Pag-IBIG FUND Corporate Headquarters Atrium of Makati Bldg

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					                                Pag-IBIG FUND
                             Corporate Headquarters
                             Atrium of Makati Bldg.,
                            Makati Avenue, Makati City


                               CIRCULAR NO. 232


            TO: ALL CONCERNED

     SUBJECT: AMENDED GUIDELINES ON THE “MAGAANG PABAHAY,
              DISENTENG BUHAY” PROGRAM


Pursuant to the approval of the Senior Management Committee (SMC) during its
meetings on February 9, 2007 and July 25, 2007, the Amended Guidelines on the
“Magaang Pabahay, Disenteng Buhay” Program is hereby issued.

A. OBJECTIVE

  In celebration of the National Shelter Month in October and in compliance with
  Memorandum Circular 112 of the President dated 7 September 2006, the Pag-IBIG
  Fund shall implement the “Magaang Pabahay, Disenteng Buhay” Program in order
  to achieve the following objectives:

     1. To afford employees in the public sector as well as the other members of
        the Fund the requirements of decent human settlement;

     2. To provide such employees as well as members of the Fund with ample
        opportunities to improve their quality of life;

     3. To implement an affordable housing program for the government
        employees as a form of non-wage benefit/incentive; and

     4. To offer the Fund’s eligible acquired real estates for sale under
        reasonable terms and conditions consistent with those of the other
        shelter agencies and government financial institutions.


B. COVERAGE

  1. These guidelines shall involve the disposition of all acquired real estates,
     including those that have not been auctioned off as well as properties that are
     occupied by the original borrower, tenant (under Ordinary Lease Scheme) or by
     any illegal occupant.

  2. Likewise, properties covered by existing Contract of Lease with Option to
     Purchase under the Rent-to-Own Program may also be purchased by the lessee
     under the following conditions:

      Updated monthly rental; and
      Application of rental payments to the purchase price and corresponding
       discount rate in the contract shall be dispensed with.


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C. BASIC RULES

  1. The first priority shall be given automatically to the occupants of the
     acquired assets before disposing the same to new buyers.

  2. The occupants of the acquired assets shall be notified and be given 15
     days to formalize their offer. Otherwise, the Fund shall proceed with the
     processing of sale after the expiration of the 15 days notification to
     prospective buyers in order to prevent any disagreement between the two
     parties.

  3. The spouse of the defaulted borrower shall be allowed to repurchase their
     units through cash or housing loan provided that the eligibility
     requirements under the existing housing loan guidelines are met.

  4. Reservation Fee

     The applicant/buyer shall be required to pay a non-refundable reservation
     fee of P1,000.00 subject to a 15-day reservation/compliance period. The
     said reservation fee shall form part of the processing fee in case the
     property is purchased through housing loan.

     This requirement, however, shall not apply to the lessee of the property
     covered under the Rent-to-Own Program who intends to purchase said
     property inasmuch as the said lessee has the option to purchase the same
     within the 5-year period as provided for in the Contract of Lease with
     Option to Purchase.

  5. Selling Price

     The selling price of the property for sale shall be based on the latest appraised
     value, which shall not be more than two (2) years old as of the date of sale.
     However, the selling price of the property of an existing Rent-to-Own account
     shall be based on the purchase price stipulated in the Contract of Lease with
     Option to Purchase, which is equal to the appraised value of the property as of
     the date of the execution of the said contract.

  6. Mode of Payment

     6.1 Cash Purchase

        a. Under cash purchase, the selling price shall be net of twenty percent
           (20%) discount plus five percent (5%) litigation discount, if applicable. The
           buyer or offeror shall only be entitled to the five percent (5%) litigation
           discount under the following circumstances:

              the acquired asset has been unlawfully occupied prior to sale
               negotiation between the buyer and the Fund; and

              a Notice to Vacate has been sent to the illegal occupant of the
               property.

           In cases, where the Fund has already incurred expenses in the eviction of
           illegal occupants of acquired assets, the litigation discount may still be
           availed of net of the Fund’s expenses.




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   b. The buyer or offeror shall be required to deposit an amount equivalent to
      at least five percent (5%) of the selling price, which shall either be in
      cash or manager’s check, upon submission of the Purchase Offer form.
      The full payment of the selling price shall be made within thirty (30)
      calendar days from receipt of Notice of Approval of Sale. Withdrawal of an
      offer already accepted shall mean forfeiture of the fifty percent (50%) of
      the deposit in favor of the Fund.

   c. The buyer who fails to pay the additional ninety five percent (95%) of the
      selling price within the specified period shall lose his/her right to
      purchase. Accordingly, the initial five percent (5%) payment of the selling
      price shall be forfeited in favor of the Fund.

6.2 Purchase through Availment of Housing Loan

   a. The buyer may avail a Pag-IBIG housing loan to acquire the subject
      property provided that the eligibility requirements under the existing
      housing loan guidelines are met. The selling price shall be net of fifteen
      percent (15%) discount plus five percent (5%) litigation discount, if
      applicable (refer to C.6.1.a hereof).

   b. The buyer or offeror shall be required to deposit an amount equivalent to
      at least five percent (5%) of the selling price, which shall either be in
      cash or manager’s check, upon submission of the Purchase Offer form.
      For settlement of the full payment, the buyer or offeror shall be required to
      submit the loan documents to the Fund within thirty (30) days from the
      date of receipt of the Notice of Award/Notice of Approval of Sale.

     Relative to the loan entitlement of the member-borrower, all
     provisions under the existing housing loan guidelines shall be
     complied with excluding, however, the loan-to-collateral ratio
     requirement. In this regard, loans up to P750,000 shall be subject to a
     loan-to-collateral ratio of one hundred percent (100%) while loans over
     P750,000 up to P2.0 million shall be subject to a loan-to-collateral ratio of
     ninety percent (90%).

     For purposes of evaluating the loan entitlement of the member-
     borrower based on capacity to pay, the gross family income shall
     pertain to the income of the borrower and the income of two other
     members of the family who are related within the third (3rd) degree of
     consanguinity or affinity (instead of 1st degree), provided that they
     are also Pag-IBIG Fund members and shall be considered as co-
     borrowers.

   c. The buyer-borrower shall pay a processing fee of Three Thousand Pesos
      (P3,000.00), inclusive of the One Thousand Pesos (P1,000.00)
      reservation fee, as follows:

      One Thousand Pesos (P1,000.00) upon reservation, which shall be
       non-refundable if the loan application is disapproved; and
      Two Thousand Pesos (P2,000.00).

   d. The buyer-borrower shall be required to pay within thirty (30) days from
      date of receipt of the Notice of Loan Approval the following:

      Equity requirement (due to difference in the selling price and loanable
       amount);


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   One-year payment of insurance premiums (SRI and Fire); and
   Two Thousand Pesos (P2,000.00) processing fee.

e. Regardless of the economic value of the property, the remaining
   balance shall be paid in equal monthly amortization in such amounts as
   may fully cover the principal and interest, as well as insurance premiums,
   over a maximum period of thirty (30) years and shall in no case exceed
   the difference between the present age and age seventy (70) of the
   principal borrower, with an annual interest rate of six percent (6%), if
   payment is made on or before due date and eight percent (8%), if
   payment is made after due date. The foregoing interest shall be
   applicable to all loans availed under this program.

f. The member-borrower shall be compulsorily covered by
   Sales/Mortgage Redemption Insurance (SRI/MRI) and fire insurance,
   in accordance with the existing housing loan guidelines, except the
   provision on interim coverage.

g. Contract-to-Sell documentation shall be adopted with a required two-year
   seasoning period. Expenses to be incurred in the conversion of Contract-
   to-Sell to Real Estate Mortgage, broken down as follows, shall be paid
   together with the monthly payment within the first eighteen (18) months of
   the seasoning period, without interest:

                    Selling Price       Up to P2M


                   BIR                     2.0%
                   RD                      1.5%
                   LGU                     1.0%
                                           4.5%

  The Expanded Withholding Tax (EWT) shall be for the account of the
  Fund. Upon default of the account and subsequent cancellation of the
  Contract-to-Sell (CTS), any amount paid for the conversion cost shall be
  refunded to the borrower

h. The loan shall be paid, whenever feasible, through salary deduction.

i. A borrower’s monthly payment shall thus be applied according to the
   following order of priority:

     Conversion cost
     Upgraded membership contribution
     Insurance premiums
     Interest
     Principal

  Any underpayment shall be subject to higher interest rate. In which case,
  the subsequent payment shall cover the unpaid portion of the previous
  monthly payment including the higher interest charged, plus the regular
  payment due for the month.

j. All other applicable provisions of the prevailing Guidelines of the Pag-IBIG
   Housing Loan Program are hereby incorporated for reference.




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7. Limitations

   7.1 Acquired properties may be repurchased by former owners but only through
       cash basis. Such purchase shall only be subjected to the twenty percent
       (20%) discount rate but not to the litigation discount of five percent (5%) of
       the selling price.

   7.2 For purposes of transparency and fair play and in order to prevent fraud and
       incidents that might be construed as violative of the Anti-Graft Law,
       employees and officers of Pag-IBIG Fund as well as its authorized
       agents/agencies who are directly involved in the administration, appraisal
       and/or disposition of acquired assets, are prohibited from participating and/or
       buying the acquired assets of the Fund under this disposal scheme.

       This disqualification shall also cover individuals related to the
       abovementioned officers and employees within the first civil degree of
       consanguinity or affinity.

8. Documentation and Taxes

   The Fund shall shoulder the expanded withholding tax, while the buyer shall pay
   all the applicable taxes, fees and assessments, such as but not limited to
   documentary stamp tax, transfer tax, registration fees, real estate taxes and all
   other expenses incidental to the sale.

   8.1 Upon full payment of the selling price under cash purchase the following
       documents shall be released to the buyer:

       a. Title in the name of Pag-IBIG Fund:

             Title
             Deed of Absolute Sale (DOAS)
             Tax Declaration
             Tax Receipts

       b. Title in the name of the Developer:

             Title
             DOAS
             Deed of Assignment (DOA), with Special Power of Attorney (SPA, if
              applicable)
             Tax Declaration
             Tax Receipts

   8.2 For properties purchased through housing loan, the Fund shall begin
       converting the eligible CTS to Real Estate Mortgage (REM) on the 18th
       month from date of take-out. After all the applicable taxes are paid with the
       Bureau of Internal Revenue (BIR), the Acquired Assets Department/Section
       shall process the transfer of title to buyer-borrower’s name as well as the
       annotation of the Loan Mortgage Agreement (LMA) in favor of the Fund with
       the Registry of Deeds (RD). The photocopies of the following documents
       shall be released to the buyer-borrower after the title has been transferred
       in his/her name:

             Title
             DOAS
             Tax Declaration


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              Tax Receipts

  9. Other Provisions

     9.1 Unsettled utility bills (water, power, etc) on properties disposed of on an
         “As-Is-Where-Is” basis shall be for the account of the buyers.

     9.2 For property under existing Ordinary Lease Contract, the Fund shall notify
         the lessee occupying said property, upon receipt of the required ten
         percent (10%) downpayment from the buyer, to vacate the leased
         premises within one (1) month from receipt of the notice.

     9.3 Any buyer shall be allowed to purchase adjacent properties through
         availment of housing loan. Meanwhile, cash buyer shall be allowed to
         purchase as many properties as he so desires.

     9.4 The Fund may also outsource the eviction process for properties
         illegally occupied, and the five percent (5%) litigation discount on the
         selling price provided for under C.6.1.a hereof shall be the litigation fee
         instead in favor of the service provider. Procurement of such service
         shall be subject to the usual bidding process as required by law.


D. REPEALING CLAUSE

  All Circulars, memoranda, rules, regulations and other issuances inconsistent
  herewith are hereby repealed, amended or modified accordingly.


E. EFFECTIVITY

  This program shall be implemented until 31 October 2007.




Makati City
5 September 2007




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