AN ACT CREATING THE ABOT-KAYA PABAHAY FUND

Case Overview and Summary

Summary of Republic Act No. 6846 (Social Housing Support Fund Act)

Policy and Objectives (Section 2):
- Promote the national shelter program and implement a continuing social housing program.
- Make affordable houses and/or lots available to low-income families across the 14 regions of the country.
- Establish a financial support system to encourage private sector participation in social housing.

Abot-Kaya Pabahay Fund (Section 3):
- Creation of a fund amounting to ₱2.5 billion over 5 years, with an annual appropriation of ₱500 million from the National Government.
- The fund shall be used exclusively for:
    - Enhancing affordability of low-cost housing for low-income families.
    - Providing developmental financing for low-cost housing projects.
    - Eliminating risks for funding agencies involved in housing (SSS, GSIS, HDMF).
- The fund shall be devoted to:
    - Provide amortization support (Section 3a).
    - Expedite land development for social housing through developmental financing (Section 3b).
    - Establish a guarantee system to ensure viable cash flow for funding agencies (Section 3c).
- The President shall avail of foreign grants, assistance, programs, and concessional loans to generate an additional ₱500 million per year for 5 years.

Amortization Support (Section 3a):
- Eligibility criteria for borrowers:
    - Gross family income within specified limits.
    - No record of offenses involving moral turpitude.
    - Not a homeowner or recipient of any housing loan/unit in the last 5 years.
- Level A (income ≤ ₱4,000/month, loan ≤ ₱80,000): Amortization support for the first 5 years, ranging from 35% (months 1-12) to 14% (months 49-60).
- Level B (income ≤ ₱5,000/month, loan > ₱80,000 but ≤ ₱100,000): Amortization support for the first 5 years, ranging from 25% (months 1-24) to 7% (months 49-60).
- Amortization support applies only to loans granted within 5 years of the Act's approval, on a first-come-first-served basis.
- Loans shall not be subject to charges, fees, or premiums, except for minimum processing fees, mortgage redemption insurance, and fire insurance premiums.
- In case of property loss or damage due to force majeure, agencies may liberalize or waive repayment terms.
- At least 60% of amortization support funds shall be for Level A borrowers.
- At least 40% of the yearly appropriation shall be for amortization support.

Developmental Financing (Section 3b):
- Proponents of low-cost housing projects (≤ ₱60,000 per house/lot package for Level A borrowers) shall be entitled to a developmental financing loan of up to 80% of the project cost.
- 15-20% of the yearly appropriation shall be for developmental financing.
- Unused funds for developmental financing shall be utilized for Level A amortization support.

Cash Flow Guarantee (Section 3c):
- Establishment of a cash flow guarantee system for loans up to ₱150,000 with interest rate ≤ 12% per annum.
- The Fund shall issue promissory notes guaranteed by the Republic of the Philippines for assigned loans.
- 40% of the yearly appropriation shall be for the cash flow guarantee.

Corporate Powers and Administration (Sections 4-5):
- The National Home Mortgage and Finance Corporation (NHMFC) shall establish and administer the amortization support and developmental financing systems.
- The Home Insurance and Guaranty Corporation (HIGC) shall establish and administer the cash flow guarantee system.
- The NHMFC and HIGC shall have various powers and functions, including policymaking, reporting, budgeting, property acquisition, accounting, actuarial studies, contracting, and investment.
- The management of the NHMFC and HIGC shall formulate policies, direct operations, authorize expenditures, approve appointments, and exercise other necessary duties.

Investments, Administrative Costs, and Appropriations (Sections 6-8):
- Excess funds not needed for current requirements shall be invested in government securities and/or deposited in government banks.
- Administrative costs shall not exceed 1% of the previous year's Fund assets.
- Appropriations shall be released quarterly in four equal installments.
- The amount needed for implementation shall be included in the General Appropriations Bill.

Audit, Reporting, and Supervision (Sections 9-11):
- The Chairman of the Commission on Audit shall act as the auditor of the Fund.
- The administering agencies shall submit annual and quarterly detailed reports to Congress, including a list of beneficiaries.
- Particular aspects of the Fund's administration may be subject to supervision, visitation, or verification by designated government agencies.

Repealing Clause and Effectivity (Sections 12-13):
- Any conflicting provisions of law, decree, executive order, rule, or regulation shall be repealed, amended, or modified.
- The Act shall take effect upon its approval and publication in at least two national newspapers of general circulation.