Home Guaranty Corporation Act of 2000

Case Overview and Summary

Summary of the Home Guaranty Corporation Act of 2000

Declaration of Policy and Objectives (Sections 2-3):
- Undertake a nationwide housing program to provide affordable decent housing.
- Strengthen and promote housing production and finance.
- Ensure funding for urban/rural housing, resettlement, site development, and renewal of blighted areas.
- Enhance capability of low-income groups to acquire decent low-cost housing.
- Provide strong and sustainable housing finance program.
- Increase private sector participation in housing finance.
- Encourage flow of private funds for mass housing development and homebuyers' financing.
- Promote local government participation in socialized housing programs.
- Serve housing requirements of underprivileged and gainfully employed.
- Institutionalize the aided self-help approach in homeownership.

Home Guaranty Corporation (Sections 4-12):
- Renamed from Home Insurance and Guaranty Corporation.
- Exists for 50 years from December 15, 2000.
- Powers and functions (Section 5):
  - Promote homebuilding and land ownership, prioritizing the homeless and underprivileged.
  - Guarantee mortgages, loans, and credit facilities for residential purposes.
  - Assist private developers in socialized, low and medium-cost mass housing projects.
  - Develop and sustain a secondary mortgage market.
  - Underwrite, purchase, own, sell securities related to housing finance.
  - Borrow money and issue bonds, debentures, securities, subject to approval.
  - Promote aided self-help housing.
  - Adopt corporate seal, enter contracts, sue and be sued.
  - Acquire, purchase, own, hold, manage properties.
  - Exercise necessary powers to accomplish objectives.
- Authorized capital stock of ₱50 billion, with ₱7.5 billion appropriated from National Treasury (Section 6).
- Net worth allocation (Section 7):
  - At least 40% for socialized housing.
  - At least 30% for low-cost housing.
  - At least 20% for medium-cost housing.
  - Not more than 10% for open housing.
- Governed by a 7-member Board of Directors (Section 8).
- Powers and duties of the Board (Section 9).
- President of the Corporation appointed by the President of the Philippines for 5 years (Section 10).
- Powers and duties of the President (Section 11).
- Executive Vice President and General Manager (Section 12).

Credit Guaranty (Sections 13-19):
- Requirements for guaranty (Section 13):
  - For developmental loans:
    - Not exceeding 70% of prudent production cost for bond guaranty.
    - Not exceeding 60% of prudent production cost for cash guaranty.
  - For single family residence:
    - Not exceeding 100% of appraised value for socialized housing.
    - Not exceeding 90% of appraised value for low-cost housing.
    - Not exceeding 80% of appraised value for medium-cost housing.
    - Not exceeding 70% of appraised value for open housing.
  - Secured by first lien on real estate or leasehold rights for at least 20 years.
  - Intended for production/acquisition of residential lot/house and lot, improvements, repairs, and mass housing construction.
  - Complete amortization provisions satisfactory to the Corporation.
  - Maturity not exceeding 30 years.
  - Terms and provisions prescribed by the Corporation.
  - Involving real properties held by government entities, private corporations, banking institutions, individuals, etc.
- Guaranty premiums, appraisal fees, and other charges (Section 14):
  - Guaranty premiums fixed based on risk characteristics, not less than:
    - 0.5% for socialized housing.
    - 0.75% for low-cost housing.
    - 1% for medium-cost housing.
    - 1.5% for open housing.
  - Fees for appraisal and inspection of properties.
- Guaranty coverage and composition (Section 15):
  - Guarantee principal balance, interest up to:
    - 11% per annum for socialized housing.
    - 10% per annum for low-cost housing.
    - 9.5% per annum for medium-cost housing.
    - 8.5% per annum for open housing.
  - Allocation of guaranty accounts:
    - At least 40% for socialized housing.
    - At least 30% for low-cost housing.
    - At least 20% for medium-cost housing.
    - Not more than 10% for open housing.
  - Ceilings for housing types determined by HUDCC and NEDA, subject to review.
  - Guaranty obligations allocated fairly among regions.
- Guaranty limitations (Section 16):
  - For development projects, not exceeding 3 times net worth of institution/entity.
  - Not exempting banks from single borrower limit of Bangko Sentral.
  - Outstanding obligations not exceeding 20 times capital and surplus of Corporation.
  - Public securities subject to registration requirements.
  - 5% of annual net operating revenues as reserve/sinking fund.
  - Subject to concurrence of Monetary Board of Bangko Sentral.
- Payments of guaranty calls (Section 17).
- Guaranty of the Republic of the Philippines (Section 18).
- Tax exemption (Section 19):
  - Interest and yields on mortgages, debentures, bonds, etc. exempt from taxation.
  - Corporation can increase exemption limit subject to approval.

Building and Loan Associations (Sections 20-21):
- Corporation authorized to issue guaranty contracts for building and loan associations (Section 20).
- Open-end mortgages for improvement or repair of properties (Section 21).

Investments of Funds (Section 22):
- Funds not needed for operations to be deposited in government banks or invested in government-guaranteed bonds/obligations.
- Corporation may purchase and cancel its own debentures.

Miscellaneous Provisions (Sections 23-40):
- Definitions (Section 23).
- Warranties of developers/builders, sellers, or funders (Section 24).
- Participation of financing institutions and other investors (Section 25).
- Powers over homeowners associations transferred to HLURB (Section 26).
- Penalties for false statements, forgery, counterfeiting, and derogatory statements (Section 27).
- Fund sources for operations from Bangko Sentral ng Pilipinas (Section 28).
- Exemption from Bangko Sentral regulations on quasi-banking functions (Section 29).
- Legal counsel by the Office of the Government Corporate Counsel (Section 30).
- Resident Auditor appointed by the Commission on Audit (Section 31).
- Quarterly reports to the President and Congress (Section 32).
- Transitory provision for submitting policies to Monetary Board (Section 33).
- Report on the development of the secondary mortgage market (Section 34).
- Sunset review by Congress every year (Section 35).
- Suppletory application of the Corporation Code (Section 36).
- Implementing rules and regulations (Section 37).
- Repeal of certain laws and executive orders (Section 38).
- Separability provision (Section 39).
- Effectivity 15 days after publication (Section 40).