OBJECTIVE

General

To ensure recovery of HDMF's housing investments through effective marketing and prompt disposition of ROPOAs.

Specific

1. To identify properly which among the real property mortgages or Contract-to-Sell (CTS) accounts acquired by the Fund, either through consolidation of Real Estate Mortgages (REM) or Dacion en Pago or cancellation of Contract-to-Sell (CTS), may be disposed of.
   
2. To dispose of promptly, at the highest value possible, acquired properties through repurchase, sealed public bidding, negotiated sale, and other modes such as disposal through brokers, through joint venture agreements with developers, LGUs, cooperatives, employees' organizations, other organized groups and/or other interested parties and through the Special Purpose Vehicle (SPV).
   
3. To provide measures for the effective marketing of assets that are subject to rapid depreciation and deterioration.
   
4. To provide Management with timely, accurate, and valuable information regarding the disposition of acquired assets relevant to decision making and planning.
   
5. To avail of the benefits as provided by the Special Purpose Vehicle (SPV).

A. CLASSIFICATION OF PROPERTY FOR DISPOSITION

1. FIRST PRIORITY

1. Assets subject to rapid depreciation and deterioration.
   
2. Assets located in remote sites and hence are not easily marketable and have no prospect of appreciation.
   
3. c. Assets where the cost of administration is higher than the expected return and/or capital gain to be earned by keeping them.

2. SECOND PRIORITY

Assets located in stable growth areas, subject to simultaneous appreciation (e.g. land) and depreciation and deterioration (e.g. improvements thereon), where the prospective rates of appreciation and return exceed the rate of depreciation and cost of administration.

3. THIRD PRIORITY

1. Assets favorably located, subject to appreciation but not to depreciation, the cost of administration of which does not offset the prospect of administration.
   
2. Asset which there is a significant number of interested buyers.

MARKETING OF THE ACQUIRED ASSETS FOR DISPOSITION

For prompt disposition of acquired assets, the Marketing Unit of the Acquired Assets Management Group shall adopt the following measures:

1. Conduct briefing/orientation to companies or industries on the acquired assets to be disposed by the Fund.
   
2. Coordinate closely with the brokers, developers, Local Government Units (LGUs), Cooperatives, Employees' Organizations, Other Organized Groups and/or other interested parties on the sale of acquired properties as support to the Government's Mass Housing Program.
   
3. Advertise or publish lists/inventories of acquired assets up for disposal in the HDMF website and in the newspapers.

B. MODES OF DISPOSAL OF THE ACQUIRED ASSETS

Acquired assets may be disposed of through any of the following modes:

1. REPURCHASED

1.1 Acquired assets may be reacquired by the former owner/s or successors-in-interest.

1.2 Repurchase shall be allowed if the following conditions are met:

1.2.1 The offer to repurchase must be enclosed with an amount equivalent to ten percent (10%) of the repurchase price which shall either be in cash or manager's/cashier's check, and which shall form part of the repurchase price if application is approved. If the offer is disapproved, the amount shall be returned.

1.2.2 Rental payment must be updated in case the offeror is occupying the property.

1.2.3 If the mode of payment is in cash, full payment must be made within thirty (30) days from receipt of notice of approval of offer to repurchase.

1.2.4 The former owner/s or successor-in-interest must comply with the other terms and conditions, as may be prescribed by the Board of Trustees.

1.2.5 The former owner/s or successors-in-interest who fails to pay the additional ninety percent (90%) of the repurchase price within the specified period shall lose his/their right to repurchase. Accordingly the initial ten percent (10%) payment of the repurchase price shall be forfeited in favor of the Fund unless the specified period has been extended by HDMF.

1.2.6 Acquired assets may also be sold/disposed of under repurchase on installment basis, subject to the following terms and conditions:

1. Downpayment shall be ten percent (10%) of the repurchase price.
   
2. The ninety percent (90%) remaining balance shall be paid in equal monthly installment within one (1) year, with the following interest rates:




Repurchase Price Interest Rate Up to P500,000 12% Over P500,000 14%




3. The former owner/s or successors-in-interest who fails to pay the monthly installment when due shall be charged a penalty of one-twentieth of one percent (1/20 of 1%) of the amount due for every day of delay.
   
4. d. A former owner/s or successors-in-interest who fails to pay at least three (3) monthly installments shall be considered in default and shall lose his right to purchase the subject property. All the installment payments including the downpayment shall be forfeited in favor of the Fund.

1.3 The minimum repurchase price shall be equal to the current market value of the property or the total HDMF exposure, whichever is higher.

The confirmation of sale to/repurchase by the former owner/s shall be made in accordance with the following levels of authority:




a) HDMF Senior Management Committee where sale/repurchase is over P2.0M     b) VP concerned where sale is above P500 thousand up to P2.0M     c) Regional or Department Manager where sale is P500 thousand and below



2. SEALED PUBLIC BIDDING

2.1 All acquired assets, the title of which have been consolidated in the name of HDMF, shall immediately be disposed of as provided for in these guidelines except: (1) those with pending court cases where the validity of the foreclosure or CTS cancellation is being protested; (2) those covered with Ordinary Lease and Lease with Option to Purchase Agreements; and (3) units that are occupied by the original borrower/owner who can recover the same through his/her spouse, children or relatives who are eligible to acquire the subject property through Rent-to-Own Program and other modes. Any sale of the foregoing property for an amount higher than P2.0M must have the prior approval of the HDMF Senior Management Committee.

2.2 Disposal of acquired assets shall be in accordance with these guidelines as well as with existing COA Circulars and other government rules and regulations that may hereinafter be passed.

COA regulations on disposal of acquired assets include:

Submission to the COA Auditor the following documents at least twenty (20) days before the advertisement or call to sealed public bidding:

1. Program for disposal of assets with time schedules;
   
2. Inventory and Inspection Report showing the itemized list and complete description of the assets to be disposed;
   
3. Appraisal Report showing the appraised values of the assets for sale;
   
4. Disposal procedures adopted; and
   
5. Amount of the original loan value, capitalized interest, advances, if any, and other information that may be required by COA.

Review of the appraisal/valuation report by the COA before disposal arrangements are finalized.

2.3 All acquired assets available for sale must have been previously appraised. The appraisal to be used must not be more than one (1) year old as of the date of sale.

2.4 Interested buyers shall be given reasonable time within which to conduct investigation/ocular inspection of the property to enable them to submit a realistic/reasonable bid/offer.

2.5 The Invitation to Bid (ITB) shall be published or advertised for not less than three (3) consecutive days in newspapers of general circulation. The ITB may also be published in the HDMF website. Where the value of the property does not warrant the expense of the publication, notice of sale shall be posted in prominent places in the locality where the property is to be sold, as well as in the HDMF premises. The advertisement shall cover a period of at most thirty (30) days before the opening of bids.

2.6 A minimum bid shall be set for each property available for sale which is to be determined using the following factors:

1. Appraised Value
2. Book Value
3. Such other factors that may be relevant in the determination of the minimum bid

2.7 The HDMF Committee on Disposition of Acquired Assets shall set the minimum bid subject to the approval of the following:

a) HDMF Senior Management Committee Above P2.0M     b) VP concerned Above P500 thousand to P2.0M     c) Regional or Department Manager P500 thousand and below

2.8 All bids shall be on an "As-Is-Where-Is" basis.

2.9 No bid below the minimum bid prices shall be accepted.

2.10 All bids shall be in Philippine Currency and the bidder shall state in words and in figures the amount of his bid.

2.11 No property swap-arrangements shall be allowed as consideration for the sale of property being offered.

2.12 Each bid shall be submitted in a sealed envelope, and addressed to the HDMF-Committee on Disposition of Acquired Assets before 2:00 p.m. on the date and at the venue of bidding, as stated in the Invitation to Bid (ITB).

The HDMF Committee on Disposition of Acquired Assets shall be composed of the following:

VP concerned Chairman Manager - Acquired Assets Management Co-Chairman Manager- Legal Department Member Manager - Internal Audit Dept Member COA Representative Observer




The committee on the Regional Level shall be composed of the following:

VP - Regional Operations Group Chairman Regional Manager - Regional Office Co-Chairman Head - Mortgage and Loans Division Member Head - Acquired Assets Division Member COA Representative Member Legal Officer Member COA Representative Observer

2.13 Each bid must be accompanied by a bidder's bond in the form of cash, cashier's check or manager's check issued by any commercial bank, payable to the Home Development Mutual Fund (HDMF) in the amount equal to ten percent (10%) of the bid price. No other form of bidder's bond shall be accepted. Such deposit shall form part of the winning bidder's downpayment or shall be returned to the non-winning bidder without interest upon completion of the public bidding.

2.14 The bidder who offers the highest bid shall be declared the winning bidder.

2.15 A tied highest bid shall be resolved by applying the following order of preference:

1. Cash Offer
2. Former Owner
3. Pag-IBIG member
4. d) Tenant/occupant of the property not delinquent in his rental payment

If there is still a tie, it shall be resolved immediately by an open bidding between/among the tied highest bidders.

2.16 There must be at least two (2) bids that meet the required minimum bid and satisfy all bidding requirements, otherwise, a failure of bidding shall be declared.

In cases of failed public bidding, Management may authorize a reduction of ten percent (10%) in the floor price of the acquired assets being disposed of, to be reduced further by another ten percent (10%) following every failed bidding. However, the total reduction in price shall not exceed thirty percent (30%) of the original floor price.

2.17 The confirmation of sale to the winning bidder shall be made in accordance with the following levels of authority:

a) HDMF Senior Management Committee for sale over P2.0M     b) VP concerned or VP Regional Operations Group for sale above P500 thousand up to P2.0M     c) Regional or Department Manager for sale P500 thousand and below

2.18 The winning bidder shall be required to pay in full the remaining balance of the bid price within five (5) working days from the date of the receipt of the Notice of Award.

2.19 The winning bidder who fails to pay in full the remaining balance within five (5) working days shall lose his right as winning bidder and the ten percent (10%) deposit of payment shall be forfeited in favor of the Fund. Such amount shall be treated as liquidated damages and HDMF shall declare the next highest bidder as the winner who shall be required to pay the remaining ninety percent (90%) of the bid price within five (5) working days from the date of receipt of the Notice of Award. In the event that there are two or more complying bidders, the same shall be applied.

Withdrawal of bid bond is tantamount to disqualification and loses his right as a winning bidder

2.20 Except for the creditable withholding and real estate taxes, all other expenses incidental to the sale and transfer of ownership shall be for the account of the winning bidder, including the ejectment of squatters and/or occupants, if any, from the property, subject of the bid.

2.21 No addition or deletion of the conditions stipulated herein shall be made by the bidder. HDMF reserves the right to reject any and all bids for non-adherence to its bidding rules.

2.22 HDMF reserves the right to reject any and all bids, to waive any formality therein, to accept such bids as may be considered most advantageous to the Fund or to call off a bidding prior to acceptance, and call for a new bid under amended rules. The decision on the bid shall be final and binding.

2.23 Booking of accounting entries on the disposal of acquired assets shall be recognized only after the perfection of the contract of sale.

3. NEGOTIATED SALE

3.1 When the HDMF Committee on Disposition of Acquired Assets decides that the property shall be disposed of thru negotiated sale after a failure of one (1) public bidding, the HDMF committee shall make preliminary negotiations with the offerors. A notice of sale shall be posted in prominent places in the locality where the property is to be sold, as well in the HDMF premises. The property may be sold at such term/price not lower than the minimum bid price set by HDMF or the highest offer submitted during the failed public bidding, whichever is higher.

3.2 The party who submits the first compliant offer shall be required to pay initially ten percent (10%) of his offered price which shall be considered as downpayment, if approved. Such downpayment shall not be refunded if the sale is not consummated due to the offeror's fault.

3.2 The confirmation of sale to the highest offeror shall be made in accordance with the following levels of authority:

a) HDMF Senior Management Committee for sale over P2.0M     b) VP concerned for sale above P500 thousand up to P2.0M     c) Regional or Department Manager for sale of P500 thousand and below

3.3 If the mode of payment is in cash, the party shall be required to pay the balance of the offered price within five (5) working days from receipt of notice of approval of sale.

3.4 All other terms and conditions that may be imposed by the Fund shall be complied within the same number of days as indicated above.

3.5 Acquired assets may also be sold/disposed of under negotiated sale on installment basis, subject to the following terms and conditions:

1. Downpayment shall be ten percent (10%) of the selling price.
   
2. The ninety percent (90%) remaining balance shall be paid in equal monthly installment within one (1) year, with the following interest rates:



Repurchase Price Interest Rate Up to P500,000 12% Over P500,000 14%



3. The purchaser who fails to pay the full monthly installment when due shall be charged a penalty of one-twentieth of one percent (1/20 of 1%) of the amount due for every day of delay.
   
4. A purchaser who fails to pay at least three (3) monthly installments shall be considered in default and shall lose his/their rights to purchase the subject property. All the installment payments including the downpayment shall be forfeited in favor of the Fund.

3.6 On exceptional cases, acquired assets may also be sold/disposed under negotiated sale on installment basis, subject to the terms and conditions as may be agreed upon between the buyer and the Fund.

3.7 Acquired assets may be sold at a price lower than the minimum bid price set only after securing prior approval from the HDMF President and Chief Executive Officer.

4. OTHER MODES OF DISPOSAL OF ACQUIRED ASSETS

Acquired assets that remain unsold after the conduct of sealed public bidding or negotiated sale or remain not leased under either ordinary lease or the Rent-to-Own Program may be disposed of using any of the following modes:

1. Disposal Through Brokers

This mode of disposal shall entail accreditation of licensed real estate brokers. Accredited brokers shall later execute a contract with HDMF, stipulating the terms and conditions agreeable to both parties.

2. Joint Venture With The Developers, LGUs, Cooperatives, Employees' Organizations, Other Organized Groups and/or Other Interested Parties.

Acquired assets may also be disposed of through joint venture with developers, Local Government Units (LGUs), cooperatives, employees' organizations, other organized groups and/or other interested parties. Such parties shall be required to enter into a joint venture agreement with HDMF, stipulating the terms and conditions acceptable to the parties.

The selling prices of acquired assets to be disposed of any of these modes shall be based on their respective appraised values.

HDMF shall grant a commission to brokers, or a discount to developers, LGUs, cooperatives, employees' organizations, other organized groups and/or other interested parties provided that, the units are disposed of/ purchased within the period of six (6) months from the date of the execution of marketing agreement or within the specified period in the Joint Venture Agreement. Such commission and discount shall be equivalent to ten percent (10%), if the units are to be disposed/purchased in cash, or five percent (5%), if payment shall be made through housing loan take-out or on installment basis.

Buyers of properties disposed of through brokers or joint venture arrangements shall no longer be entitled to the ten percent (10%) or five percent (5%) discounts.

On top of the ten percent (10%) or the five percent (5%) discounts, brokers, developers, LGUs, cooperatives, employees' organizations, other organized groups and/or other interested parties engaged in joint ventures with HDMF shall be entitled to a five percent (5%) litigation discount for properties which are occupied by the original owner/s or squatters disposed on an "As-Is-Where-Is" basis.

All participating brokers shall be required to post a cash performance bond equivalent to one-twentieth of one percent (1/20 of 1%) of the selling price of the property or P250.00, whichever is higher, while developers, LGUs and other interested parties shall be required to pay upfront an amount equivalent to five percent (5%) as downpayment.

3. Disposal Through the Special Purpose Vehicle (SPV)

ROPOAs may also be disposed of under this mode, subject to the rules and regulations of The Special Purpose Vehicle (SPV) Act of 2000 (Republic Act No. 9182).