The Board of Trustees under Resolution No by chenboying

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									POLICY AND PROCEDURAL GUIDELINES NO. ______

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HOUSING AND INSURANCE GROUP All Executive Vice Presidents All Senior Vice Presidents NCR/Luzon Operations Group Visayas-Mindanao Operations Group Membership Group Controller Group Asset Management Group Administration Group GSIS Law Office Information Technology Services Group Corporate Services Group Actuarial and Treasury Group HOUSING LOAN RESTRUCTURING AND CONDONATION PROGRAM IN COMPLIANCE WITH REPUBLIC ACT 9507

SUBJECT MATTER :

I.

BACKGROUND/RATIONALE

In 1998, Republic Act 8501 otherwise known as the Housing Loan Condonation Act of 1998 was enacted into law purposely to assist home loan borrowers update their accounts in the midst of the Asian financial crisis. The GSIS, along with other Government Financial Institutions and Key Shelter Agencies implemented the said program from March 1998 to July 2000. After the said program and despite the absence of an enabling law, the GSIS continued to offer restructuring and condonation programs, as follows:   Pabahay Loan Restructuring Program approved on May 16, 2000 under Board Resolution No. 151 Rate Reduction and Restructuring Program (RRRP) approved on July 17, 2002 under Board Resolution No. 197

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Amended Rate Reduction and Restructuring Program (ARRRP) approved on July 31, 2005 under Board Resolution No. 156 Sais ang Interest Sa Lahat (SAIS) Program, a one-time rate reduction and condonation program was approved on April 25, 2007 under Board Resolution No. 74.

Last year, the collapse of the sub-prime markets in the United States has triggered a global financial crisis, affecting practically all the economies in the world. In particular, the equity markets worldwide have suffered the sharpest fall in values and this had severe impact on financial institutions. Even up to this date, this extraordinary crisis continues to shake global capital markets with stocks fluctuating wildly and individual investors have watched their savings devalue crippling people’s trust in financial institutions. Consequently, the economic crisis has resulted in a slowdown of trade, a decline in industrial production, a sharp rise in unemployment in the developed countries including East Asia and reduced consumer spending with its domino effects. In order to address the effects of the global crisis, Republic Act No. 9507 was signed into law on October 13, 2008, otherwise known as the “Socialized and Low-Cost Housing Loan Restructuring and Condonation Program”. In compliance with the said law, the Board of Trustees under Resolution No. 55 approved on March 18, 2009, the implementation of the GSIS Housing Loan Restructuring and Condonation Program. To ensure effective and uniform implementation of the said program, the policies and procedural guidelines (PPG) are hereby prescribed.

II.

DEFINITION OF TERMS a. Abandoned Unit – refers to a housing structure that has not been occupied by the borrower-owner for more than one (1) year from the date of delinquency. Condonation – means the relief given by law in the payment of penalties, surcharges and a portion of accrued interest as approved by the GSIS Board of Trustees. Deed of Conditional Sale – pertains to a bilateral contract whereby the GSIS as seller expressly reserve the ownership of the subject property despite delivery thereof to the buyers and bind themselves to deliver the title of the said property to the buyers upon full payment of the purchase price.

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Real Estate Mortgage – a contract whereby the debtor secures to the creditor the fulfillment of the principal obligations, specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated. Dacion en Pago – refers to the mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor property for the satisfaction of monetary debt. Delinquent Accounts/Borrowers/Installment buyers – refers to accounts/borrowers/installment buyers with at least six (6) months of unpaid monthly amortizations as of the effectivity of RA 9507 on March 16, 2009. Fire and Allied Perils Insurance – refers to a yearly renewable term insurance on the housing structure subject of a loan/sale against fire, lightning, earthquake shocks, typhoons and floods. Force Majeure – refers to those events which cannot be foreseen or if foreseeable, cannot be prevented or avoided by the exercise of due diligence such as strikes or other labor difficulties, rebellion or insurrection, acts of war, riots or civil commotions, acts of public enemies, national emergencies, fire, flood, earthquake or other catastrophes or acts of God. Foreclosed Accounts – refers to accounts that have been issued Certificates of Sale (COS) by virtue of auction sale conducted by the court, sheriff or notary public and with expired redemption period. Foreclosure – refers to the legal procedure either judicially or extrajudicially, as long as due process is observed, for enforcing claims against a mortgagor in default of payment of his obligation. Legal Heirs – pertains to persons who are called to succeed to the rights and interests of a deceased person either by provision of a will or by operation of law. Loan Restructuring – refers to a process where the principal terms and conditions of the original loan are modified in accordance with an agreement setting forth a new plan of payment or a schedule of payment on a periodic basis.

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Housing Loan Redemption Insurance – refers to a yearly renewable term insurance where the borrower is covered for an amount equal to the restructured obligation. This also refers to Sales or Mortgage Redemption Insurance. Outstanding Obligation – refers to the sum of the outstanding loan principal, unpaid principal, accrued interests and penalties, insurance premiums, taxes, foreclosure and other incidental expenses, if any. Program – refers to the GSIS Housing Loan Restructuring and Condonation Program in compliance to RA 9507. Restructured Obligation – refers to the sum of the outstanding loan principal, unpaid principal, accrued interests, insurance premiums, taxes, foreclosure and other incidental expenses, less down payment and discount on accrued interest, if any. Successors-in-Interest – refers to the assignees, transferees and buyers of rights who have assumed the original loan as supported by legal documents, including Special Power of Attorney (SPA), duly approved by the GSIS. Operating Unit Concerned (OUC) – refers to Housing Department for Home Office accounts and Housing and Insurance Unit for Regional Office accounts.

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III.

TERMS AND CONDITIONS 1. Coverage The Program shall cover housing loan obligations of delinquent borrowers/installment buyers with accumulated arrearages equivalent to at least six (6) monthly amortizations including housing loans booked as Accounts Receivable, regardless of the original principal amount of the loan. 2. Eligibility The following may apply for condonation and loan restructuring under this program: a) All borrowers/installment buyers of covered accounts notwithstanding that the same borrowers/installment buyers have

availed themselves of the benefits of a previous condonation and loan restructuring program. b) The legal heirs of deceased housing loan borrowers/installment buyers with unpaid loan balances/installments after application of the proceeds of the Housing Loan Redemption Insurance, if any. c) Successors-in-interest of housing loan borrowers, who have assumed the original mortgage or are assignees of Deed of Conditional Sale, as supported by Deed of Sale with Assumption of Mortgage (REL Accounts), Deed of Transfer of Rights with Assumption of Obligation (DCS Accounts), including Special Power of Attorney (SPA). 3. Exclusion The following housing loan accounts are not covered under the Program: a) Any account without a single payment since the effectivity of the deed of conditional sale, deed of real estate loan mortgage, and/or restructuring agreement; b) An account under a Deed of Conditional Sale that has been cancelled; c) An account that has been foreclosed and the redemption period has already lapsed; d) An account which housing unit has been abandoned by the borrower-owner for more than one (1) year from the date of delinquency; e) An account which housing unit is occupied by a third party other than the original registered beneficiary or his/her legal heirs/successor-in-interest; f) An account that has been surrendered to GSIS through a dacion en pago, the title of which has already been consolidated/transferred in the name of the GSIS. 4. Penalties and Surcharges All penalties and surcharges on approved application shall be condoned.

5. Processing Fee The delinquent borrower/installment buyer, legal heir or successor-ininterest applying for condonation and loan restructuring shall not be charged a processing fee. 6. Downpayment and Discount on Accrued Interest Downpayment shall not be required. However, if the applicant opts to pay partially or in full, a discount on unpaid accrued interest shall be given, as follows: Percentage of Payment 25% - 49% 50% - 74% 75% - 99% 100% 7. Restructured Balance The amount for restructuring shall be the sum of the unpaid principal, accrued interests, fire insurance premiums, housing loan redemption insurance premiums, if any, including taxes, foreclosure and other incidental expenses advanced by GSIS, less downpayment and the applicable discount on accrued interest. 8. Interest Rate on Restructured Obligation The restructured balance shall be imposed an interest rate of 8% per annum compounded annually, fixed throughout the loan term. 9. Term of Restructured Obligation The repayment term of the restructured obligation shall be in multiples of five (i.e. 5, 10, 15, 20, 25 or 30 years). In no instance, however, shall the loan term exceed the difference between the applicant/borrower’s age at the time of receipt of application and age eighty (80). 10. Default The restructured account is considered in default as soon as the arrearages exceed the amount equivalent to six (6) monthly amortizations. In the event of default, the outstanding balance becomes due and demandable. Discount Rate 10% 20% 30% 40%

11. Penalty Rate on Delayed Payments Delayed payment/remittance of monthly dues shall be charged a penalty of 0.5% per month except during the first six (6) months of regular monthly installment. 12. Program Implementation Period The program shall be implemented for a period of eighteen (18) months reckoned from the effectivity of the approval of this PPG.

IV.

REQUIREMENTS General Requirements: 1. Application Form, duly accomplished and signed by the applicant and spouse 2. Any two (2) of the following Identification Cards:  GSIS eCard / SSS ID / Company ID  Passport / Driver's License  Senior Citizen ID / Voter's ID / Postal ID 3. Latest Declaration of Real Property 4. Real Property Tax Clearance Certificate for the current year 5. Community Tax Certificate for the current year 6. Affidavit of Occupancy by the Applicant Specific Requirements: 1) For legal heirs of deceased borrower/installment buyer a) Deed of Adjudication of Sole Heir (for a sole surviving heir) or Deed of Extra-Judicial Settlement (for two or more surviving heirs) plus Special Power of Attorney from co-heirs authorizing the applicantheir to file application for restructuring/condonation under this program. b) Acceptable identification cards (IDs) of all heir(s)

2) For Successors-in-interest of housing loan borrowers a) Deed of Sale with Assumption of Mortgage (REL Accounts), Deed of Transfer of Rights with Assumption of Obligation (DCS Accounts) b) Special Power of Attorney (SPA)

V.

REMEDIES AGAINST DELINQUENT ACCOUNTS 1. The GSIS shall continue to exercise its rights to foreclose the mortgage, cancel the Deed of Conditional Sale or other remedies involving properties covered by the following: a. Excluded accounts in Section IV.3 above; b. Delinquent accounts of borrowers/installment buyers who failed to avail themselves of this Program; and c. Accounts of borrowers/installment buyers who availed themselves of the Program but subsequently defaulted on their payments. 2. In case of foreclosure of delinquent real estate loan accounts, the foreclosure proceedings shall be exempt from publication in newspapers of general circulation, subject however, to the following conditions: a. The date and place of auction sale shall be posted for not less than twenty (20) days in at least three (3) conspicuous public places in the city or municipality where the property is situated. b. It shall be subject to other applicable provisions of R.A. No. 3135, as amended, otherwise known as an “Act to Regulate the Sale of Property under Special Powers of Attorney Inserted In or Annexed to Real Estate Mortgages”. c. A written notice of foreclosure shall be sent to the borrower at his/her last known address. 3. Cancellation of Deed of Conditional Sale – In case of deed of conditional sale, the same is considered cancelled after thirty (30) days from receipt of the notice of cancellation by the buyer or the person occupying of the subject property.

VI.

SUBROGATION OF RIGHTS ON DCS ACCOUNTS AND ASSUMPTION OF MORTGAGE ON REL ACCOUNTS 1. Subrogation of Rights on DCS Accounts - Subrogation of rights shall only be allowed on DCS accounts which are qualified under this program on the basis of a duly accomplished application form by the subrogee/transferee of rights to be supported by the Deed of Transfer of Rights and Special Power of Attorney. Subrogation shall only be approved upon personal appearance of the original awardee and the transferee of rights and their spouses, if applicable. 2. For real estate loan (REL) accounts, transfer of ownership from the mortgagor to the buyer of a mortgaged property shall not be allowed. Account shall be restructured in the name of the mortgagor.

VII.

COMPUTATION OF TOTAL OUTSTANDING OBLIGATIONS, RESTRUCTURED LOAN AND THE MONTLY AMORTIZATION 1. On the basis of the latest Statement of Account provided by the Internal Reconciliation Department/Unit, the OUC shall compute for the amount to be restructured, as follows: Account Principal Accrued Interest Penalties/Surcharge Fire Insurance Premium Fire Insurance Surcharge MRI/SR Premium MRI/SRI Surcharge Total Outstanding Balance Less: Penalties/Surcharges Fire Insurance Surcharge MRI/SRI Surcharge Outstanding Balance (Net of Penalties and Surcharges) Less: Downpayment (if any) Discount on Accrued Interest (if applicable) Outstanding Balance (Net of Downpayment/Discount) Add: Foreclosure Expenses (if any) Taxes Other Incidental Expenses Amount to be Restructured Amount xxx,xxx.xx xxx,xxx.xx xxx,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx xxx,xxx.xx xxx,xxx.xx x,xxx.xx x,xxx.xx xxx,xxx.xx x,xxx.xx x,xxx.xx xxx,xxx.xx x,xxx.xx x,xxx.xx x,xxx.xx xxx,xxx.xx

2. The monthly amortization for the restructured loan shall be computed by applying the following formula: Monthly Amortization = Restructured Loan ÷ Annuity Factor where the annuity factor shall depend on the term of the loan as follows: Term 5 10 15 20 25 30 Annuity Factor 49.64490335 83.43239039 106.42758634 122.07773031 132.72895533 139.97800011

VIII.

PROCEDURES 1. Filing of Application: a. The applicant, who may be the borrower/mortgagor/installment buyer or his/her legal heir or successor-in-interest, shall file the application for restructuring and condonation with the GSIS office maintaining the housing loan account. b. A Special Power of Attorney (SPA) shall be accepted only in cases where the borrower/mortgagor/installment buyer or his/her legal heir or successor-in-interest is working overseas and the SPA presented has been executed and duly notarized prior to his/her departure from the country or duly authenticated by the Philippine Consul in the foreign country, or when the applicant is physically incapacitated as evidenced by a Medical Certificate. 2. Acceptance and Evaluation of Application: a. The OUC shall accept the application and shall evaluate the eligibility of the applicant. b. If found eligible, the OUC shall request from the Internal Reconciliation Department/Unit the latest reconciled Statement of Account (SOA).

c. Upon receipt of the latest reconciled SOA, the OUC shall compute for the Restructured Balance and determine the applicable restructuring terms and conditions in accordance with the policies herein. d. The OUC shall then prepare and forward the Restructuring Evaluation Sheet (RES) to the Housing Executive Committee, thru its Secretariat, for approval/disapproval. 3. Approval of Application a. The Housing Executive Committee shall meet at least once a week to deliberate on the applications for restructuring and condonation referred by the OUCs. b. The Housing Executive Committee shall be composed of the following: Chairperson Member Member : : : Senior Vice President Housing and Insurance Group Vice-President Housing and Marketing - NCR Vice-President Housing and Marketing - Regional Office

c. The Housing Executive Committee shall transmit to the OUC its resolution on each of the application not later than three (3) working days after every meeting. 4. Documentation a. Upon receipt of the resolution approving the application, the OUC shall prepare the restructuring agreement and/or Promissory Note and shall advise the applicant to sign the said documents. The Officer IV, Housing Department (for Home Office accounts) and the concerned Regional Manager (for Regional Office accounts) shall sign the Restructuring Agreement in behalf of the GSIS. b. The OUC shall then provide the applicant and Record Management Department for Head Office accounts, and the Office of the Assistant Regional Manager for Regional Office accounts, copies of the notarized documents. c. In case of disapproved application, the OUC shall notify the applicant in writing about the disapproval and shall refer the

account to the Billing and Collection Unit (BCU) for sending of final collection notice. d. After sending of the final collection notice, BCU shall endorse the account to the Business Development and Account Recovery Office, who shall then initiate the following:   for DCS accounts, prepare and send to the installment buyer a notice of cancellation by notarial act for REL accounts, endorse the account to GSIS Law Office for foreclosure

5. Installation of Restructured Accounts The OUC shall install the restructured account in the CML-Housing Module in SAP.

All Orders, Circulars, Policy and Procedural Guidelines which are inconsistent herewith are hereby superseded, modified or repealed accordingly. This PPG shall take effect immediately.

WINSTON F. GARCIA President and General Manager


								
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