Home > Benefits and Programs > Retail > Dacion En Pago

OBJECTIVE

1. To expedite and simplify the means of consolidating mortgaged properties of retail accounts in the name of the Fund.
   
   
2. To reduce the Fund's litigation expenses.
   
   
3. To institute immediate turn-around or disposal of properties resulting to the following:
   

   3.1 Savings from maintenance cost.
   

   3.2 Prevents further depreciation/deterioration of the properties.
   

   3.3 Capital recovery or generation of cashflow strengthening the liquidity of the Fund.

BASIC RULE

These guidelines shall involve the disposition of all acquired real estates, including those that have not been auctioned off as well as properties that are occupied by the original borrower, tenant (under Ordinary Lease Scheme) or by any illegal occupant.

Likewise, properties covered by existing Contract of Lease with Option to Purchase under the Rent-to-Own Program may also be purchased by the lessee under the following conditions:

1. Updated monthly rental; and
   
2. Application of rental payments to the purchase price and corresponding discount rate in the contract shall be dispensed with.

BASIC RULES

1. Dacion en pago refers to the conveyance of the property in favor of a creditor in satisfaction of the borrower's/transferor's indebtedness.
   
2. It shall be allowed upon default but prior to registration of the Certificate of Sale (COS) of mortgaged properties auctioned and awarded in favor of the Fund.
   
3. The Billing and Collection Department II/Remediation Section shall apply the member-borrower's Total Accumulated Value (TAV) to the total mortgage obligation prior to endorsement of the account to the Foreclosure Department/Section, except in the following circumstances:
   
• The appraised value adequately covers the total mortgage obligation as of application for dacion en pago; or
• A previous TAV offsetting was made in payment of housing loan arrearages.
  
4. Dacion en pago shall be accepted and approved regardless of the appraised value of the mortgaged property in relation to the total mortgage obligation in order to achieve the objective of the program. The latest appraisal should have been made within one (1) year from the time the mortgagor signified in writing his intention to convey his mortgaged property as payment for his obligation.
   
5. The consideration of the dacion en pago shall be the appraised value or the total mortgage obligation, whichever is lower.
   
6. The total mortgage obligation shall be equivalent to the sum of the total outstanding principal, total unpaid interest, and insurance advances, but shall exclude penalty charges.

For accounts under litigation, this shall include the ten percent (10%) attorney's fee and litigation expenses. The 10% attorney's fee may be waived subject to existing guidelines.

PERTINENT DOCUMENTt

1. The borrower shall execute Dacion en Pago in favor of the Fund upon compliance with the basic requirements mentioned in Item No. 2.
   
2. By virtue of the assignment, the borrower transfers and conveys his mortgaged property as payment of his obligation with the Fund. Furthermore, the borrower attests to the fact that, among other things, no third party creditor/s will be affected by the transfer of his property in favor of the Fund.

CONSOLIDATION OF TITLE

1. All expenses, including taxes, to be incurred in the consolidation of title in the name of Pag-IBIG Fund shall be for the account of the Fund.
   
2. The following documents shall be presented to the Register of Deeds for consolidation of title in the name of Pag-IBIG Fund:
   
• Official Receipt (OR) on Transfer Fee (original copy)
• Tax Clearance
• Dacion en Pago
• Title (owner's duplicate copy)
• Certificate Authorizing Registration (CAR)
  
3. Upon consolidation of the title, the Tax Declaration shall be issued in the name of Pag-IBIG Fund.

APPROVAL OF APPLICATIONS

The required action on all applications shall be subject to the following levels of authority:

CONSEQUENCES OF DACION EN PAGO

A borrower whose loan has been subjected to dacion en pago shall no longer be eligible to avail of another housing loan. However, he/she shall be allowed to lease the subject property under Ordinary Lease Scheme.