Automatic foreclosure of unpaid housing units MULLED

Written by Butch Fernandez / Reporter

VICE President Noli de Castro wants Congress to pass a law that would allow automatic foreclosure proceedings against delinquent beneficiaries of the government’s low-cost housing program. Appearing before a Senate inquiry into the National Home Mortgage Finance Corp.’s (NHMFC) auction of some 53,000 unpaid housing loans to Deutsche Bank Global Opportunities under a joint-venture agreement, de Castro laid the blame on lawmakers for passing an earlier law condoning delinquent loans the government granted under its Unified Housing Program. “Sa Meralco [Manila Electric Co.] pag hindi ka nakabayad, puputulin kaagad ng kuryente mo; ganun din sa tubig [With Meralco, if you don’t pay your bills, your electricity will be cut off immediately; the same with water],” de Castro, the Arroyo administration’s housing czar, told senators, adding that because they are not allowed to apply the same policy on delinquent housing-loan beneficiaries, the debts have grown to billions of pesos. The Senate inquiry, presided by Sens. Richard Gordon and Rodolfo Biazon, was triggered by a resolution filed by Sen. Francis Escudero,  citing complaints from housing-loan beneficiaries that the NHMFC auction to Deutsche Bank Global “resulted in higher interest rates and exorbitant down payment housing-loan restructuring scheme tantamount to a questionable public-service accountability.” Biazon voiced suspicion that the NHMFC-Deutsche Bank scheme was “structured to foreclose” the housing units so these could later be sold at higher prices. “If the government housing-loan beneficiaries cannot pay the 9-percent interest, how can you expect them to pay the 14-percent interest under the restructuring scheme?” Before adjourning the hearing, Gordon moved to create a technical working group that would meet with the housing agencies and lending institutions, including the Social Security System, the Government Service Insurance System, and the LandBank “to get to the bottom of the problem.” Interviewed after the hearing, de Castro admitted that the Unified Housing Loan program, implemented in the 1980s up to early 1990s, eventually “failed” because of nonpayment of these housing loans. “Under the Unified Housing Program, it was really a failure; that is why the unpaid housing loans were sold to the Balikatan,” the Vice President said. Balikatan is the joint-venture special- purpose vehicle formed by the NHMFC and Deutsche Bank Global. He explained that his automatic foreclosure proposal was made in response to questions from lawmakers on what they plan to do with the problem of delinquent housing loans. “Well, they’re asking what’s the best way to resolve that problem. In my view, that’s the best: automatic foreclosure. If you can’t pay, your property will be foreclosed; you also won’t have the right to sue the housing agency that lent the loan. I wish that’s the setup, i.e., that we’d have a law like that,” he said partly in Pilipino. At the same time, de Castro conceded that foreclosure is a long process because there are people living in houses, and it’s not that easy to just boot them out.