7. COLLATERAL
The loan shall be secured by collateral consisting of the same residential properties to which the loan proceeds are applied.
7.1 - For loans that are covered by buyback guaranty and are secured by properties which are bought from developers, the security shall consist of a First Real Estate Mortgage or a Contract to Sell (CTS) on the subject properties, fully covering the payment of the obligation, as stipulated in the corresponding loan agreement and promissory note of the borrower (for REM), or the Deed of Assignment (for CTS)
7.2 - For loans which are not covered by buyback guaranty and are secured by properties which are bought from developers, the security shall consist of a Contract-to-Sell on the aforesaid properties, fully covering the payment of the obligation, which shall likewise be stipulated in the Deed of Assignment.
The loan however, may be secured by a First REM instead of a CTS, and exempted from the buyback provision, provided any of the following conditions are complied with:
The borrower pays the advance amortizations for twenty-four (24) months;The loan-to-collateral ratio does not exceed 70%.
7.3 - For loans which do not belong to the category of developers' accounts, the security shall consist of a First Real Estate Mortgage on the subject properties fully covering the payment of the obligation as stipulated in the corresponding loan agreement and promissory note of the borrower.
7.4 - The property must be covered by an Original Certificate of Title (OCT), Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) issued by the Register of Deeds, free from all liens and encumbrances; and must be registered in the name of:
7.4.1 - Any one or more of the borrowers, (except in the case of accommodation mortgages), in the case of a real estate mortgage (REM)7.4.2 - The developer or the land owner, if the developer has a Special Power of Attorney under a joint venture agreement, in the case of a Contract to Sell (CTS), provided that the Deed of Assignment of the CTS and the property is annotated in the title in favor of Pag-IBIG Fund
7.5 - Accommodation mortgages shall be allowed only for borrowers who are related up to the first civil degree of consanguinity or affinity, subject to the following requirements:
7.5.1 - The owner shall constitute the first mortgage as accommodation mortgagor, to secure the borrower's loan obligation or give the latter the special power to do so; and7.5.2 - The borrower shall undertake and sign as co-mortgagor, to fully cover the residential unit and improvements thereon
7.6 - The real estate taxes on the property must be updated as of the quarter immediately preceding the date of loan application, and yearly thereafter during the term of the loan.
7.7 - For developer accounts, the properties subject of the loans shall be appraised by Pag-IBIG Fund in two stages:
7.7.1 - A preliminary appraisal (PA) which may be undertaken prior to actual development and house construction upon the request of the developer, and payment of the corresponding appraisal fees; and7.7.2 - A collateral inspection/validation to be undertaken upon completion of the house construction and land development servicing the houses constructed, for which a Collateral Appraisal Report (CAR) shall be issued.
The housing unit and the facilities fronting the unit for takeout must be 100% complete, and an occupancy permit presented by the borrower at the time of loan takeout, if the purpose of the loan is to purchase a residential unit (PRU)
Appraisal of developer accounts conducted by the Home Guaranty Corporation (HGC) shall be validated by the Fund
7.8 - For other accounts, the property subject of the loan shall likewise be appraised by Pag-IBIG Fund
8. PARI-PASSU
A Pari-Passu arrangement with any institution acceptable to Pag-IBIG Fund, such as but not limited to provident funds, shall be allowed wherein said institution can extend its own loan (not for Pag-IBIG Fund takeout), in addition to the Pag-IBIG member housing loan, secured by the same collateral, on a pro-rata sharing of the mortgage lien, subject to the following conditions:
8.1 - Pag-IBIG Fund shall have physical possession of the mortgages, regardless of the loan amount extended by the other institution
8.2 - In computing the credit capacity of the borrower, the income already considered in determining the Pag-IBIG housing loan entitlement of the borrower shall be excluded.
8.3 - In case of default, the following shall apply:
d) Cross-default - Default in the monthly payments for either amortization shall constitute default in both.e) Foreclosure - When foreclosure becomes necessary or advisable, proceedings may be initiated either by the Fund or the originating institution upon mutual agreement by both parties.
f) Proceeds - Foreclosure proceeds shall be divided according to the ratio of loan exposure of the Fund and the originating institution after deducting all the legal and incidental expenses.
9. INSURANCE
The borrower shall be compulsorily covered by mortgage/sales redemption insurance and fire insurance:
9.1 Mortgage/Sales Redemption Insurance (MRI/SRI) - A borrower who is not beyond sixty-five (65) years old and six (6) months at the time of housing loan application shall be covered by the MRI/SRI, provided that he/she shall not be over seventy (70) years old on his birthday nearest the date the original housing loan expires. The MRI/ SRI coverage of the borrower shall be subject to the schedule of insurance in the Pag-IBIG Fund Master Policy.
In the case of borrowers who are tacked into a single loan, only the principal borrower shall be covered by the MRI/SRI to the full extent of the loan. Thus, the entire loan shall be extinguished by the MRI/SRI, should the principal borrower die. On the other hand, the principal borrower shall continue to amortize the entire loan, should one or both of his co-borrowers die.
9.1.1 - Interim CoverageThe interim MRI/SRI coverage on the principal borrower under the automatic coverage system shall take effect on the date of the issuance of the Notice of Approval (NOA) or Letter of Guaranty (LOG) by Pag-IBIG Fund.
9.1.2 Regular Coverage
a) The regular coverage shall be a non-medical yearly renewable term insurance (YRT) for which Pag-IBIG housing loan borrowers shall pay a uniform premium rate effective on the date of loan-takeout.b) The amount of coverage shall be the original amount of the loan.
9.2 - Fire and Allied Perils Insurance - The borrower shall obtain fire and other allied perils insurance on the property mortgaged or subject of the Contract to Sell for an amount equivalent to the appraised value of the residential unit or the loan amount, whichever is lower.
9.3 - Premium Payments - The annual premium for the first year of coverage shall be prepaid and shall be deducted from the loan proceeds upon loan takeout. Premiums due for the second year, and every year thereafter that the insurance coverage is in force shall be prepaid on a monthly basis and shall be collected together with the monthly loan amortization.
9.4 All housing loan applicants registered under the Pag-IBIG Overseas Program and working overseas shall be charged an additional two pesos per thousand of coverage per year (P2.00/P1,000/annum).
9.5 No Evidence Limit (NEL) - The NEL shall be P2,000,000. As such, all borrowers up to 60 years old with loans of up to P2,000,000 shall no longer be subjected to underwriting approval.
9.6 Borrowers over 60 years old shall be required to submit a Health Statement Form (filled out by the applicant in his own handwriting, duly signed and dated, and witnessed by two persons) for underwriting approval.
9.7 FME for POP members over sixty (60) years old - The full medical examination (FME) report may be dispensed with for loan applicants under the Pag-IBIG Overseas Program who are over 60 years old. In its place, the Health Statement Form shall be submitted, filled out by the applicant in his own handwriting, duly signed and dated, and witnessed by two persons. The applicant shall also be required to submit a copy of the result of his medical examination conducted prior to his assignment overseas as required by his employment agency.
Should the applicant's health be found "sub-standard", the corresponding sub-standard rating shall be applied, and the applicant shall also be charged the additional extra premium.
10. PREPAYMENT
10.1 - A borrower shall be allowed to prepay his loan in full or in part without prepayment penalty, pursuant to Republic Act 7394.
10.2 - Accelerated payments - any amount paid in excess of the required monthly amortization 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).
11. DEFAULT
11.1 The borrower shall be considered in default when he or any of his co-borrowers fails to pay any three (3) consecutive monthly amortizations and/or monthly membership contributions and other obligations on the loan.
11.2 - At point of default, the outstanding loan, together with accrued interest, penalties, fees and other charges, shall become immediately due and demandable. The said amount shall likewise be subject to the following:
11.2.1 - A penalty equivalent to 1/20 of 1% of the total amount due (comprised of the principal, accrued interests, insurance premiums, and penalties already incurred on unpaid amortizations) for every day of delay.11.2.2 - It shall continue to bear interest at the stipulated rate from the time the outstanding loan become due and demandable.
11.3 Pag-IBIG Fund may adopt the following remedies:
a. Cancellation of the CTS;b. Call against the warranty of the developer to buy back the defaulting account
11.3.2 - For Loans Secured By Real Estate Mortgage (REM)
a. The account shall be endorsed for foreclosureb. Default shall also constitute a lien on the Total Accumulated Value (TAV) of the member's savings with Pag-IBIG Fund.
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