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COVERAGE

These Consolidated Guidelines on the Pag-IBIG Housing Loan Restructuring Program, otherwise known as "Gabay Pabahay", seek to assist Pag-IBIG borrowers preserve their properties from foreclosure or cancellation of Contract to Sell by providing them with the opportunity to restructure their accounts for the following purposes:

• To update or fully pay delinquent accounts, wherein the borrowers shall have the option to shorten or lengthen the term of the loan.
  
  
• To avail of the non-interest bearing scheme for the unsettled interest and penalty during the period of delinquency.

1. Delinquent borrowers who qualify for penalty condonation under Section 2 of RA 8501, i.e. borrowers who have not yet availed of any penalty condonation program from any government financial institution or agency involved in the National Shelter Program;

2. Delinquent borrowers who qualify for penalty condonation under Section 3 of RA 8501, i.e., borrowers with an annual income of not more than P300,000 whose accounts have been in arrears for at least two years, and who have defaulted on their loans due to justifiable reasons deemed as such by the Pag-IBIG Fund Board of Trustees;

3. Delinquent borrowers who do not qualify for penalty condonation under Sections 2 or 3 of RA 8501;

4. Delinquent borrowers whose mortgages have been endorsed for foreclosure, but prior to the registration of the Certificate of Sale (COS); provided that the borrowers fully pay all the costs and expenses incurred by the Fund relative to the preparation for foreclosure, sale and custody of the properties or capitalizes these expenses over the term of the restructured loan;

5. Delinquent borrowers whose loans are secured by a Contract-to-Sell (CTS) subject to the following conditions:

5.1 Full or partial settlement of the total arrearages, which shall not be lower than the minimum downpayment required under Section B. 2.1;

5.2 The CTS account is not covered by a buyback agreement;

5.3 The CTS account is not yet cancelled by notarial act;

5.4 The CTS account shall be subject to a 24-month seasoning period, for purposes of conversion, reckoned from date of approval of loan restructuring; and

5.5 In the event of default, the Fund shall not be liable under the refund provision of RA 6552.

6. Delinquent borrowers whose loan terms have expired, provided that the borrowers are not beyond the age of 60 at the time of application.

7. Heirs of deceased housing loan borrowers with unpaid loan balance after application of the proceeds of the Mortgage Redemption Insurance (MRI).

8. Heirs who have been paying the outstanding balance or have previously availed of a loan restructuring program;

9. Successors-in-interest of Pag-IBIG housing loan borrowers, herein defined as individuals who have assumed the original mortgage as supported by legal documents;

10. Group Land Acquisition and Development (GLAD) and other Homeowners' Association (HOA) accounts;

PENALTY CONDONATION

Pursuant to Sections 2 and 3 of Republic Act (RA) 8501 or the "Housing Loan Condonation Act of 1998", all unpaid penalties of Pag-IBIG housing loan borrowers shall be condoned; provided that all due and demandable arrearages are restructured or fully paid.

1. Delinquent borrowers who have not yet availed themselves of any penalty condonation program from any government financial institution or agency involved in the National Shelter Program shall be granted automatic condonation of penalties.

2. Delinquent borrowers who have previously availed themselves of a penalty condonation program from any government financial institution or agency involved in the National Shelter Program shall be entitled to a full condonation of penalties incurred up to the date of application for loan restructuring, provided the borrower meets the requirements under Section 3 of RA 8501.

A.SPECIFIC PROVISIONS

1. Arrearages to be restructured

The amount to be restructured shall consist of the following total arrearages:

a. Interest Bearing

• Principal
• Insurance Premiums
• Payments to the Housing Contributory Fund as of the date of application for loan restructuring
• Other Advances/Expenses

b. Non-Interest Bearing

• Interest
• Penalties Not Condoned

The total amount of unpaid interest and penalties not condoned shall not bear any interest, but it shall be spread equally over the entire term of the restructured loan.

In case of accounts endorsed for foreclosure but prior to the registration of the Certificate of Sale (COS), the amount to be restructured shall be the total outstanding loan balance as of the date of loan restructuring. If the following foreclosure expenses are not paid upfront upon application for loan restructuring, it shall be added to the loan amount to be restructured and shall be subject to interest:

- Filing Fee - computation shall be based on the outstanding loan balance, in accordance with Schedule of Fees provided by the Office of the Clerk of Court

- Cost of the publication of the extrajudicial foreclosure

- Sheriff's fee

- Notarial fee

- 10% Attorney's fee - based on the total court expenses incurred plus the total loan obligation (net of penalties condoned)

For branches with retainers handling foreclosed accounts, the retainer's fees shall be paid upfront, i.e., prior to availment of loan restructuring.

The unpaid membership contributions shall be paid in cash or through a plan of payment not to exceed two (2) years.

2. Downpayment Required

2.1 The downpayment required shall be a minimum of ten percent (10%) of the total arrearages plus unpaid membership contributions as defined in Section B1 to be paid prior to loan restructuring. The said downpayment shall be applied according to the following order of priorities:

1. Arrearages on Insurance Premiums
2. Payments to the Housing Contributory Fund
3. Other advances/expenses, e.g. foreclosure expenses
4. Principal
5. Penalties not condoned
6. Interest

2.2 The borrowers shall have the option to apply their Total Accumulated Value (TAV) in accordance with the following conditions:

2.2.1 Apply at least twenty percent (20%) of the Total Accumulated Value (TAV) of the borrowers' savings to his total arrearages, if they have an outstanding Pag-IBIG Multi-Purpose Loan (MPL), and have not previously offset their TAV against their MPL; or

2.2.2 Apply the entire amount of the borrowers' TAV to their total arrearages, if they have no outstanding MPL.

The TAV of the successors-in-interest can also be used as downpayment. The cut-off date for TAV offsetting shall be the date of filing of application for loan restructuring.

3. Borrower's Eligibility

3.1 Non-Pag-IBIG members as successors-in-interest shall be required to pay upfront membership contributions equivalent to twenty four (24) months. The succeeding membership contributions shall be paid simultaneously with the monthly payment.

3.2 Inactive members shall be required to re-activate their membership.

3.3 Both mandatory and upgraded contributions, if any, shall be paid together with the monthly payment under any of the following circumstances:

• In case the member-borrower is self-employed or unemployed upon application for loan restructuring; or
• In the event the member-borrower becomes unemployed anytime within the term of the loan.

However, for employed member-borrower, only the upgraded contributions shall be paid together with the monthly payment.

4. Interest Rate

Borrowers who shall update/restructure their loans shall be entitled to a two-interest rate structure whereby borrowers who shall pay their monthly payments on or before the due date shall be charged a lower interest rate according to the following schedule: /p>

LOAN VALUE INTEREST RATE If payment is made on or before due date after due date Up to P180,000 9% 12% Over P180,000 - P500,000 12% 16% Over P500,000 and up 14% 18%

If the original interest rate of the housing loan account to be restructured is lower than the rate specified under these guidelines, the original interest rate shall be applied to the restructured loan.

5. Repricing

The date of approval of loan restructuring shall be the reckoning date for repricing restructured accounts with original loan values over Three Hundred Thousand Pesos (P300,000.00). At the beginning of the sixth year, the Fund may reprice the outstanding balance of the restructured loans at rates based on prevailing market rates at point of repricing, which shall not be lower than the respective rates provided under Section 4 and shall not exceed the following:

RESTRUCTED LOAN AMOUNT INTEREST RATE If payment is made on or before due date after due date 300,000 - 500,000 14% 16% Over P500,000 16% 18%

The new rates shall be in effect up to the end of the loan term.

6. Insurances

All restructured accounts shall compulsorily be covered with the following insurances:

• Mortgage/Sales Redemption Insurance (MRI/SRI) - the original borrower/mortgagor or successors-in-interest shall be covered by MRI/SRI based on the total restructured loan amount.

In case the restructured loan exceeds P2 Million, the borrower shall meet the underwriting requirement and pay the appropriate premiums.

• Fire Insurance (FI) - the FI coverage shall be based on the premium of the original loan.

7. Term of Restructured Loan

The restructured loan shall be repaid within thirty (30) years reckoned from the date of approval of the application for loan restructuring. In no instance, however, shall the loan term exceed the difference between the borrower's age at the time of loan application and age sixty-five (65).

8. Loan Documentation

A Restructuring Agreement and a new Promissory Note (PN), consolidating all previous loans, shall cover the restructured REM account. For CTS account with an issued Notice of Cancellation, a Deed of Revocation on said notice shall be executed, provided that the 30-day period from date of receipt of the said Notice of Cancellation has not yet lapsed.

The borrower's ledgers for the original and/or restructured loan (if any) shall be consolidated together with the restructured loan arising from these guidelines.

In case of tacked loans, only the principal borrower shall be required to sign the new PN. However, if the co-borrower/s is/are a co-owner/s of the mortgaged property, the co-borrower/s will also be required to sign the new PN.

9. Period of Application

Delinquent Pag-IBIG housing loan borrowers shall file their application for loan restructuring upon default but prior to registration of the Certificate of Sale (COS). For CTS accounts, the buyer shall file his application for loan restructuring anytime prior to the expiration of the 30-day period pursuant to RA 6552, reckoned from the date of receipt of the Notice of Cancellation of CTS by the buyer.

After the given period, Pag-IBIG Fund shall enforce the appropriate legal action on the delinquent accounts.

10. Fees/Charges

Applicants for loan restructuring shall pay the following fees/charges:

1. A processing fee of Two Hundred Pesos (P200.00) to be paid upon filing of the application;
2. First year's premium for mortgage/sales redemption insurance to be paid upon approval of the application for loan restructuring.

11. Approving Authority

11.1 The applications for loan restructuring and penalty condonation (except applications under Section 3 of RA 8501) shall be approved by the following:

RESTRUCTURED LOAN AMOUNT APPROVING OFFICER Up to P300,000 Chief of Division Up to P500,000 Assistant Manager Up to P1M Manager Up to P2M Vice President More than P2M Senior Vice-President

A monthly status report on availments shall be submitted to the OSVP-Operations, a consolidated copy of which shall be presented to the Board of Trustees for confirmation/notation.

11.2 The Pag-IBIG Fund Board of Trustees shall confirm/approve applications for penalty condonation under Sections 2 and 3 of RA 8501.

12. Restructured accounts in the Foreclosure Department/Section

Upon approval of the Application for Housing Loan Restructuring, the account shall be referred back to the Billing and Collection - Remediation Department/Division for monitoring of the monthly payments. Hence, Foreclosure Department/Section shall observe the following activities:

12.1 Defer the documentation or preparation of the petition for extrajudicial foreclosure (EJF).

12.2 Defer the filing of petition for EJF, for accounts with complete documentation for extrajudicial foreclosure.

12.3 Request for suspension of the raffle of EJF cases, for accounts with petitions filed.

12.4 Request for withdrawal of auction, for accounts whose auction dates have been set.

12.5 Postpone securing Certificate of Sale (COS), for auctioned accounts.

12.6 Defer COS registration with the Registry of Deeds, for accounts whose COS have been paid.

C. REQUIREMENTS FOR AVAILMENT

1. To avail of the program, an applicant shall submit the following documents:

1.1 Authenticated/certified photocopy of real estate tax receipts for the quarter immediately preceding application for loan restructuring.

1.2 Notarized Deed of Absolute Sale (DOAS) or Deed of Sale with Assumption of Mortgage or Assignment of Rights (for successors-in-interest)

1.3 Deed of Extra-judicial Settlement (for heirs

1.4 Other documentary requirements that may be deemed necessary by the Fund.

Applicants shall be required to file their application for loan restructuring in person. A Special Power of Attorney (SPA) of not more than one (1) year old at the time of application shall be accepted only in cases when the party is working overseas and the SPA presented has been executed and duly notarized prior to his/her departure from the country or duly authenticated by the Philippines consul in the foreign country, or when the applicant is physically incapacitated as evidenced by a Medical Certificate.

D. OTHER PROVISIONS

1. Loan Payment

1.1 If the borrower is still employed, a salary deduction scheme through a collection agreement with the borrower's employer shall be preferred over other modes of repayment.

1.2 In case a salary deduction scheme is not feasible, monthly payments on the loan may be collected over-the-counter, through collecting banks, or through any other collection system which Pag-IBIG Fund may adopt in the future.

1.3 The monthly payment shall be applied according to the following order of priorities:

1. Membership Contribution (for borrowers whose MCs are incorporated in the monthly payment)
2. MRI/SRI and Fire Insurance
3. Interest
4. Principal

In case there is deficiency after application of payment, such deficiency shall be satisfied by subsequent monthly payment, and any remaining amount thereof shall be applied according to the order of payments mentioned above.

1.4 In case of accelerated payments, any amount paid in excess of the required monthly payment shall be applied automatically to principal, unless otherwise expressly requested by the borrower.

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

2. Delayed Payment

Borrowers who fail to pay their monthly payment on the restructured loan on or before the due date shall be charged the higher interest rate as provided for in Section B4.

3. Default

Borrowers who fail to pay three (3) consecutive monthly payments shall be considered in default, after which the Fund shall immediately institute foreclosure proceedings.

For restructured CTS accounts that are in default, Notice of Cancellation shall be issued to the borrowers for immediate cancellation of the CTS by notarial act on the said accounts.

4. Limitation

4.1 Borrowers shall be allowed to avail of this program only once during the term of the loan.

4.2 Borrowers who are allowed to avail of this program may sell, transfer, or convey their mortgage loans by way of assumption of mortgage subject to the written conformity of Pag-IBIG Fund.

4.3 The following delinquent borrowers/accounts are not eligible under this restructuring program:

• Delinquent borrowers who have abandoned the housing units subject of the loan
• Cancelled CTS accounts under the MACEDA LAW or RA 6552.
• Accounts covered by buy back and back-up guarantee that become delinquent during the seasoning/buyback period.

5.The Fund shall refund penalties paid under protest to borrowers who have fully paid their accounts subject to the following conditions:

5.1 The penalty condoned is covered by RA 8501; and

5.2 There is a written protest submitted by the borrower prior to full payment/settlement of the account.

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