Zubiri : Housing loan restructuring law will benefit 370,000
housing loan borrowers

"Shelter is a lynchpin of the social reform agenda of the government to alleviate the hardships and difficulties faced by our countrymen in this time of worldwide economic meltdown," said Senator Juan Miguel Zubiri as he witnessed the signing into law yesterday of the Socialized and Low-Cost Housing Loan Restructuring Act of 2008 or Republic Act No. 9507, by President Gloria Macapagal-Arroyo in Luisiana, Laguna.

The signing of the measure coincided with the launching of the local housing program by Vice president Noli De Castro for the Fourth Congressional District of Laguna in Sitio Dapi, Barangay San Jose, Luisiana, Laguna.

"This measure provides relief to our countrymen in this time of worldwide financial turmoil and economic uncertainties and prevents delinquent home borrowers to join the ranks of the homeless," said Senator Zubiri, principal author of the bill and Chairman of the Senate Committee on Urban Planning, Housing and Resettlement said

"The law will benefit around 368,535 delinquent home borrowers, with total arrears of P70 billion, from eviction out of their homes. They can stay in their homes while GFIs are assured of continuous cash flow."

When asked if the Philippines will follow the US financial crisis fathered by the subprime housing mortgage crisis, Zubiri said, "It is unlikely, on the contrary this could even be a timely measure to prevent such financial crisis happening here in the Philippines, as we are providing a win-win mechanism here for the government financial institutions (GFIs) and housing agencies on one side and the delinquent home borrowers on the other. This is different from the bail-out package of the banks and other financial institutions in the US, here we are helping-out the delinquent borrowers themselves, and in-effect helps the GFIs collect from these delinquent accounts."

"This will allow the GFIs and housing agencies to collect from the otherwise non-performing assets and provide them a continuous flow of revenue, while the delinquent borrowers can avail themselves of a longer loan restructuring scheme, lower monthly amortization and condonation of all penalties and surcharges upon approval of the application, especially on the latter, the penalties and surcharges are estimated to account for twenty-five percent (25%) of the outstanding loan of a particular delinquent account, in effect, this is an outright discount of 25%" he further

The penalties and surcharges roughly amounts to only P17 Billion which is not being collected anyway by these entities and does not cover principal amount of the loan which will be repaid.

Highlight of R. A. 9507:

Starting the coverage of delinquent accounts to those with three months of unpaid monthly amortizations;

Original principal amount shall be within the HUDCC loan ceiling but not exceeding P2.5 Million;

Benefits:

Condonation of all penalties and surcharges;
Condonation of a reasonable portion of the interest of the housing loan, as determined by respective GFIs and housing agencies, of which
All accrued interests shall be treated as non-interest bearing principal to be equally repaid;
Restructured loan shall be imposed an interest rate of not more than the interest of the original loan , or not more than 12% whichever is lower;
Extension of loan restructuring payment period in order to lower the monthly amortization up to the age 70 of the borrower.
Incentives such as reasonable discount on interest for prompt payment of monthly amortization on restructured loan to be determined by the GFI or housing agency.

Disqualified accounts are:

- Account without a single payment since take out;
- Account wherein the housing unit is abandoned for one year:
- An account which housing unit is occupied by a third Party other than the original registered beneficiary or his legal heirs;
- Foreclosed account, the title of which had already been consolidated/transferred in the name of the GFI and housing agencies through dacion en pago;
- Pag-ibig Fund contract-to-sell accounts covered by the developers' buy-back guaranty.

Aside from Zubiri, the other authors of the bill in the Senate are Senators Rodolfo Biazon and Jinggoy Estrada.