FREQUENTLY ASKED QUESTIONS (FAQ's)
- What is the role of the Home Guaranty Corporation in the government's shelter program? How does it differ from the roles of the Home Development Mutual Fund (HDMF or the Pag-IBIG Fund) and the National Home Mortgage Finance Corporation (NHMFC)?
HGC supports homeownership among Filipinos by encouraging banks and financial institutions to lend to individual home buyers and housing developers. It assures lenders and investors in housing by issuing loan and securitization guarantees. The HMDF/Pag-IBIG Fund and NHMFC, however, directly lend money to housing developers and individual/group borrowers.
- What are the benefits of the HGC Guaranty?
- It guarantees the payment of the guaranteed loan or investment balance outstanding and due on the principal obligation, plus interest yields of up to 11%;
- It exempts the interests derived and other yields from the loan from all forms of taxes(up to 11% rate of interests);
- For socialized housing, those with contract prices of P 400,000.00 and below are entitled to the maximum cover and tax-exempt interest of up to 11%, and;
- The Government of the Republic of the Philippines guarantees the payment of HGC's obligations.
- Home loan borrowers can borrow up to 90% of the appraisal value of collateral property.
- Banks are exempt from the Banko Sentral ng Pilipinas (BSP) capital reserve requirement for HGC guaranteed loans
- Banks are freed-up from administrative burden when a loan defaults
- What are the guaranty programs of the HGC?
- Developmental Loan Guaranty, which covers loans extended to developers for the development of subdivisions, townhouses, dormitories, apartments and other residential dwellings.
- Retail Loan Guaranty, which covers loans and credit facilities extended for the purchase / acquisition of a single family residence.
- Guaranty for Securitization Schemes, which provides guaranty cover on securities and/or financial instruments or on the receivables backing-up the securities.
- Who may avail of HGC guaranty? How?
Banks, government and private financial institutions, housing developers, and Building and Loan Associations (BLAs) may avail themselves of the HGC Guaranty. These institutions must apply for a Guaranty Line from HGC. Upon approval, they may enroll their accounts against their approved Guaranty Line.
- Why was the HGC Charter amended?
The corporate life of the HGC expired in 2000. To ensure that its mission of promoting home ownership by providing a viable system of guaranty for the housing sector shall continue, the HGC Charter was amended, which among others, has extended HGC's corporate life for another fifty (50) years.
- What are the salient points of Republic Act 8763 or the HGC Act of 2000?
- It gave the HGC another fifty (50) year corporate life;
- The name of the Corporation was changed from Home Insurance and Guaranty Corporation (HIGC) to Home Guaranty Corporation (HGC);
- The authorized capital stock was increased from PhP 2.5 billion to PhP 50 billion;
- Included the Secretary of Finance and the Director General of the National Economic and Development Authority (NEDA) as Chairman and ex-officio member of the HGC Board of Directors, respectively;
- Transferred the supervision and regulation of Homeowners' Associations to the Housing and Land Use Regulatory Board (HLURB);
- Mandates HGC to promote the secondary mortgage market and;
- Prioritizes socialized and low-cost housing projects.
- What is a Building and Loan Association (BLA)? What is the role of HGC on BLAs?
BLA encourages and promotes affordable means of capital formation for housing. The HGC is mandated to issue contracts of guaranty for the accounts of the BLAs.
- Why does HGC have Acquired Assets/Properties?
In the event that the borrowers defaulted in their amortization payments, the bank calls on the guaranty of the HGC. Upon payment by the HGC of its guaranty obligations the banks subsequently assign all their rights over the assets / mortgages to HGC.
- How does HGC recover from/dispose of its Acquired Assets/Properties?
If the original borrower cannot pay the arrears, HGC will accept purchase proposals from interested buyers, and in compliance with all governing laws regarding the sale of acquired and foreclosed properties of government agencies.
The property/ies shall be sold on an "AS IS, WHERE IS" basis.
- Terms of Payment
Properties under Category A can be paid either through
outright cash, from proceeds of financing by bank/financial institution, or through
installment. Properties under Category B can also be paid through outright cash,
from proceeds of financing by bank/financial institution, through installment, or
can be subject of lease under HGC's Rent-to-Own Program.
10.1. Outright Cash
- The highest ranked cash bidder shall be required to submit a bank
guaranty or its equivalent within fifteen (15) days from receipt of notice.
Failure to submit the same shall disqualify him/her from award of sale
of the property. In which case, the property shall be offered to the next
ranked cash bidder who shall also be required to submit a bank
guaranty or its equivalent. The same process is repeated until the
property is awarded to the successful bidder.
- The winning bidder shall be required to remit full payment for the
selling price of the property within five (5) days from receipt of Notice of
Award of Sale.
10.2 Proceeds of Financing by Bank/Financial Institution
- A downpayment equivalent to 10% of the bid price shall be required
from the winning bidder to be paid within five (5) working days from
receipt of Notice of Award of Sale.
- While awaiting release of the loan proceeds, the winning bidder shall
execute a Contract to Sell with a term of ten (10) years with HGC. The
winning bidder shall pay the required monthly amortization until the
proceeds of the loan is remitted to HGC.
- The winning bidder shall be required to submit a Letter of Guaranty
(LOG)/Notice of Loan Approval (NLOA) issued by a bank/financial
institution within two (2) months from the execution of the CTS. The
winning bidder shall remit the take-out proceeds covering full payment
of the property within six (6) months from the execution of CTS.
- The authority to move in/occupy the property shall only be issued to
the winning bidder upon submission of the LOG/NLOA.
10.3 Installment Scheme
Applicable only to properties that have any or all of
the following characteristics:
(a) have illegal occupant/s,
(b) titles still in the
names of the previous owners and for transfer in the name of HGC, and
(c) titles with liens and encumbrances or with annotation of "lis pendens".
10.3.1 HGC In-house Financing
- Minimum downpayment: 10% of the bid price
- Balance shall be payable within a maximum period of 15 years,
provided that the age of the bidder does not exceed 70 at the
end of the contract term. The following interest rates shall apply:
|SELLING PRICE (SP)
(if paid on or before
(if paid after due
|Up to Php 400,000.00
|Php 400,001.00 to Php 2.0 M
|More than Php 2.0 M
10.3.2 One-Year Installment Scheme
- Minimum downpayment: 10% of the bid price
- Balance shall be payable within a period of one year in equal
monthly installment at zero percent (0%) interest.
10.4. Rent-to-Own Program - applicable only to properties under Category B
- Minimum monthly lease rate: Prevailing rental rates within the vicinity
as recommended by the HGC commissioned appraiser.
- Term of Lease: Maximum period of five (5) years
- Lease rate is subject to a 10% annual escalation
- Initial cash out: 1 month advance and 2 months deposit (based on the
monthly lease rate)
- The Lessee may exercise his/her option to purchase the property
within the 5-year term by paying for the property in cash based on the
published selling price.
- Portion of payments made by the Lessee during the term of the lease
shall be applied as partial payment of the selling price of the property,
||PERCENTAGE OF APPLICATION
- Bid proposals shall be dropped at the designated bid box located at the AMDG
- The award of sale of the property shall be based on the offer deemed to be most
advantageous to the Corporation.
For inquiries, please call the AMDG at telephone numbers 897-32-90 & 897-32-31
or visit the HGC office at the 4th Floor, Jade Building, 335 Sen. Gil Puyat Avenue,
Makati City. The list of the properties may also be viewed at the HGC website, www.hgc.gov.ph.
THE CORPORATION RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS OR
TO ACCEPT SUCH BIDS AS MAY BE CONSIDERED MOST ADVANTAGEOUS TO