HOUSING LOAN CONDONATION ACT OF 1998

Case Overview and Summary

Summary of Republic Act No. 8501 (Housing Loan Condonation Act of 1998)

Condonation of Penalties on Housing Loans
- All unpaid penalties on housing loans from government institutions involved in the National Shelter Program are condoned, provided that:
• Due and demandable arrearages composed of principal and interest are restructured and paid within the remaining loan period. (Section 2a)
• If only part of the arrearages is paid, only the corresponding penalties shall be condoned. (Section 2b)
• The borrower must not have availed of any previous condonation program. (Section 2c)
• Penalties due to funders of NHMFC on delinquent accounts under its management shall also be condoned up to the extent paid by individual borrowers. (Section 2d)

Amendatory Clause for Pag-ibig Fund
- Pag-ibig Fund is granted the power to condone penalties on loans, subject to the following conditions:
• A member-borrower may apply for condonation only once for the entire loan amount. (Section 3d1)
• The loan must have been in arrears for at least two (2) years. (Section 3d2)
• The annual total family income must not exceed Three Hundred Thousand Pesos (P300,000.00). (Section 3d3)
• Pag-ibig Fund can also condone penalties on employers who fail to remit employee contributions. (Section 3d)

Applicability to Defective Housing Units
- The Act shall also apply to borrowers who failed to pay due to structurally defective or substandard housing units and/or subdivisions lacking basic amenities as required by law. (Section 4)

Implementing Rules and Regulations
- All government institutions involved in the National Shelter Program must promulgate implementing rules and regulations within sixty (60) days after the Act's effectivity. (Section 5)

Repealing Clause and Effectivity
- All inconsistent laws, executive orders, rules or regulations are repealed or modified accordingly. (Section 6)
- The Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation. (Section 7)