MODIFIED GUIDELINES OF THE PAG-IBIG PROGRAM FOR THE DEVELOPMENT OF MEDIUM/HIGH-RISE CONDOMINIUM BUILDING (MHRB) PROJECTS

Pag-IBIG Fund CIRCULAR NO. ______

MODIFIED GUIDELINES OF THE PAG-IBIG PROGRAM FOR THE
DEVELOPMENT OF MEDIUM/HIGH-RISE CONDOMINIUM BUILDING (MHRB)
PROJECTS IN METRO MANILA AND HIGHLY URBANIZED CITIES

A. COVERAGE
These guidelines shall cover Medium/High-Rise Condominium Building
(MHRB) Projects located in Metro Manila and Highly Urbanized Cities.

B. OBJECTIVES
1. To provide a ready inventory of condominium units for sale at more
affordable prices to eligible Pag-IBIG members in the Metro Manila area
and highly urbanized cities;

2. To provide Pag-IBIG members who are working in the Metro Manila area
and highly urbanized cities with the opportunity to acquire condominium
units in the area, thereby reducing transportation costs to and from their
places of habitat;

3. To provide developers with a liquidity mechanism that will increase
capacity for housing production and reduce project financing costs,
through a faster turnaround of their investments in the construction and
development of medium/high-rise condominium buildings in the Metro
Manila area and highly urbanized cities;

4. To simplify and facilitate the processing of end-user financing for eligible
Pag-IBIG members, given time-savings realized in the wholesale appraisal
and inspection of housing units in medium/high-rise condominium
buildings which have been accredited by Pag-IBIG Fund.

C. PROJECT ACCREDITATION
The proposed medium/high-rise building (MHRB) project must conform with
Pag-IBIG Fund’s standards, attached hereto as Annex “A”, and must have the
following general specifications:

1. The project must be a medium/high-rise residential building with a
minimum floor area of 18 square meters per unit;

2. The site of the project must be characterized by the availability of basic
socio-economic institutions such as government centers, churches,
hospitals/health centers, schools, public markets and commercial
establishments within a five-kilometer radius, and must be accessible
to public transport;

3. The selling price of the condominium units must not be more than
P3.0 Million.

4. The MHRB project plan must provide for basic amenities and
community facilities.

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The MHRB project shall likewise be evaluated as to market feasibility,
technical feasibility and financial feasibility on the basis of the Pag-IBIG
Evaluation Criteria attached hereto as Annex “B”.

D. THE DEVELOPER AND ITS ROLE
1. To qualify under the Pag-IBIG Program for the Development of MHRB
Projects, a company must have an established track record of at least
three (3) years in housing development, having completed at least 1,000
house and lot or condominium units at the time of application.

If with previous dealings with the Fund, the developer must have an
established track record of delivering quality mortgages.

A company which fails to meet the aforementioned criteria but can show
convincing proof of its financial and technical capability to complete the
project according to the Fund’s project specifications/standards, shall be
given due consideration.

The company shall be notified whether it qualifies under the program or
not within fifteen (15) days from submission of the required corporate
documents.

2. The Company shall enter into a Memorandum of Agreement (MOA) with
Pag-IBIG Fund stipulating, among others, that it shall:

2.1 Deliver completed condominium units as per specifications in
accordance with a delivery schedule;

2.2 Secure and obtain all necessary licenses, permits and approvals
required by government agencies in connection with the proposed
MHRB project;

The Development Permit must be secured prior to loan approval
while the License to Sell may be submitted within six (6) months
upon receipt of Notice of Approval (NOA), otherwise, the loan
application shall be deemed cancelled.

2.3 Warrant satisfactory and faithful performance of all the works and
services attendant to the project in accordance with the drawings,
plans and specifications approved by the Housing and Land Use
Regulatory Board (HLURB) and such other regulatory agencies;

2.4 Correct, rework and/or reconstruct, at its own expense, delivered
units which are found defective and/or below specifications within
a period of one (1) month after the sale and turn-over of the unit
to a member-buyer;

2.5 Warrant the validity, legality and authenticity of the individual
titles, as well as the construction of the units in accordance with
HLURB and Pag-IBIG Fund approved standards;

2.6 Execute in favor of, and deliver to Pag-IBIG Fund, the individual
Assignment of Take-out Proceeds with Real Estate Mortgage and
individual Promissory Note, assigning the takeout proceeds, Real
Estate Mortgage and Condominium Certificates of Title (CCTs)

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covering the condominium units for which the Fund shall release
funds;
2.7 Handle the marketing of the condominium units in the proposed
MHRB project to qualified Pag-IBIG member-buyers. The
condominium units must be sold within six (6) months from date
of release of funds.

2.8 Buy back unsold condominium units at the end of the six-month
marketing period, at a price equivalent to the amount of funds
released by Pag-IBIG Fund for the units, plus accrued interest
charges, within fifteen (15) calendar days from receipt of notice.

2.9 Ensure the extension and installation of electrical and water
facilities to serve the MHRB project, the cost of which shall be
shouldered by the company;

2.10 Maintain all condominium facilities at its own expense until such
time that the facilities are turned over and accepted by the proper
authorities; and

2.11 Secure an interim fire and other allied perils insurance on the
property assigned/mortgaged to the Fund for an amount
equivalent to the funds released by Pag-IBIG Fund.

E. Pag-IBIG FUND’s PARTICIPATION

1. The Pag-IBIG Fund shall release funds, which shall be based on the
lowest of the following: seventy percent (70%) of the appraised value of
the completed condominium unit, seventy percent (70%) of the
developer’s selling price or One Million Five Hundred Thousand Pesos
(P1,500,000.00), for every completed condominium unit delivered to
Pag-IBIG Fund in accordance with the terms and conditions of the MOA.

2. Pag-IBIG Fund shall release funds in tranches up to maximum of 250
condominium units, within a period of three (3) years. Pag-IBIG Fund shall
only release funds if the condominium building where the subject
properties are located, is already complete in accordance with the plans
and specifications.

Subsequent funds shall be infused into the project only when fifty percent
(50%) of the completed condominium units delivered under the preceding
tranche have been sold out, and one hundred percent (100%) of the
completed condominium units delivered under any previous tranche have
been sold out.

3. Pag-IBIG Fund shall provide long-term financing via the Contract-to-Sell
(CTS) or Real Estate Mortgage (REM) scheme to qualified memberbuyers.

4. Upon take-out of the borrower’s Pag-IBIG housing loan, the Fund shall
deduct the following from the loan proceeds, if applicable:
4.1 The amount of funds already released by Pag-IBIG Fund to the
developer for the borrower’s unit;
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4.2 Unpaid Interest charges, herein defined as the prevailing market
rate (on Friday preceding the date of release of proceeds) of
2-year Treasury Notes, plus three percent (3%) during the six (6)
months marketing period, and 5% thereafter, which shall in no
case be less than 8.5%.
4.3 Retention value to cover for the expenses on the conversion
of CTS accounts to REM, in accordance with the rate
prescribed in the prevailing guidelines on the Pag-IBIG Fund
housing loan program; and
4.4 Other unpaid obligations of the developer.

5. Pag-IBIG Fund shall have the following options in the event the developer
fails to dispose of the condominium units within a period of six (6) months
from the date of release of funds:
5.1 Grant the developer a grace period of not more than three (3)
months within which to dispose of the unsold units.
5.2 After the expiration of the grace period, Pag-IBIG Fund shall
require the developer to buy back unsold units within fifteen (15)
calendar days from receipt of notice, at a price equal to the funds
released for the said units, plus accrued interest charges.
Pag-IBIG Fund shall likewise have the option to suspend the
release of funds.
5.3 Register the individual Real Estate Mortgage (REM) on the
individual Condominium Certificates of Title covering the unsold
condominium units’ subject of the funds released and institute
foreclosure proceedings.

All expenses pertaining to the registration of the REM shall be for
the account of the developer.

6. Pag-IBIG Fund shall enter into a Memorandum of Agreement (MOA) with a
developer for the development of one MHRB project in Metro Manila and
highly urbanized cities at a time, until such time that the company shall
have established a track record that will merit Pag-IBIG Fund’s entering
into a MOA with the developer for the simultaneous development of
several MHRB projects in the area.


F. TERMS AND CONDITIONS FOR AVAILMENT
1. Amount.
Each drawdown shall not exceed the lowest of the following: seventy
percent (70%) of the appraised value of the completed condominium unit,
seventy percent (70%) of the developer’s selling price or One Million Five
Hundred Thousand Pesos (P1,500,000.00), for every completed
condominium unit delivered to Pag-IBIG FUND in accordance with the
terms and conditions of the MOA.
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2. Maturity
Each drawdown shall have a maturity period of six (6) months.
3. Interest
The loan shall bear an interest rate defined as the prevailing market rate
(on Friday preceding the date of release of proceeds) of 2-year Treasury
Notes, plus three percent (3%) during the six (6) months marketing period,
and 5% thereafter, which shall in no case be less than 8.5%.
4. Collateral
The developer shall execute, in favor of, and deliver to Pag-IBIG Fund the
individual Assignment of Take-out Proceeds with Real Estate Mortgage
(REM) and individual Promissory Note, assigning the takeout proceeds,
Real Estate Mortgage and TCTs covering the house and lot packages for
which Pag-IBIG Fund shall release funds.
5. Project Timetable
The construction of the project must commence within one (1) year from
the receipt of the Notice of Approval (NOA) and must be fully completed
within a maximum period of three (3) years. Failure to comply within the
specified time shall lead to the cancellation of the loan approval.
6. Funding Commitment Line
The developer shall secure from Pag-IBIG Fund a Funding Commitment
Line either under Window 1 (With Buyback Guaranty on CTS
accounts of defaulting prospective beneficiaries) or Window 2
(Without Buyback Guaranty).
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7. Loan Payment
The loan principal and the applicable accrued interest charges shall be
paid from the take-out proceeds. Pag-IBIG Fund shall furnish the
developer a statement of the application of payment on the outstanding
loan balance and accrued interest charges, within seven (7) working days
from submission of complete loan documents required for the release of
take-out proceeds.
Should the take-out proceeds fully cover the developer’s outstanding loan
balance and accrued interest charges, Pag-IBIG Fund shall remit any
remaining amount thereon to the developer.
8. Commitment Fee
The developer shall submit an annual schedule of drawdowns, the first of
which shall not be later than sixty (60) calendar days after execution of the
Memorandum of Agreement. The developer shall pay a commitment fee
equivalent to one-fourth of one percent (1/4 of 1%) of the amounts
scheduled for drawdown during the first ninety (90) days or first quarter
following the execution of the MOA. If availments or drawdowns are made
as scheduled, said fee may be refunded or may be applied to the
scheduled drawdown/s for the subsequent quarter/s. Otherwise, it shall be
forfeited.
9. Loan Processing Fee
The developer shall pay a processing fee of ¼ of 1% of the approved loan
amount or fifty thousand pesos (P50,000.00), whichever is lower, inclusive
of a non-refundable filing fee of ten thousand pesos (P10,000.00).
10. Service Fee
The developer shall pay a service fee equivalent to 0.1% of the amount for
drawdown.


G. OTHER PROVISIONS
Upon execution of the Memorandum of Agreement (MOA), a standby Letter
of Credit (LC) may be granted in favor of the developer provided that the
following requirements are complied with:
1.) Development Permit from HLURB
2.) Building Permit from LGU
3.) Environmental Clearance Certificate (ECC) from DENR
4.) License to Sell from HLURB
In addition, the developer must have at least thirty percent (30%) proof of
sales based on the total number of residential condominium units.