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Pursuant to the approval of the Management Committee during its series of meetings, the Modified Guidelines on the Pag-IBIG Fund Affordable Housing Program is hereby issued:

1.   COVERAGE

This Guidelines shall cover all retail and developer-assisted housing loan applications  for   Pag-IBIG   Fund   Affordable   Housing   Program   (AHP) received by the Fund upon its effectivity.

2.   LOAN PURPOSE

The housing loan proceeds may be used to finance anyone or a combination of the following:

2.1 Purchase of fully developed residential lot or adjoining residential lots not exceeding one thousand square meters (1,000 sq. m.);

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

2.2.1    Old or brand new;
2.2.2    A property mortgaged with the Fund; or
2.2.3    Adjoining  houses  and  lots  /  townhouses  /  row  houses  /
condominium units.

The subdivision project where said residential units are located must have complied with all the required facilities pursuant to BP No. 220.

2.3 Construction or completion of a residential unit on a residential lot owned by the borrower or a relative of the borrower based on Section 8.1.2 herein;

2.4 Home improvement on the house owned by the borrower or a relative of the borrower based on Section 8.1.2 herein, or on a property currently secured under a Contract-to-Sell (CTS), or Deed of Conditional Sale (DCS) between Pag-IBIG Fund and the buyer, i.e. any alteration in an existing residential unit intended by the borrower to be a permanent integral part thereof, which will enhance its durability and material value; or

2.5 The housing loan proceeds may be used to refinance an existing housing loan; provided, that the borrower must be regularly paying without any payment made beyond thirty (30) days past due for the last six (6) months from date of application.

3.    ELIGIBILITY REQUIREMENTS

To qualify for the Pag-IBIG Fund AHP, a member shall satisfy the following requirements:

3.1 On Pag-IBIG Membership

3.1.1    Must be an active member under the Pag-IBIG I Membership Program as evidenced by the remittance of at least twenty-four (24) monthly savings at the time of application;"

3.1.2    A member, whose monthly savings are still short of the required number, may be allowed to apply for this program; provided, his/her total savings upon application is at least equivalent to 24 monthly savings based on the mandatory rate, inclusive of the employee (EE) and the employer (ER) counterparts;

3.1.3    A non-member who wishes to apply for a Pag-IBIG Fund AHP may be allowed to do so; provided, he/she remits the required 24 monthly savings based on the mandatory rate in lump sum, inclusive of the EE and ER counterparts. Said lump sum amount shall be considered a single remittance for the applicable month as of the payment date;

3.2 Has a gross monthly income not exceeding Seventeen Thousand Five Hundred Pesos (P17,500). Gross monthly income is herein defined as basic monthly compensation and cost of living allowance;

3.3 Not more than sixty-five (65) years old at the date of application and not more than seventy (70) years old at maturity;

3.4 Has the legal capacity to acquire and encumber real property;

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

3.6 If with existing Pag-IBIG housing account, either as principal buyer / borrower or co-buyer / co-borrower, it must be updated;
 
3.7 Has no outstanding Pag-IBIG Short-Term Loan (STL) in arrears at the time of application. A member whose STL is in arrears shall be required to update his/her account; and

3.8 Had  no  Pag-IBIG  housing  account  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 his/her housing account and surrenders the property.

4.   LOANABLE AMOUNT

A qualified Pag-IBIG member may apply for a housing loan of up to Seven Hundred and Fifty Thousand Pesos (P750,000.00), which shall be based on the lowest of the following: the member's actual need, desired loan amount, and loanable amount based on gross monthly income, capacity to pay, and the loan- to-appraised value ratio.

4.1 Loanable Amount Based on Gross Monthly Income

The housing loan shall not exceed the limit for the applicable income cluster.

Details		Maximum Gross M onthly Income / Cluster Limit
Income Cluster	C l uster 1 (NCR)	U p to P15, 000	U p to P17, 500
	C l uster 2 (Regi ons	U p to P12, 000	U p to P14, 000
Loanable Amount		Up to the Sociali zed Housing Loan Ceiling	U p to P750, 000

4.2 Loanable Amount Based on Capacity to Pay

4.2.1   All applications shall be evaluated based on the borrower’s capacity to pay.

4.2.2    The loanable amount shall be limited to an amount for which the monthly repayment shall not exceed thirty-five percent (35%) of the borrower's gross monthly income. In case of tacked loans, the individual gross monthly income of the borrower shall be considered.

4.2.3   For government employees who will be paying their loan amortization through salary deduction, their net take home pay must not fall below the minimum requirement as prescribed in the General Appropriations Act.

4.2.4    Tacked Loans

A maximum of three (3) qualified Pag-IBIG members may apply for a tacked loan subject to the following conditions:

a.    If the applicant members are related with the second civil degree of consanguinity or affinity:

a.1 The individual gross monthly income of those tacked into a single loan shall be considered in determining their respective capacities to pay; and

a.2  Co-borrowers must likewise pass the eligibility requirements provided in this Guidelines. They shall be jointly and severally liable with the principal borrower for the entire housing loan obligation.

b.    If the co-borrowers are non-relatives, or are related beyond the second civil degree of consanguinity or affinity, in addition to the requisites provided under the immediately preceding section of 4.2.4.a, the following conditions must likewise be met and complied with:

b.1     The purpose of the housing is either for purchase of residential unit or lot, or purchase of lot with house construction;
b.2     The subject property shall be registered in the names of all the borrowers;
b.3    All the borrowers shall execute the REM; and
b.4     The  mortgage  shall  be  released  only  upon  full payment of the entire housing loan obligation.

Applications for tacked loans shall be subject to the approval of the appropriate level of approving/signing authorities.

4.3 Loanable Amount Based on Loan-to-Appraised Value (LTV) Ratio

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

Loanable Amount    LTV Ratio Up to the Socialized Housing Loan Ceiling        100% Over the Socialized Housing Loan Ceiling up to P750,000         95%

5.    INTEREST RATE

5.1 The housing loan of borrowers under AHP shall be charged with the following interest rates for the first five (5) years or ten (10) years of the loan, whichever is applicable:

Details		Maximum Gross Monthly Income / Cluster Limit
Income Cluster	Cluster 1 (NCR)	U p to P15, 000	U p to P17, 500
	Cluster 2 (Regions)	U p to P12, 000	U p to P14, 000
Loanable Amount		Up to the Socialized Housing Loan Ceiling	U p to P750, 000
I nterest Rate*		3 . 0%	6 . 5%

*Applicable Interest rates may change subject to the approval of the Management.

5.1.1    Housing loan borrowers earning up to P15,000 for Cluster 1 and up to P12,000 for Cluster 2 with loan amount of up to the socialized housing loan ceiling shall be charged with interest rate of 3% for the first 5 years of the loan.

5.1.2    Housing loan borrowers earning up to P17,500 for Cluster 1 and up to P14,000 for Cluster 2 with housing loan of up to P750,000 shall be charged with interest rate of 6.5% for the first 10 years of the loan.

5.2 At the end of the 5-year or 10-year period, the interest rate shall be repriced based on the prevailing interest rate in the Fund's Full Risk- Based Pricing (FRBP) Framework. For borrowers opting for a 3-year or 5-year fixing period, the interest rate shall be repriced based on the prevailing interest rate in the FRBP Framework or it shall be increased by two percent (2%), whichever is lower.

Thereafter, said interest rate shall be repriced periodically depending on the chosen fixed pricing period of the borrower. The base rate for succeeding repricing shall be the interest rate for the immediately preceding repricing period.

5.3 An interest shall also be applied and charged from the initial release of proceeds until the final and/or full release of proceeds (DV/Check Date), if release of the proceeds of the housing loan is in staggered basis.

6.   LOAN TERM

The housing loan shall be repaid at a maximum term of thirty (30) years and shall, in no case, exceed the difference between age seventy (70) and the present age of the principal borrower. The principal borrower shall be considered  70  years  old  at  the  time  he/she  has  reached  his/her  70th birthday.

7.   PAYMENT OF LOAN AMORTIZATION

7.1 Mode of Payment

7.1.1    The housing loan shall be paid in equal monthly amortizations in such amounts as may full cover the principal and interest, as well as insurance premiums, over the term of the loan, and shall be made, whenever feasible, through salary deduction. The borrower must however give his/her consent in writing for the deduction of the amount of loan amortization from his/her salary.

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

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

a.    Post-dated checks;
b.    Payment  to  an  accredited  developer  with  a  Collection
Servicing Agreement with the Fund;
c.    Accredited Collection Partners;
d.    Auto debit arrangement with banks; or
e.    Any other collection system which the Fund may implement in the future.

7.1.3    In case of salary deduction, an equivalent of one (1) month amortization shall be deducted from the loan proceeds upon takeout. The said amount shall form part of the borrower's payment.

7.2 Payment Due Dates

7.2.1    The payment of the monthly amortization shall commence on the month immediately following the takeout date (DV/Check Date), and every month thereafter until full settlement of the housing loan.

7.2.2    In case of staggered releases, the payment date shall coincide with the DV/Check Date of the final release of proceeds or the constructive takeout date, whichever is applicable.

7.2.3    Should the due date fall on a non-working day in the Pag-IBIG branch where the housing loan is maintained, the monthly amortization shall be paid until the next working day.

7.3 Partial payments shall be accepted but the unpaid portion of the amount due shall be charged with the applicable penalty. Any amount paid by the borrower shall be applied in accordance with the order of priority under Section 7.5.

7.4 Any portion of the amount due that remains unpaid after the due date shall be charged with a penalty of 1/20 of 1% for every day of delay.
7.5 The monthly payment shall thus be applied according to the following order of priority:

7.5.1    Penalties,
7.5.2    Insurance Premiums,
7.5.3    Interest, and
7.5.4    Principal.

8.   COLLATERAL

The Pag-IBIG housing loan shall be secured by a collateral acceptable to the Fund, which, as a rule, shall consist of the same residential properties to which the takeout proceeds are applied. An off-site collateral under the Pag-IBIG Fund AHP shall not be allowed.

8.1 For Retail Housing Loans

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

8.1.2    Accommodation mortgages shall be allowed only for principal borrowers who are related to the accommodation mortgagor up to the second civil degree of consanguinity or up to the first civil degree of affinity. The accommodation mortgagor and the borrower shall sign the REM as co-mortgagors to fully cover the housing loan.

8.1.3    The Original Certificate of Title (OCT), Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) issued by the Register of Deeds must be registered in the name of any one or more of the borrowers. In case of Third Party REM or accommodation mortgage, the title shall be registered in the name of the accommodation mortgagor.

8.2 For Developer-Assisted Housing Loans

8.2.1    Contract-to-Sell (CTS) Documentation

The developer shall execute a CTS with Pag-IBIG Fund member to cover the purchase of the residential unit or lot used as collateral for the Pag-IBIG housing loan of the member subject to the provisions of the Guidelines on the Pag-IBIG Fund Takeout Mechanism under the Developer's CTS/REM Scheme. The developer shall execute a Deed of Assignment assigning the CTS in favor of the Fund, which shall be annotated on the title of the property.

8.2.2    Deed of Conditional Sale (DCS) Documentation

a.    The title of the subject property shall be transferred in the name of the Fund. Costs for the transfer of title shall be for the account of the developer. However, upon the borrower's written request and provided that the LTV ratio does not exceed fifty percent (50%), the title of the property may also be transferred in his/her name.

b.    If the title of the property is transferred in the name of the Fund, a DCS shall be executed with the borrower. In case the title is transferred directly in the name of the borrower, the developer shall execute a Deed of Absolute Sale in favor of the borrower, who shall also execute a loan and mortgage agreement (LMA) and promissory note with the Fund to fully cover his/her obligation.

8.3 The property must be free from all liens and encumbrances except those provided under Section 4, Rule 74 of the Rules of Court. In case no adverse claim has been filed against the property and the said lien is still effective within two (2) years from the settlement and distribution of the property, the developer/borrower shall put up a surety bond as security for the loan. To ensure that the surety bond is callable, the surety bond shall pay for the approved loan amount in case another person including an heir of the registered owner, would lay a claim against the collateral property offered as security. The surety bond must cover the remaining prescriptive period as of date of housing loan application.
 
In the event that the 2-year prescribed period had already expired and no adverse claim against the collateral property has been filed, the surety bond shall no longer be required.

8.4 The  subject  property  shall  be  appraised  by  Pag-IBIG  Fund  or  its authorized representatives/agents.

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

To ensure that the real estate taxes on the collateral property are updated, the borrower shall be required to submit a copy of the official receipt of the real estate taxes paid for the preceding year not later than June 30 if the current year and every year thereafter.

9.    INSURANCE

9.1 The borrowers shall be compulsorily covered by Mortgage Redemption Insurance or Sales Redemption Insurance (MRI/SRI), whichever is applicable. In the case of borrowers and co-borrowers, who are tacked into a single account, each of them shall be covered by the MRI/SRI to the extent of their corresponding obligation. The MRI/SRI premiums shall be the aggregate of the premiums corresponding to the housing loan granted to each borrower.

9.1.1    Interim Coverage

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

9.1.2    Regular Coverage

The regular MRI/SRI coverage shall be a non-medical yearly renewable insurance for which the borrowers shall pay a uniform premium rate effective on the date of takeout.

In the event of death or permanent / total disability of any of the borrowers, Pag-IBIG Fund shall apply the MRI/SRI proceeds to the entire outstanding housing loan obligation, and the excess, if any, shall be paid to the borrowers or his/her heirs.

9.2 The principal borrower shall obtain Fire and Other Allied Perils Insurance on the subject property for an amount equivalent to the appraised value of the housing component of the residential unit or the loan amount, whichever is lower.

In case of staggered release of loan proceeds, the principal borrower shall likewise obtain interim FAPI coverage on the subject property from the date of issuance of the NOA / LOG by Pag-IBIG Fund.

10. PREPAYMENT

10.1 A borrower shall be allowed to prepay his/her housing loan in full or in part without prepayment penalty, pursuant to Republic Act 7394, otherwise known as “The Consumer Act of the Philippines”, but subject however to a service fee as may be fixed by the Fund.

10.2 Accelerated payments - Any amount in excess of the monthly amortization due shall be treated as advance amortization and shall be applied on the next amortization due date. However, upon request of the borrower and provided the amount to be applied is equivalent to at least one monthly amortization, said amount shall be applied to the principal.

The  preference  of  the  borrower  on  the  treatment  of  his  excess payment must be noted on/properly disclosed in the Pag-IBIG Fund receipt.

11. DEFAULT

11.1  The borrower shall be considered in default when he/she, or any of his/her co-borrowers in case of a tacked loan:

11.1.1   Fails to pay three (3) monthly amortizations;
11.1.2   Failure of the borrower to submit proof of payment of the real estate taxes for the year; or
11.1.3   Violates  or  fails  to  perform  any  of  the  obligations  in  the contracts entered into with Pag-IBIG Fund.

In case of multiple housing loans, any event of default on any of the housing  accounts  shall  constitute  default  on  all  of  his/her  other housing accounts.

11.2 At point of default, the outstanding obligation, which includes the principal, accrued interests, penalties, fees, and other charges shall become immediately due and demandable. The said amount shall likewise be subject to the following:

11.2.1   The  unpaid  amount  shall  continue  to  be  charged  with  a penalty equivalent to 1/20 of 1% of the amount due for every day of delay.
11.2.2   It shall continue to bear interest at the stipulated rate from the time the obligation becomes due and demandable.

11.3  While the account remains due and demandable, the borrower shall not be granted another housing account under any of the Pag-IBIG housing programs.

11.4  In  case  of  default,  Pag-IBIG  Fund  shall  cancel  the  CTS/DCS  or foreclose the mortgage in accordance with the existing guidelines on the matter.

11.5  Payments for accounts in default and foreclosed accounts shall not revive the housing loan account unless payment is sufficient to fully update said account.
 
11.6 Any amount paid by the borrower to the seller/developer prior to loan takeout shall be recoverable from the seller/developer.

12. PROCESSING AND APPRAISAL FEES

For every availment of housing loan, the borrower shall pay the corresponding processing and appraisal fees for his/her application.

13. AVAILMENT OF SUBSEQUENT HOUSING LOANS

13.1  A borrower, who has an existing Pag-IBIG housing loan, may avail of a subsequent housing loan secured by the same collateral, inclusive of the value of the improvements on the property, if any, that covered his/her existing loan or a different collateral property, subject to the following conditions:

13.1.1   He/She is an active member of Pag-IBIG Fund;
13.1.2   His/Her housing account/s is/are updated; and
13.1.3   He/She has capacity to pay his/her obligation/s.

The aggregate value, representing the outstanding balances of his/her existing housing accounts upon application and the new housing loan under AHP, shall not exceed P750,000. In case he/she is also a co- borrower, his/her proportionate share in the outstanding balance of the existing housing loan under a tacked account shall be included in the computation of the said aggregate value.

13.2  The existing housing loan and the subsequent housing loan shall be considered as separate and distinct from each other, without prejudice to the provision on cross-default.

14. ALIGNMENT  OF   Pag-IBIG  FUND   SPECIAL  HOUSING  FINANCE PROGRAMS WITH THIS GUIDELINES

Unless otherwise specified in the memorandum of agreement or implementing guidelines of the Pag-IBIG Fund special housing loan programs, all terms and conditions provided in this Guidelines shall be adopted.

15. REVIEW OF THE GUIDELINES

The Guidelines on the Pag-IBIG Fund Affordable Housing Program shall be subject to review at anytime but not more often than once every two (2) years taking into consideration the viability of the Fund and the prevailing market conditions.

16. MECHANISM ON RESOLUTION OF ISSUES

Any issue in the interpretation and implementation of this guidelines shall, as much as possible, be resolved by the concerned officer. Matters that are not thereby satisfactorily resolved shall be escalated to the next higher approving authorities.

17. REPEALING CLAUSE
 
The existing Pag-IBIG Fund Circular No. 379 and memoranda, rules, regulations, and other issuances inconsistent herewith are hereby repealed.

18. EFFECTIVITY

This Circular takes effect after fifteen (15) calendar days following the completion of its publication in the Official Gazette or in a newspaper of general circulation.