HOME DEVELOPMENT MUTUAL FUND Corporate Headquarters The Atrium of Makati Makati Avenue, Makati City

HDMF CIRCULAR NO. 255

TO: ALL CONCERNED SUBJECT: REVISED GUIDELINES OF THE PAG-IBIG PROGRAM FOR THE DEVELOPMENT OF MEDIUM/HIGH-RISE CONDOMINIUM BUILDING (MHRB) PROJECTS IN METRO MANILA AND HIGHLY URBANIZED CITIES

Pursuant to the approval by the HDMF Board of Trustees during the 256th Board Meeting last 20 April 2009, the Revised Guidelines of the Pag-IBIG Program for the Development of Medium/High-Rise Condominium Building (MHRB) Projects in Metro Manila and Highly Urbanized Cities, are hereby issued: A. COVERAGE These guidelines shall cover Medium/High-Rise Condominium Building (MHRB) Projects located in Metro Manila and highly urbanized cities.

B. OBJECTIVES 1. To provide a ready inventory of condominium units for sale at more affordable prices to eligible Pag-IBIG members in the Metro Manila area and highly urbanized cities; 2. To provide Pag-IBIG members who are working in the Metro Manila area and highly urbanized cities with the opportunity to acquire condominium units in the area, thereby reducing transportation costs to and from their places of habitat; 3. To provide developers with a liquidity mechanism that will increase capacity for housing production and reduce project financing costs, through a faster turnaround of their investments in the construction and development of medium/high-rise condominium buildings in the Metro Manila area and highly urbanized cities; 4. To simplify and facilitate the processing of end-user financing for eligible Pag-IBIG members, given time-savings realized in the wholesale appraisal and inspection of housing units in medium/high-rise condominium buildings which have been accredited by Pag-IBIG Fund.

C. PROJECT ACCREDITATION The proposed medium/high-rise building (MHRB) project must conform with Pag-IBIG Funds standards, attached hereto as Annex A, and must have the following general specifications:
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1. The project must be a medium/high-rise residential building with a minimum floor area of 18 square meters per unit; 2. The site of the project must be characterized by the availability of basic socio-economic institutions such as government centers, churches, hospitals/health centers, schools, public markets and commercial establishments within a five-kilometer radius, and must be accessible to public transport; 3. The selling price of the condominium units must not be more than P3.0 Million. 4. The MHRB project plan must provide for basic amenities and community facilities. The MHRB project shall likewise be evaluated as to market feasibility, technical feasibility and financial feasibility on the basis of the Pag-IBIG Evaluation Criteria attached hereto as Annex B.

D. THE DEVELOPER AND ITS ROLE 1. To qualify under the Pag-IBIG Program for the Development of MHRB Projects, a company must have an established track record of at least three (3) years in housing development, having completed at least 1,000 house and lot or condominium units at the time of application. If with previous dealings with the Fund, the developer must have an established track record of delivering quality mortgages. A company which fails to meet the aforementioned criteria but can show convincing proof of its financial and technical capability to complete the project according to the Funds project specifications/standards, shall be given due consideration. The company shall be notified whether it qualifies under the program or not within fifteen (15) days from submission of the required corporate documents. 2. The Company shall enter into a Memorandum of Agreement (MOA) with the Fund stipulating, among others, that it shall: 2.1 Deliver completed condominium units as per specifications in accordance with a delivery schedule; 2.2 Secure and obtain all necessary licenses, permits and approvals required by government agencies in connection with the proposed MHRB project; The Development Permit must be secured prior to loan approval while the License to Sell may be submitted within six (6) months upon receipt of Notice of approval (NOA), otherwise, the loan application shall be deemed cancelled. 2.3 Warrant satisfactory and faithful performance of all the works and services attendant to the project in accordance with the drawings,

plans and specifications approved by the Housing and Land Use Regulatory Board (HLURB) and such other regulatory agencies; 2.4 Correct, rework and/or reconstruct, at its own expense, delivered units which are found defective and/or below specifications within a period of one (1) month after the sale and turn-over of the unit to a member-buyer; 2.5 Warrant the validity, legality and authenticity of the individual titles, as well as the construction of the units in accordance with HLURB and Pag-IBIG Fund approved standards; 2.6 Execute in favor of, and deliver to Pag-IBIG Fund, the individual Assignment of Take-out Proceeds with Real Estate Mortgage and individual Promissory Note, assigning the takeout proceeds, Real Estate Mortgage and Condominium Certificates of Title (CCTs) covering the condominium units for which the Fund shall release funds; 2.7 Handle the marketing of the condominium units in the proposed MHRB project to qualified Pag-IBIG member-buyers. The condominium units must be sold within six (6) months from date of release of funds. 2.8 Buy back unsold condominium units at the end of the six-month marketing period, at a price equivalent to the amount of funds released by Pag-IBIG Fund for the units, plus accrued interest charges, within fifteen (15) calendar days from receipt of notice. 2.9 Ensure the extension and installation of electrical and water facilities to serve the MHRB project, the cost of which shall be shouldered by the company; and 2.10 Maintain all condominium facilities at its own expense until such time that the facilities are turned over and accepted by the proper authorities. 2.11 Secure an interim fire and other allied perils insurance on the property assigned/mortgaged to the Fund for an amount equivalent to the funds released by Pag-IBIG Fund.

E. HDMFs PARTICIPATION 1. The Fund shall release funds, which shall be based on the lowest of the following: seventy percent (70%) of the appraised value of the completed condominium unit, seventy percent (70%) of the developers selling price or One Million Five Hundred Thousand Pesos (P1,500,000.00), for every completed condominium unit delivered to Pag-IBIG Fund in accordance with the terms and conditions of the MOA. 2. HDMF shall release funds in tranches within a period of three (3) years. Each drawdown shall be based on completed condominium units delivered by the developer, which is equivalent to not more than 250 units or 50% of the total units, whichever is lower. The Fund shall only release funds if the condominium building where the subject properties are

located, is already complete in accordance with the plans and specifications. Subsequent funds shall be infused into the project only when fifty percent (50%) of the completed condominium units delivered under the preceding tranche have been sold out, and one hundred percent (100%) of the completed condominium units delivered under any previous tranche have been sold out. 3. HDMF shall provide long-term financing via the Contract-to-Sell (CTS) or Real Estate Mortgage (REM) scheme to qualified member-buyers. 4. Upon take-out of the borrowers Pag-IBIG housing loan, the Fund shall deduct the following from the loan proceeds, if applicable: 4.1 The amount of funds already released by the Fund to the developer for the borrowers unit; 4.2 Unpaid Interest charges, herein defined as the prevailing market rate (on Friday preceding the date of release of proceeds) of 2year Treasury Notes, plus three percent (3%) during the six (6) months marketing period, and 5% thereafter, which shall in no case be less than 8.5%. 4.3 Retention value to cover for the expenses on the conversion of CTS accounts to REM, in accordance with the rate prescribed in the prevailing guidelines on the Pag-IBIG Fund housing loan program; and 4.4 Other unpaid obligations of the developer. 5. The Fund shall have the following options in the event the developer fails to dispose of the condominium units within a period of six (6) months from the date of release of funds: Grant the developer a grace period of not more than three (3) months within which to dispose of the unsold units. 5.2 After the expiration of the grace period, the Fund shall require the developer to buy back unsold units within fifteen (15) calendar days from receipt of notice, at a price equal to the funds released for the said units, plus accrued interest charges. The Fund shall likewise have the option to suspend the release of funds. 5.3 Register the individual Real Estate Mortgage (REM) on the individual Condominium Certificates of Title covering the unsold condominium units subject of the funds released and institute foreclosure proceedings. All expenses pertaining to the registration of the REM shall be for the account of the developer. 6. The Fund shall enter into a Memorandum of Agreement (MOA) with a developer for the development of one MHRB project in Metro Manila and highly urbanized cities at a time, until such time that the company shall

have established a track record that will merit the Funds entering into a MOA with the developer for the simultaneous development of several MHRB projects in the area.

F. TERMS AND CONDITIONS FOR AVAILMENT 1. Amount. Each drawdown shall not exceed the lowest of the following: seventy percent (70%) of the appraised value of the completed condominium unit, seventy percent (70%) of the developers selling price or One Million Five Hundred Thousand Pesos (P1,500,000.00), for every completed condominium unit delivered to HDMF in accordance with the terms and conditions of the MOA. 2. Maturity Each drawdown shall have a maturity period of six (6) months. 3. Interest The loan shall bear an interest rate defined as the prevailing market rate (on Friday preceding the date of release of proceeds) of 2-year Treasury Notes, plus three percent (3%) during the six (6) months marketing period, and 5% thereafter, which shall in no case be less than 8.5%. 4. Collateral The developer shall execute, in favor of, and deliver to the Fund the individual Assignment of Take-out Proceeds with Real Estate Mortgage (REM) and individual Promissory Note, assigning the takeout proceeds, Real Estate Mortgage and TCTs covering the house and lot packages for which HDMF shall release funds. 5. Project Timetable The construction of the project must commence within one (1) year from the receipt of the Notice of Approval (NOA) and must be fully completed within a maximum period of three (3) years. Failure to comply within the specified time shall lead to the cancellation of the loan approval. 6. Funding Commitment Line The Developer shall secure from HDMF a Funding Commitment Line either under Window 1 (With Buyback Guaranty on CTS accounts of defaulting prospective beneficiaries) or Window 2 (Without Buyback Guaranty). 7. Loan Payment The loan principal and the applicable accrued interest charges shall be paid from the take-out proceeds. The Fund shall furnish the developer a statement of the application of payment on the outstanding loan balance and accrued interest charges, within seven (7) working days from submission of complete loan documents required for the release of takeout proceeds.

Should the take-out proceeds fully cover the developers outstanding loan balance and accrued interest charges, the Fund shall remit any remaining amount thereon to the developer. 8. Commitment Fee The developer shall submit an annual schedule of drawdowns, the first of which shall not be later than sixty (60) calendar days after execution of the Memorandum of Agreement. The developer shall pay a commitment fee equivalent to one-fourth of one percent (1/4 of 1%) of the amounts scheduled for drawdown during the first ninety (90) days or first quarter following the execution of the MOA. If availments or drawdowns are made as scheduled, said fee may be refunded or may be applied to the scheduled drawdown/s for the subsequent quarter/s. Otherwise, it shall be forfeited. 9. Loan Processing Fee The developer shall pay a processing fee of of 1% of the approved loan amount or fifty thousand pesos (P50,000.00), whichever is lower, inclusive of a non-refundable filing fee of ten thousand pesos (P10,000.00). 10. Service Fee The developer shall pay a service fee equivalent to 0.1% of the amount for drawdown.

G. APPROVAL OF APPLICATIONS All applications shall be processed within sixty (60) working days from the date the company submits all required documents, and shall be subject to the approval of the HDMF Board of Trustees.

H. AMENDMENTS These guidelines may be amended, revised or modified by the Senior Management Committee in furtherance of the objectives of the program, provided that the amendments, revisions or modifications herein adopted are consistent with the mandate of the Fund under its charter and existing laws. This Circular takes effect immediately.

JAIME A. FABIAA Officer-in-Charge

Makati City _______________ 2009

Annex B

HOME DEVELOPMENT MUTUAL FUND

Evaluation Criteria for the Development of a Pag-IBIG Medium-Rise Condominium

1. THE COMPANY A. Technical Capability

1. Profile

- years of experience in housing development, its key officers/directors and technical personnel 2. Track record in Land Development and House Construction B. Financial Capability 1. Financial performance for the last three (3) years 2. Credit standing with banks, other financial institutions and suppliers

ll. THE PROJECT A. Market Feasibility 1. Housing Need (a brief presentation of housing demand and supply in the area) 2. Income Profile of the Target Market 3. Socioeconomic Facilities (City/Municipal Hall, hospital/health centers, schools, public market, commercial/recreational area) 4. Marketing Strategy B. Technical Feasibility 1. 2. 3. 4. 5. 6. Property Ownership, Title Condition and Size of Condominium Site Model Units Cost Profile Pricing Scheme Land Development

C. Financial Feasibility 1. Project Costs (Rawland, House Construction, other costs) 2. Source of Funds 3. Projected Financial Statements