yearly rental period.

65. What happens if the tenant is in arrears in the payment of rent?

The BSP charges an interest of two percent per month for late payment of rent computed from due date to the date of payment.

66. What documents do you require from the interested lessees?

The lessee is required to accomplish a Lessee Information Sheet and to submit the following:

Individual:

• Photocopy of Community Tax Certificate
• “2 x 2″ ID Picture
• Proof of Income (latest ITR, Certificate of Employment, Business permit, etc.)
• Employer’s Certificate
• Bank Accounts

Corporate:

• SEC Registration, Articles of Incorporation, Business Permit
• Audited Financial Statements for the last two years
• Board Resolution and Secretary’s Certificate authorizing the lease and the signatories

Source: http://www.bsp.gov.ph/downloads/Publications/FAQs/assets.pdf

Happy Hunting!

—

To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Become a Fan in Facebook:Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2009 All rights reserved.

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

PPS. If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. If your inbox is getting full, you may subscribe through my RSS Feed instead.

Bangko Sentral ng Pilipinas foreclosed properties for sale as of November 30, 2009 plus FAQ is a post from: Foreclosure Investing Philippines

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As mentioned in my previous post which contains the full text of Act No. 3135, I am posting here Act No. 4118 which amends the original Act 3135. However, after reading the contents of Act No. 4118, I am inclined to believe that the full text of Act 3135 which I shared in my previous post was already Act 3135 as amended by Act 4118.

Why am I posting these? For starters, I just want to be sure that we are all on the same page when it comes to extrajudicial foreclosure sales in the Philippines. Please continue reading to find out more…

ACT NO. 4118 – AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND THIRTY-FIVE, ENTITLED “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES.”

SECTION 1. Section six of Act Numbered Thirty-one hundred and thirty-five, entitled “An Act to regulate the sale of property under special powers inserted in or annexed to real-estate mortgages,” is hereby amended to read as follows:

“Section 6. In all cases in which an extrajudicial sale is made under the special power herein before referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.”

SECTION 2. The following three sections are hereby inserted after section six of said Act Numbered Thirty-one hundred and thirty-five:

“Section 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

“Section 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

“Section 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the property or any part thereof was rented; if the purchaser occupied the property as his own dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty-five of the Code of Civil Procedure.”

SECTION 3. The number of the present section seven of said Act Numbered Thirty-one hundred and thirty-five is hereby changed, making it section ten.

SECTION 4. This Act shall take effect on its approval.

Approved, December 7, 1933

Source: http://www.chanrobles.com/acts/actsno4118.html

To date I have only been featuring information and listings of two of the most common types of foreclosures we can invest in here in the Philippines. These are bank foreclosed properties or acquired assets and real property being sold through tax foreclosure auctions.

Soon I will be posting listings and information about a third type of foreclosures which are properties that are to be sold through an extrajudicial foreclosure sale. This is governed by Act 3135 as amended by Act 4118 hence if you are interested in participating in such auctions, you can use these as reference on how they are generally conducted.

Subscribe now to e-mail alerts if you want to be notified when I post these listings.

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To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in twitter:http://twitter.com/jay_castillo
Become a Fan in Facebook:Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2009 All rights reserved.

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

PPS. If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. If your inbox is getting full, you may subscribe through my RSS Feed instead.

Act 4118 – Act 3135 as amended and governs extrajudicial foreclosures is a post from: Foreclosure Investing Philippines

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I attended a seminar on how to prevent foreclosures more than a year ago and I often heard the speaker talk about Act No. 3135 which is An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages. I can’t remember exactly who gave the seminar because my notes and handouts were also destroyed during typhoon Ondoy’s visit, maybe if and when I find notes in my only laptop that got saved, I can share more details on that seminar about foreclosure prevention. That was the first and only seminar I have attended that thoroughly discussed Act 3135 which is often referenced by court rulings pertaining to foreclosures in the Philippines.

As far as I understand, Act No.  3135 governs extrajudicial foreclosures in the Philippines. Sorry, I really can’t  so I will not attempt to discuss the salient features of Act 3135, I will just share its full text here for easy reference for everyone, took me quite some time to find this! Here you go…

ACT NO. 3135 – AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES

SECTION 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following election shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.

SECTION 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.

SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

SECTION 4. The sale shall be made at public auction, between the hours or nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary public of said municipality, who shall be entitled to collect a fee of five pesos each day of actual work performed, in addition to his expenses.

SECTION 5. At any sale, the creditor, trustee, or other persons authorized to act for the creditor, may participate in the bidding and purchase under the same conditions as any other bidder, unless the contrary has been expressly provided in the mortgage or trust deed under which the sale is made.

SECTION 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

SECTION 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the property or any part thereof was rented; if the purchaser occupied the property as his own dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty-five of the Code of Civil Procedure.

SECTION 10. This Act shall take effect on its approval.

Approved: March 6, 1924

Source: http://www.chanrobles.com/acts/actsno3135.html

By the way, there is an amendment to Act No. 3135 and it is Act No. 4118. I’ll also share the full text of this act here in one of my next posts. Feel free to to leave a comment below if you want to share any insights, I would be very thankful and would appreciate it very much!

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On a different note, if you have read one of my tweets or status update in facebook, you probably already know how heavy my workload has been this month of December. In addition, my wife and I are still very busy looking for a sound investment we can call our new home. If I have been unable to answer a comment here or any of your  e-mail or text messages, please accept my apologies. I humbly ask for more patience and let me reassure you all that things will improve soon.

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My vision – financial freedom for all!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Follow me in twitter: http://twitter.com/jay_castillo
Become a Fan in Facebook: Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2009 All rights reserved.

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

PPS. If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. If your inbox is getting full, you may subscribe through my RSS Feed instead.

Act No. 3135 – An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages (full text) is a post from: Foreclosure Investing Philippines

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A guest post by Samantha from MortgageFit

Taking out the right kind of mortgage can be a harrowing experience unless you know your mortgage requirements well. Many consumers take out mortgages only to repent later as they are unable to negotiate with mortgage lenders on favorable terms. It is best to walk into your lender’s office and talk it out at length about your finances. Talking directly to the mortgage lender has an edge over online mortgages.

Online mortgage loan will undoubtedly help you to save a lot of time, money and energy and you don’t have to run around to look for a mortgage lender or rates offered. But you take out a mortgage depending on your individual requirement. Do online mortgages treat mortgage applications taking into account individual needs? Not to a very large extent.

If you approach a mortgage lender personally, you can discuss about your finances directly. You may also get valuable guidance from the lender and settle upon a mortgage that suits your needs best. In fact lenders will co-operate with you since the mortgage market is still fragile and lenders will not want to lose consumers.

How will you identify the best online mortgage lender?

If it is easier for you to apply for a mortgage online, do a bit of research that will prevent you from being duped.

• When you are looking for the online mortgage lender, find out if the lender is a member of Mortgage Bankers Association (MBA) and National Association of Mortgage Brokers. Visit the websites of the above to find out whether or not the mortgage lender is a current member.

• A good and reliable website will have a security and privacy statement. So, look for the same. A reliable and legitimate website will always try to protect your privacy.

• Online mortgage lender will not make use of pop up advertisements for promoting themselves.

• If the data or information you enter into the website is encrypted, it is likely to be a legitimate website

Repeat the same procedure for all the websites you visit. Once you have done your homework, it is time for selecting the right mortgage deal for yourself. If you adopt the above measures, chances are that you won’t get duped easily and you will be able to decide upon the right lender better.

Samantha is a contributing Financial Writer, Moderator and Community Mentor of MortgageFit. She has been an active participant in the forums wherein she offers mortgage advice and suggestions to people in loan problems.

Are online mortgages reliable? is a post from: Foreclosure Investing Philippines

Bahay Financial Services or BFS currently has a vast inventory of pre-owned or foreclosed properties for sale that includes investment/budget homes and lots. Their current listing includes properties in attractive locations in the National Capital Region (NCR), CALABARZON, Visayas, and Mindanao.

I have checked the listing and I noted that it includes more than 3,000 properties that are still in “Available” status.

The foreclosed properties for sale are very affordable and easy payment terms are also available. For more information, you may contact BFS directly using the contact details found here: http://www.bfs.com.ph/contactus

The BFS foreclosed real estate listing is available online and you may access it through the following link: http://www.bfs.com.ph/propertylist. For those who want to download the complete list by copying it online, you might get frustrated as it could take a long time to download due to the large amount of data, even with a fast internet connection. At least that was what I experienced when I tried it. Anyway, after a long wait, I was able to download the complete listing. If anyone wants to download my copy (which I have already zipped) to avoid the long time to download I encountered, you may download it here.

I know a fellow real estate investor who has already purchased two repossessed houses from BFS which are now part of his portfolio of real estate investments. He is already receiving positive cashflow from these properties.

Bahay Financial Services, Inc. is a pioneering multi-national mortgage servicing platform that combines functional competencies in Mortgage Finance Origination and Credit Underwriting, Loan Servicing, Default Management, Property Management and Secondary Market Development. More information about BFS is available here: http://www,bfs.com.ph/aboutus

Don’t forget to subscribe to my mailing list so you won’t miss any new listings. If your mailbox is getting full, you may also subscribe via RSS reader.

Bahay Financial Services (BFS) Pre-owned Properties for Sale (January 2009) is a post from: Foreclosure Investing Philippines

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