PAG IBIG Housing Loan Progran Guidelines No. 1 to 6

Pag-IBIG Housing Loan Program

For End-User Financing (Cir. 219)
GUIDELINES IMPLEMENTING THE "ABOT-KAMAY PABAHAY" PROGRAM

1. LOAN PURPOSE

The Pag-IBIG housing loan may be used to finance any one or a combination of the following:

1.1 - Purchase of a fully developed lot not exceeding one thousand square meters (1,000 sq. m.), which should be within a residential area;

1.2 - Purchase of a lot and construction of a residential unit thereon;

1.3 - Purchase of a residential house and lot, townhouse or condominium unit, inclusive of a parking slot, which may be:

1.3.1 - Old or brand new;

1.3.2 - A property mortgaged with the Fund; or

1.3.3 - An acquired asset which is disposed of through sealed public bidding, negotiated sale, or Rent-to-Own Program.

1.4 - Construction or completion of a residential unit on a lot owned by the member;

1.5 - Home improvement, i.e. any alteration in an existing residential unit intended by a homeowner to be a permanent integral part thereof, which will enhance its durability and material value;

1.6 - Refinancing of an existing mortgage with an institution acceptable to the Fund, provided that:

1.6.1 - The loan is not in default within twelve months prior to date of application;

1.6.2 - said loan has a repayment history of at least two years with the original mortgagee

1.7 - Combination of loan purposes shall be limited to the following:

1.7.1 - Purchase of a fully developed lot not exceeding one thousand square meters (1,000 sq. m.) and construction of a residential unit thereon;

1.7.2 - Purchase of a residential unit, whether old or new, with home improvement;

1.7.3 - Refinancing of an existing mortgage with home improvement;

1.7.4 - Refinancing of an existing mortgage, specifically a lot loan, with construction of a residential unit thereon.

2. BORROWER'S ELIGIBILITY

To qualify for a Pag-IBIG housing loan, a member shall satisfy the following requirements:

2.1 - On Pag-IBIG Membership

2.1.1 - Must be a member under the Pag-IBIG I, Pag-IBIG II or Pag-IBIG Overseas Program (POP) for at least twenty-four (24) months, as evidenced by the remittance of at least 24 monthly contributions at the time of loan application.

2.1.2 - A member, whether new or with existing monthly contributions that are still short of the 24-month membership requirement, shall be allowed to make lump sum payment based on the basic monthly membership contribution rates to meet said requirement at point of loan application. Lump sum payment of membership contributions shall be considered a single contribution for the applicable month as of the payment date.

Said member shall be required to pay the upgraded membership contribution rates upon housing loan approval and onwards.

2.1.3 - A member who has contributed for at least two (2) years shall be required to pay the upgraded membership contribution rates upon housing loan approval and onwards.

2.1.4 For purposes of satisfying the residency requirement, the period corresponding to the Total Accumulated Value (TAV) applied earlier to a member's outstanding loan (offsetting) shall be considered when counting the total number of monthly contributions, provided that the remaining TAV after offsetting does not fall below the equivalent amount of 24 monthly contributions.

2.2 - Not more than 65 years old at the date of loan application and must be insurable; provided further that he/she is not more than 70 years old at the date of loan maturity;

2.3 - Has the legal capacity to acquire and encumber real property;

2.4 Has passed satisfactory background/credit and employment/ business checks of the developer and Pag-IBIG Fund;

2.5 - Has no outstanding Pag-IBIG housing loan, either as a principal borrower or co-borrower;

2.6 - Had no Pag-IBIG housing loan that was foreclosed, cancelled, bought back, or subjected to dacion en pago;

2.7 - Has no outstanding Pag-IBIG multi-purpose loan in arrears at the time of loan application. A member whose multi-purpose loan is in arrears shall be required to pay his arrearages over the counter to update his account.

3. LOAN AMOUNT

A qualified Pag-IBIG member shall be allowed to borrow an amount up to a maximum of Two Million Pesos (P2,000,000.00), which shall be based on the lowest of the following: the member's actual need, his loan entitlement and the loan-to-collateral ratio.

3.1 - Loan Entitlement based on Pag-IBIG Contributions

A member's loan entitlement shall be proportionate to his Pag-IBIG contributions (inclusive of the employer counterpart contributions), which shall be based on the following schedule:

Pag-IBIG Membership Contributions		Loan Amount
POP	Pag-IBIG I & II
US $ 5	200	Up to P500,000
US $ equivalent at point of availment	250	Over P500,000 – P600,000
	300	Over P600,000 – P700,000
	350	Over P700,000 – P800,000
	400	Over P800,000 – P900,000
	450	Over P900,000 – P1,000,000
	500	Over P1,000,000 – P1,100,000
	550	Over P1,100,000 – P1,200,000
	600	Over P1,200,000 – P1,300,000
	650	Over P1,300,000 – P1,400,000
	700	Over P1,400,000 – P1,500,000
	750	Over P1,500,000 – P1,600,000
	800	Over P1,600,000 – P1,700,000
	850	Over P1,700,000 – P1,800,000
	900	Over P1,800,000 – P1,900,000
	950	Over P1,900,000 – P2,000,000

POP contributions made in foreign currency shall be converted to its peso equivalent on the date when payment was made, rounded off to the nearest dollar. POP members may also opt to pay the upgraded contributions in its local currency (peso) equivalent.

For loans up to Seven Hundred Fifty Thousand Pesos (P750,000.00) which shall either be secured by a First Real Estate Mortgage or a Contract to Sell on the property which is bought from a developer, and are covered by a buyback guaranty, the member's loan entitlement shall be based solely on his Pag-IBIG contributions.

3.2 - Loan Entitlement base on Capacity to Pay

A member's capacity to pay shall be evaluated in the following cases:

a) The loan amount applied for is less than or equal to Seven Hundred Fifty Thousand Pesos (P750,000.00), and the account is not covered by a buyback guaranty;

b) The loan amount applied for is over Seven Hundred Fifty Thousand Pesos (P750,000.00)

A member's loan entitlement shall be limited to an amount for which the monthly repayment on principal and interest shall not exceed forty percent (40%) of the member's or family's net disposable income, whichever is applicable; provided further that the member's net take home pay does not fall below the minimum requirement as prescribed by the GAA or company policy, whichever is applicable, after deducting the computed monthly repayment, other obligations and statutory deductions.

These conditions shall be supported by the following documents:

3.2.1 - For Pag-IBIG I and II Members

a) Latest Income Tax Return (ITR) for the year immediately preceding the date of loan application, with attached W2 form, stamped received by the BIR.

In view of Revenue Regulation 2-98, employees receiving purely compensation income may instead submit the BIR Form 2316 or the Certificate of Compensation Payment/Tax Withheld filed by their employers with the BIR.

The following, however, are not qualified for substituted filing and therefore still required to file BIR form 1700:

a.1. individuals with two (2) or more employers, whose taxes during the year did not result to tax withheld = tax due.

a.2. individuals whose income tax have not been withheld correctly.

a.3. individuals whose spouses fall under a.1 and a.2.

a.4. individuals deriving other non-business, non-professional-related income in addition to compensation income not otherwise subject to final tax.

b) Certificate of Employment and Compensation (CEC) or pay slip, where applicable.

c) Other documents that the Fund may prescribe

3.2.2 - For POP Members

a) Employment Contract (EC), which shall be supported by an English translation if written in a foreign language other than the English language;

b) Certificate of Income duly certified by the employer;

The gross family income shall pertain to the income of the member, his legitimate spouse and unmarried children, provided they are living with the borrower and are Pag-IBIG members eligible to avail of a Pag-IBIG housing loan.

The net disposable income shall be the gross family income less statutory deductions and monthly amortizations on outstanding obligations.

Family members, whose income is being considered in determining the borrower's net disposable family income, shall be classified as co-borrowers to the housing loan. This shall likewise be in accordance with the policy on tacked loans as provided for in Section 3.4 hereof.

In the event that the co-borrower signifies an intention to avail of a Pag-IBIG housing loan for himself/herself, the principal borrower's net disposable family income shall be re-evaluated to determine whether he/she is capable to take on the original housing loan independent of the co-borrower. Upon arriving at favorable findings, the co-borrower shall be released from the original obligation and shall be allowed to avail of his/her own Pag-IBIG housing loan, subject to the evaluation of his/her own net disposable income.

3.3 - Loan-to-Collateral Ratio

The ratio of the loan amount to the appraised value of the collateral shall not exceed the following rates:

Loan Amount	With Buyback Guaranty	Without Buyback Guaranty/ Retail Account
Up to P300,000	100%	100%
Over P300,000 to P750,000	100%	90%
Over P750,000 to P1M	95%	85%
Over P1M to P2M	90%	75%

3.4 - A maximum of three (3) qualified Pag-IBIG members may be tacked into a single loan which is secured by the same collateral, provided they are related within the first civil degree of consanguinity or affinity.;

4. INTEREST RATE

4.1 - The Pag-IBIG Abot-Kamay Pabahay Program shall bear interest at the following rates per annum:

Loan Amount	Interest rate
Up to P300,000 Over P300,000 to P500,000 Over P500,000 to P1,000,000 Over P1,000,000 to P2,000,000	6% 7% 10.5% 11.5%

Such interest rate shall accrue on the basis of 365-day actual days elapsed.

4.2 - Repricing

4.2.1 - For loans up to Three Hundred Thousand Pesos ( P300,000), Pag-IBIG Fund may reprice the interest rate once every five years provided that it shall not exceed the original rate.

4.2.2 - For loans over Three Hundred Thousand Pesos (P300,000.00) up to Two Million Pesos ( P2,000,000.00), Pag-IBIG Fund shall reprice the interest rate once every five years at rates based on prevailing market rates at point of repricing which shall not exceed the following:

Original Loan Amount	Interest rate
Over P300,000 to P500,000 Over P500,000 to P1,000,000 Over P1,000,000 to P2,000,000	9% 12.5% 13.5%

5. LOAN TERM

5.1 - The housing loan shall be repaid at a maximum term of thirty (30) years, and shall in no case exceed the difference between the present age and age seventy (70) of the principal borrower.

5.2 The borrower shall be allowed to lengthen or shorten the loan term only once during the life of the loan.

5.3 Acquired assets disposed of through Pag-IBIG housing loans shall have a maximum loan term of thirty (30) years.

6.1 - The loan shall be paid in equal monthly amortizations in such amounts as may fully cover the principal and interest, as well as insurance premiums, over the loan period, and shall be made, whenever feasible, through salary deduction.

a. The borrower shall execute the Authority to Deduct the monthly loan amortization from his salary, and shall secure the conforme of his employer for the purpose.

b. Pag-IBIG Fund and the employer shall enter into a Collection Agreement stipulating, among others, that the deduction for the employee's Pag-IBIG housing loan shall have priority over other obligations of the same nature after all statutory deductions have been effected.

6.2 - The monthly amortizations may also be paid to Pag-IBIG Fund through any of the following modes:

a) over-the-counter

b) If the developer has a Collection Servicing Agreement (CSA) with Pag-IBIG Fund, payments shall be remitted to the developer.

c) issuance of postdated checks initially to cover the first twelve (12) monthly amortizations. Developers with Collection Servicing Agreement (CSA) with Pag-IBIG Fund shall have custody of the PDCs. Meanwhile, PDCs for accounts of developers not covered by CSAs shall be kept in the Fund's possession.

d) auto debit arrangement with banks

e) any other collection system which the Fund may implement in the future

6.2.2 Accounts not covered by buyback guaranty

a) issuance of postdated checks, initially to cover the first twelve (12) monthly amortizations

b) auto debit arrangement with banks

c) any other collection system which the Fund may implement in the future

6.3 - The first monthly amortization shall be deducted from the loan takeout proceeds. This requirement, however, shall be mandatory only for accounts that are not covered by buyback guaranty. Developers that provide buyback guaranty to its accounts may opt not to have the first monthly amortization deducted from the takeout proceeds. For purposes of recording, the basis of the PFR date (initial payment) for the payment shall be the takeout date.

Succeeding monthly payments of accounts that are subject to the deduction of first monthly amortization shall commence on the second month immediately following loan takeout/final loan release. On the other hand, succeeding monthly payments of accounts not falling on the above category shall commence on the month immediately following loan takeout/final loan release. The monthly payments shall be paid on the date that coincides with the date of loan takeout/final loan release, e.g., on the 17th

6.4 - The borrower who fails to pay the full monthly amortization and/or other loan obligations when due shall pay a penalty of 1/20 of 1% of the amount due for every day of delay.

Similarly, accounts taken out under earlier Pag-IBIG Fund housing programs shall be charged with penalties against any unpaid amount should the borrower fail to pay the full amortization and/or other loan obligations when due. The charging of penalties shall be governed by the guidelines prevailing at the time of loan takeout.

6.4.1 - For accounts released from September 10, 1988 up to November 22, 1994 (taken out under Circular Nos. 55,62,65,90, 90-A, 106, 119, and 122), the penalty rate shall be 1/10 of 1% of the amount due for every day of delay

6.4.2 - For accounts released from November 23, 1994 up to November 8, 2001 (taken out under Circular Nos. 127, 127-A, 148, 148-A, 171 and 178), the penalty rate shall be 1/20 of 1% of the amount due for every day of delay

6.5 - The upgraded membership contributions, net of the mandatory contributions (except in the case of individual payors / self-employed / POP who shall be shouldering both the EE and ER share), corresponding to the borrower's approved loan shall be paid together with the borrower's monthly amortization and shall be considered as contributions for the applicable month.

6.6 - A borrower's monthly payments shall thus be applied according to the following order of priority:

a) penalties
b) upgraded membership contributions
c) insurance premiums
d) interest, and
e) principal