Republic of the Philippines HOUSING AND URBAN DEVELOPMENT COORDINATING COUNCIL RULES AND REGULATIONS IMPLEMENTING

limited to, the Government Service Insurance System (GSIS), the Social Security System (SSS), the Home Development Mutual Fund (HDMF) or PagIBIG Fund, the National Home Mortgage Finance Corporation (NHMFC), the Social Housing Finance Corporation (SHFC), the Home Guaranty Corporation

REPUBLIC ACT NO. 9507 ENTITLED (HGC), and the National Housing Authority (NHA), collectively known as the AN ACT TO ESTABLISH A SOCIALIZED AND LOW-COST HOUSING LOAN government financial institutions (GFIs) and housing agencies, with guidelines RESTRUCTURING AND CONDONATION PROGRAM, PROVIDING THE for the comprehensive implementation of the Act. MECHANISMS THEREFOR AND FOR OTHER PURPOSES Section 4. Construction These Rules shall be construed and applied RULE I in accordance with and in furtherance of the policy and objectives of the law. TITLE, AUTHORITY, PURPOSE, CONSTRUCTION AND DEFINITION OF In case of conflict and/or ambiguity, which may arise in the implementation of TERMS these Rules, the concerned agencies shall issue the necessary clarification. Section 1. Title These Rules shall be known and cited as the Unified 1Section 5. Definition of Terms As used in these Rules, the following Rules and Regulations Implementing Republic Act (R.A.) No. 9507, otherwise terms shall mean as follows: known as An Act to Establish a Socialized and Low-Cost Housing Loan a. Abandoned Unit refers to a housing structure that has not been Restructuring and Condonation Program, Providing the Mechanisms Therefor occupied by the borrower-owner for more than one (1) year from and for Other Purposes. the date of delinquency. Section 2. Authority By virtue of Section 8 of R.A. No. 9507, an b. Condonation means the relief given by law in the payment of inter-agency committee, composed of all the government institutions and penalties, surcharges and a portion of accrued interest to be agencies enumerated under Section 3(a) of R.A. No. 9507 to be headed by the determined by the governing boards of the GFIs and housing Housing and Urban Development Coordinating Council (HUDCC), is hereby agencies within thirty (30) days from the effectivity of these Rules. created to promulgate the Implementing Rules and Regulations not later than c. Contract-to-Sell pertains to a bilateral contract whereby the GFIs 25 January 2009. and housing agencies as sellers expressly reserve the ownership of Section 3. Purpose These Rules and Regulations shall provide the subject property despite delivery thereof to the buyers and agencies involved in the National Shelter Program (NSP), including but not

bind themselves to deliver the title of the said property to the buyers upon full payment of the purchase price. It also refers to Conditional Contract to Sell and Deed of Conditional Sale. d. Dacion en Pago refers to the mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor property for the satisfaction of monetary debt. e. Delinquent Accounts/Borrowers/Installment buyers refers to accounts/borrowers/installment buyers with at least three (3) months of unpaid monthly amortizations as of the effectivity of these Rules. f. Fire and Allied Perils Insurance refers to a yearly renewable term insurance on the housing structure subject of a loan/sale against fire, lightning, earthquake shocks, typhoons and floods. g. Force Majeure refers to those events which cannot be foreseen or if foreseeable, cannot be prevented or avoided by the exercise of due diligence such as strikes or other labor difficulties, rebellion or insurrection, acts of war, riots or civil commotions, acts of public enemies, national emergencies, fire, flood, earthquake or other catastrophes or acts of God. h. Foreclosed Accounts refers to accounts that have been issued Certificates of Sale (COS) by virtue of auction sale conducted by the court, sheriff or notary public and with expired redemption period.

2i. Foreclosure refers to the legal procedure either judicially or extra-judicially, as long as due process is observed, for enforcing claims against a mortgagor in default of payment of his obligation. j. Legal Heirs pertains to persons who are called to succeed to the rights and interests of a deceased person either by provision of a will or by operation of law. k. Loan Restructuring refers to a process where the principal terms and conditions of the original loan are modified in accordance with an agreement setting forth a new plan of payment or a schedule of payment on a periodic basis. l. Mortgage Redemption Insurance refers to a yearly renewable term insurance where the borrower is covered for an amount equal to the restructured obligation. This also refers to Loan/Sales/Housing Redemption Insurance. m. Outstanding Obligation refers to the sum of the outstanding loan principal, unpaid principal, accrued interests and penalties, insurance premiums, taxes, foreclosure and other incidental expenses, if any. n. Program refers to the Socialized and Low-Cost Housing Loan Restructuring and Condonation Program established under R.A. No. 9507. o. Restructured Obligation refers to the sum of the interest bearing and non-interest bearing obligation.

The interest-bearing portion refers to the total outstanding loan principal, unpaid principal, unpaid insurance premiums, taxes, foreclosure and other incidental expenses, if any. The non-interest bearing portion refers to the remaining accrued interest due net of condoned portion, if any, to be paid in equal monthly amortization within the term of the restructured obligation. p. Socialized and Low-Cost Housing Loans/Obligations refers to housing loans/obligations the original amounts of which are within the housing loan ceilings as determined by the HUDCC and the original principal obligations of which do not exceed P2.5 million. It also refers to the obligations of community/group/homeowners associations (HOA), provided the principal amount of the individual members loan does not exceed 3P2.5 million. It further refers to installment receivables of GFIs and housing agencies covering sale of housing units/lots on installment basis, the selling price of which does not exceed P2.5 million. q. Successors-in-Interest refers to the assignees, transferees and buyers of rights who have assumed the original loan as supported by legal documents, including Special Power of Attorney (SPA), duly approved by the GFIs and housing agencies. RULE II

COVERAGE Section 1. Covered Accounts The Program shall cover loans/obligations of delinquent home borrowers/installment buyers of the institutions mentioned in Section 2 of this Rule with three (3) unpaid monthly amortizations/payments as of 16 March 2009 provided that the original principal amount of the housing loan/obligation shall not exceed Two Million Five Hundred Thousand (P2,500,000.00). The Program shall also cover delinquent accounts of community/homeowners associations/group loans and local housing projects financed by NHA thru loan agreements provided the principal amount of an individual members loan does not exceed Two Million Five Hundred Thousand (P2,500,000.00). Section 2. Covered Institutions The condonation and loan restructuring program shall cover all GFIs and housing agencies involved in the NSP of the government, including, but not limited to, the GSIS, SSS, HDMF/Pag-IBIG Fund, NHMFC, SHFC, HGC and NHA. Section 3. Eligible Applicants The following may apply for condonation and loan restructuring under this program, provided, they comply with the eligibility requirements: a. All borrowers/ installment buyers of covered accounts with any of the covered institutions mentioned in Sections 1 and 2 of this Rule, respectively, notwithstanding that the same borrowers/installment buyers have availed themselves of the

benefits of a previous condonation and loan restructuring program from any of the covered GFIs and housing agencies. 4b. The legal heirs of deceased housing loan borrowers/installment buyers with unpaid loan balances/installments after application of the proceeds of the Mortgage/Loan/Sales/Housing Redemption Insurance. c. Successors-in-interest of housing loan borrowers, who have assumed the original mortgage or of installment buyers who are assignees of Contract to Sell, as supported by legal documents, including Special Power of Attorney (SPA), duly approved by or with the consent of the said GFIs and housing agencies. Section 4. Existing Condonation and Loan Restructuring Programs The Program shall be construed as separate and distinct from the existing condonation and loan restructuring programs being implemented by the respective GFIs and housing agencies and the borrower/installment buyer shall be given the option to choose which condonation and loan restructuring program he/she may avail of. RULE III TERMS AND CONDITIONS Section 1. Terms and Conditions The terms and conditions of the Program are as follows: a. Housing Loan Ceiling The original principal amount of the housing loans/obligations of the borrowers/installment buyers

who shall apply for condonation and loan restructuring under the Program shall not exceed Two Million Five Hundred Thousand Pesos (P2,500,000.00). b. Program Implementation Period The program shall be implemented for a period of eighteen (18) months reckoned from the effectivity of these Rules. The GFIs and housing agencies shall notify eligible borrowers/installment buyers through letter, publication or posting on how they can avail themselves of this program. Provided, That this condonation and loan restructuring may be availed of only once, except in case of force majeure, which prevents the borrower from performing his/her financial obligation under the contract. c. Downpayment and Processing Fee The delinquent borrower/installment buyer, legal heir or successor-in-interest 5applying for condonation and loan restructuring shall not be charged a processing fee and no downpayment shall be required. d. Condonation of Penalties and Accrued Interest All penalties and surcharges shall be condoned upon approval of the application. With respect to the accrued interest on the housing loan, a reasonable portion thereof shall also be condoned. However, the amount or percentage of the interest to be condoned shall be

determined by the respective boards of the GFIs and housing agencies within thirty (30) days from the effectivity of these Rules. All corresponding penalties and surcharges, which the NHMFC and SHFC shall have to pay their funders as a result of the implementation of the Act may be adjusted and condoned. e. Uncondoned Interest as Non-interest Bearing Component All remaining accrued interest shall be treated as non-interest bearing component to be paid in equal monthly amortizations during the term of the restructured obligation. f. Interest Rate on Restructured Obligation The interest bearing portion of the restructured obligation shall be imposed an interest rate of not more than the interest of the original loan or the latest restructured obligation or not more than twelve percent (12%), whichever is lower. g. Term of the Restructured Obligation The maximum term of the restructured obligation shall be thirty (30) years reckoned from the date of approval of application for condonation and loan restructuring. In no instance, however, shall the loan term exceed the difference between the borrowers age at the time of application and age seventy (70). h. Utilization of Total Accumulated Membership Contribution The GSIS, SSS and HDMF/Pag-IBIG Fund may allow the borrower-applicant to use the total accumulated value of his/her

membership contributions or savings to update his/her housing obligation. i. Default An account shall be considered in default if the borrower fails to pay three (3) consecutive monthly amortizations/ payments. In such cases, the GFIs and housing agencies may pursue foreclosure proceedings or cancellation of Contract-to-Sell/ 6Deed of Conditional Sale/Conditional Contract to Sell proceedings on the property, in accordance with the provisions of Rule V of these Rules. j. Delayed Payments Penalty charges on any delayed payment on the monthly amortization/payment of the restructured obligation shall be subject to the policies of the respective Boards of the GFIs and housing agencies, to be determined within thirty (30) days from the effectivity of these Rules. The due date for purposes of computing penalty charges shall be subject to the policies of the respective Boards of the GFIs and housing agencies, which shall also be determined within thirty (30) days from the effectivity of these Rules. k. Insurances Policies on the insurance coverage of restructured obligations shall be approved by the respective Boards of the GFIs and housing agencies within thirty (30) days from the effectivity of these Rules: Mortgage Redemption Insurance/Sales Redemption Insurance

(MRI/SRI) the original borrower/installment buyer, legal heir or successor-in-interest shall be covered by MRI/SRI based on the total restructured loan amount. Fire and Allied Perils (FAP) Insurance the FAP Insurance coverage shall be based on the premium of the original or restructured loan. l. Assumption of Obligation In case of permanent physical incapacity of the borrower/installment buyer, his/her successorsin-interest may assume payment of his/her outstanding loan: Provided, that in case of death of the borrower/installment buyer,

sell; b. An account which housing unit has been abandoned by the borrower-owner for more than one (1) year from the date of delinquency; c. An account which housing unit is occupied by a third party other than the original registered beneficiary or his/her legal heirs/successor-in-interest; d. An account that has been foreclosed and the redemption period has already lapsed; e. An account under a contract-to-sell that has been cancelled;

the proceeds of the MRI shall be fully applied to his/her f. An account that has been surrendered to the GFIs or housing outstanding obligation. Any balance left of the obligation may be agencies through a dacion en pago, the title of which has already assumed by his/her legal heirs: Provided further, that such legal been consolidated/transferred in the name of the GFIs or housing heirs and successors-in-interest must pass the GFIs and/or agencies; and housing agencies eligibility requirements before they are allowed g. HDMF/Pag-IBIG Fund contract-to-sell accounts covered by the to assume payment of the borrowers/installment buyers developers buy-back guaranty. obligation. RULE V 7RULE IV REMEDIES AGAINST DELINQUENT ACCOUNTS EXCLUSION FROM COVERAGE Section 1. Remedies The GFIs and housing agencies shall continue to Section 1. Accounts Excluded from the Coverage of R.A. No. 9507 exercise their rights to foreclose the mortgage, cancel the Contract to The following housing loan accounts are not covered under the Program: Sell/Deed of Conditional Sale/Conditional Contract to Sell or other remedies a. Any account without a single payment since take-out/effectivity of involving properties covered by the following: contract to sell/deed of conditional sale/conditional contract to a. Excluded accounts in Section 1 of Rule IV of these Rules;

b. Delinquent accounts of borrowers/installment buyers who failed to avail themselves of the benefits under R.A. No. 9507; and 8c. Accounts of borrowers/installment buyers who availed themselves of the Program but subsequently defaulted on their payments. Section 2. Foreclosure In case of foreclosure of mortgage of delinquent accounts mentioned in Section 1 of Rule V of these Rules, the foreclosure

RULE VI AVAILMENT PROCEDURES Section 1. Availment Procedures The applicants for the Program shall follow the following procedures: a. The borrower/installment buyer, legal heir or successor-ininterest shall file the application for the Program with the Head Offices of the GSIS, SSS, HDMF/Pag-IBIG Fund, NHMFC, SHFC,

proceedings shall be exempt from publication in newspapers of general HGC, and NHA or with any of their authorized offices. circulation, subject however, to the following conditions: A Special Power of Attorney (SPA) shall be accepted only in cases a. The date and place of auction sale shall be posted for not less than when the party is working overseas and the SPA presented has twenty (20) days in at least three (3) conspicuous public places in been executed and duly notarized prior to his/her departure from the city or municipality where the property is situated. the country or duly authenticated by the Philippine Consul in the b. It shall be subject to other applicable provisions of R.A. No. 3135, foreign country, or when the applicant is physically incapacitated as amended, otherwise known as an Act to Regulate the Sale of as evidenced by a Medical Certificate. Property under Special Powers of Attorney Inserted In or Annexed 9b. The GFIs and housing agencies shall evaluate the application of to Real Estate Mortgages. borrower/installment buyer/legal heir/successor-in-interest and if c. A written notice of foreclosure shall be sent to the borrower/ at found qualified, require the latter to accomplish the restructuring his/her last known address. agreement or its equivalent and Promissory Note (PN), or other Section 3. Cancellation of Contract to Sell/Deed of Conditional Sale/ required documents. Conditional Contract to Sell In case of contract to sell/deed of conditional c. The approval of the application for the Program and signing of the sale/conditional contract to sell, the same is considered cancelled after thirty restructuring agreement or its equivalent and PN shall be done by (30) days from receipt by the buyer of the notice of cancellation or demand for the officers duly authorized by the GFIs and housing agencies. rescission of contract/deed by notarial act sent to his/her last known address d. The GFIs and housing agencies shall post the process flow or or to the address of the subject property.

availment procedures in conspicuous places within their respective premises. Section 2. Computation of Total Outstanding Obligation, Restructured Loan and Monthly Amortization/Payment The computation of total outstanding obligation and restructured loan shall be as follows: a. Determine the total outstanding obligation as of cut-off date, to be determined by the GFIs and housing agencies within thirty (30) days from application of the borrower/installment buyer/legal heir/successor-in-interest, as to principal, interests, penalties and other charges and expenses, including foreclosure expenses and insurance premiums, if any. b. Deduct all accumulated unpaid penalties and surcharges, including a reasonable portion of the accrued interest, the amount or percentage of which shall be determined by the respective boards of the GFIs and housing agencies, within thirty (30) days from the effectivity of these Rules. c. The remaining balance shall be divided into: c.1 Interest bearing portion The sum of the total outstanding loan principal, unpaid principal, unpaid insurance premiums, taxes, foreclosure and other incidental expenses, if any. c.2 Non-interest bearing portion All remaining accrued interest to be paid in equal monthly amortizations during the term of the restructured obligation.

d. The monthly amortization/payment of the restructured loan shall be composed of the amortization/payment for the interest bearing and the non-interest bearing portions. 10Section 3. Payment The applicant may pay the restructured loan in lump sum or installments within the restructured period at the nearest branch/office of the GFIs, housing agencies or their authorized collecting institutions. RULE VII INCENTIVES FOR PROMPT PAYMENTS Section 1. Incentives for Prompt Payment of Monthly Amortization/ Payment All accounts, the monthly amortizations/payments of which are paid on time, shall be entitled to incentives, including but not limited to, a reasonable discount on loan interest, the amount or percentage of which shall be determined by the respective boards of the GFIs and housing agencies, within thirty (30) days from the effectivity of these Rules. RULE VIII AUTHORITY TO CONTINUE THE CONDONATION AND LOAN RESTRUCTURING PROGRAM Section 1. Authority to Continue Implementation Notwithstanding the lapse of the availment period as provided in Rule III, Section 1 (b) of these Rules, the governing boards of the GSIS, SSS, HDMF/Pag-IBIG Fund, NHMFC, SHFC, HGC and NHA are authorized to continue the implementation of this Program.

Section 2. Authority to Increase Ceiling HUDCC is authorized to increase the amount of the loan ceiling every year after the effectivity of the Act. RULE IX GENERAL PROVISIONS Section 1. Issuance of Supplemental Agency Guidelines The respective boards of the GFIs and housing agencies may issue specific guidelines, systems and procedures for the implementation of R.A. No. 9507 which are consistent with the provisions of the Act, within thirty (30) days from the effectivity of these Rules. Section 2. Monitoring and Evaluation The HUDCC shall monitor and evaluate the implementation of these Rules. The HUDCC shall convene an Inter-Agency Committee to undertake periodic assessment, and provisions of the guidelines may be refined as the need arises. 11Section 3. Reporting The GFIs and housing agencies shall submit, through HUDCC, to the Committee on Urban Planning, Housing and Resettlement of the Senate and the Committee on Housing and Urban Development of the House of Representatives an annual report on the implementation of the condonation and loan restructuring program. RULE X SEPARABILITY AND EFFECTIVITY Section 1. Separability Clause If any provision of these Rules is contrary to the provisions of RA No. 9507, the provisions not otherwise

affected shall remain valid and subsisting. Section 2. Effectivity These Rules shall take effect fifteen (15) days after publication in any two (2) national newspapers of general circulation. 12

NHMFC loan restructuring or condonation program he/she wishes to avail SUPPLEMENTAL GUIDELINES FOR THE IMPLEMENTATION OF R.A. NO. 9507 (AN ACT TO ESTABLISH A SOCIALIZED AND LOW-COST HOUSING LOAN RESTRUCTURING AND CONDONATION PROGRAM, PROVIDING THE MECHANISMS THEREFOR AND FOR OTHER PURPOSES) Section 1. Rationale These Guidelines are being issued to supplement the Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 9507, otherwise known as An Act to Establish a Socialized and Low-Cost Housing Loan Restructuring and Condonation Program, Providing the Mechanisms Therefor and for Other Purposes. Section 2. Coverage - This housing loan restructuring and condonation program shall cover loans of delinquent accounts of the National Home Mortgage Finance Corporation (NHMFC) under the Folio I Program, Unified Home Lending Program (UHLP or Folio II accounts), the Community Mortgage Program (CMP), Acquired Assets Division (AAD) and Public Estates Authority (PEA) accounts with accumulated arrearages equivalent to at least three (3) monthly amortizations as of 16 March 2009 provided that the original principal amount of the housing loan shall not exceed P 2.5 million. Borrowers who have already availed of benefits from previous NHMFC loan restructuring or condonation programs can still avail of the benefits of this program. The borrower shall be given the option to choose which of. Section 3. Eligible Applicants - The following may apply for loan restructuring and condonation under this program: a. All borrowers of covered accounts mentioned in Section 1 b. The qualified legal heirs of deceased housing loan borrowers with unpaid balances after application of proceeds of the Mortgage Redemption Insurance c. The qualified legal heirs/successors-in-interest of housing loan borrowers who have assumed the original mortgage or of installment buyers who are assignees of Contract to Sell, as supported by legal documents duly approved by NHMFC The NHMFC shall only recognize legal heir/s who has submitted to the Collection Group an affidavit of self adjudication for sole 1heir or extra judicial settlement for two (2) or more heirs plus an affidavit of publication from the editor of the newspaper. The NHMFC shall only recognize succesors-in-interest or assumers who have applied with the Collection Group for a Deed of Sale with Assumption of Mortgage (DSAM). Section 4. Implementation Period - The program shall be implemented for a period of eighteen (18) months starting 16 March 2009. The NHMFC shall notify eligible borrowers through letter, publication or posting. This program may be availed of only once, except in case of force

majeure, which prevents the borrower from performing his/her financial obligation under the restructuring contract. Section 5. Term of Restructured Obligation - The maximum term of the restructured obligation shall be thirty (30) years reckoned from the date of approval of application for loan restructuring and condonation. In no instance, however, shall the loan term exceed the difference between the borrowers age at the time of application and age seventy (70) years old. Section 6. Down Payment and Processing Fee - The delinquent borrower, legal heir or successor-in-interest applying for loan restructuring and condonation shall not be charged a processing fee and no down payment shall be required. Section 7. Availment Procedures - Applicants for this program shall follow the subsequent procedures: a. The eligible borrower, legal heir or successor-in-interest shall file an application for loan restructuring and condonation with the NHMFC Head Office (2 nd Floor Collection Group) or in any of its Regional/Satellite Offices. b. NHMFC officers/counselors will provide borrowers with the updated computation sheet of the restructured loan, stating the interest and non-interest bearing portions of the loan. If borrower is updating in the NHMFC Head Office, the

computation sheet will be obtained from the: b.1 Collection and Accounts Management Group (2 nd floor) for Folio II accounts and PEA accounts; b.2 Folio I Accounts Servicing Unit (7 th floor) for Folio I accounts; 2b.3 CMP Accounts Servicing Unit (6 th floor) for CMP accounts; and b.4 Acquired Assets Division (7 th floor) for Foreclosed accounts with unexpired redemption. Borrowers can also update/restructure their accounts and get a copy of the updated original computation sheet in the NHMFC Regional/Satellite Offices. c. The NHMFC shall evaluate the application of the borrower and if found qualified, require the accomplishment/submission of the following:

c.1 Loan restructuring application form c.2 Promissory Note (PN) c.3 Original computation sheet c.4 2 valid IDs with signature (NHMFC account ID, company ID, Passport, Drivers License, SSS, GSIS, etc.) c.5 Notarized Special Power of Attorney (if not original borrower) c.6 Marriage Contract (if represented by spouse) c.7 Health Statement (if borrower is 60 years old and above and if the restructured loan is P1,000,000 and above) A Special Power of Attorney (SPA) shall be accepted when the borrower is working overseas and the SPA presented has been executed and duly notarized prior to his/her departure from the country or duly authenticated by the Philippine Consul in the foreign country, or when the applicant is physically incapacitated as evidenced by a medical certificate. d. The Collection Group Head and Department Managers in charge of the servicing of the accounts shall be the approving officer/s for the Application for Loan Restructuring.

and computation sheet as basis for recording the transaction. 3f. NHMFC borrowers, legal heirs or successor-in-interests may call the following NHMFC telephone numbers for inquiries: 8175693, 893-0475, 817-6502, 817-6027, 893-0057 and 892-5441. Section 8. Implementation of Loan Restructuring and Condonation Program Pursuant to R.A. 9507 and its IRR, the following should be implemented: a. Condonation of Penalties All penalties and surcharges shall be condoned upon approval of the application. b. Condonation of a Portion of Accrued Interest 10% of the accrued/unpaid interest on the housing loan shall be condoned for borrowers who will avail of the program until the end of December 2009 and 5% of the accrued/unpaid interest on the housing loan shall be condoned for borrowers who will avail of the program from January to September 2010. c. Uncondoned Interest as Non-interest Bearing Component All remaining accrued/unpaid interest shall be treated as noninterest bearing component to be paid in equal monthly amortization during the term of the restructured obligation.

e. The Accounting Division, the Electronic Data Processing (EDP) d. Interest Rate on Restructured Obligation Division and the Securities and Mortgage Custodianship The interest bearing portion of the restructured obligation shall Division (SMCD) shall be furnished a copy of the duly be imposed an interest rate of not more than the interest of the accomplished and approved loan restructuring application form

original loan or the latest restructured obligation or not more than twelve percent (12%), whichever is lower. e. Insurances The NHMFC borrower, qualified legal heir or successor-ininterest shall be covered by Mortgage Redemption Insurance (MRI) based on the total restructured loan amount.

the next due date of the regular loan, which is the date of loan takeout. If the due date falls on the 29 th , 30 th and 31

The property shall be covered by Fire and Allied Perils (FAP) st Insurance which shall be based on the original loan value. of the Borrowers whose application for restructuring has been month, the due date shall be on the same day of the succeeding approved shall pay a one (1) year pre-payment of Mortgage months except for the months that has lesser days wherein the Redemption Insurance (MRI) and the corresponding due date shall be on the last working day of the month. If the Documentary Taxes. due date falls on a Saturday, Sunday or a holiday, the monthly 4A borrower who is 60 years old and above and/or the approved amortization shall be paid on the working day before such date. restructured loan is P1,000,000 and above shall be required to h. Payment submit a Health Statement. The eligible borrower must pay the restructured loan amount in f. Default lump sum or installments within the restructured period at the A restructured account shall be considered in default if the NHMFC Central, Regional/Satellite Offices and at selected borrower fails to pay three (3) consecutive monthly branches of the Philippine National Bank (PNB), Land Bank of amortizations/payments. In such case, NHMFC may pursue the Philippines (LBP) for SALDED accounts, Development foreclosure proceedings on the property, pursuant with R.A. Bank of the Philippines (DBP), BPI Family Savings Bank and 9507. other accredited collecting agents. g. Due Date The borrower must present the computation sheet issued by the The first due date of the restructured loan shall coincide with NHMFC Collection Group upon payment to any of the above

offices. i. Delayed Payment Borrowers who fail to pay the monthly amortization of the restructured loan when due shall be charged a penalty equivalent to 1/15 of 1% per day of delay on the unpaid insurances and interests. j. Assumption of Obligation 5In case of permanent physical incapacity of the borrower, his/her qualified legal heirs/successors-in-interest may assume payment of his/her outstanding loan. In case of death of the borrower, the proceeds of the MRI shall be fully applied to his/her outstanding obligation. Any balance left of the obligation may be assumed by his/her qualified legal heirs/successors-ininterest, provided that such legal heirs/successors-in-interest must pass NHMFCs eligibility requirements before they are

Regional/Satellite Offices to avail of this discount. l. Remedies against Delinquent Accounts NHMFC shall continue to exercise their rights to foreclose the mortgage, cancel the Contract to Sell or other remedies involving properties covered by the following: l.1 Excluded accounts in Section 1, Rule of the IRR of R.A. 9507; l.2 Delinquent accounts of borrowers/installment buyers who failed to avail themselves of the benefits under R.A. No. 9507; and l.3 Accounts of borrowers who availed themselves of the Program but subsequently defaulted on their payments. m. Foreclosure In case of foreclosure of mortgage of delinquent accounts mentioned in letter l of Section 8 of these Guidelines, the

allowed to assume payment of the borrowers/installment NHMFC may pursue foreclosure proceedings which shall be buyers obligation. exempt from publication in newspapers of general circulation, k. Incentives for Prompt Payment of Monthly Amortization subject, however, to the following conditions: All regular accounts (1-2 months) as of 16 March 2009 whose m.1 The date and place of auction sale shall be posted for not monthly amortizations are regularly paid on or before their due less than twenty (20) days in at least three (3) date shall be entitled to an incentive of a 2% reduction on 6conspicuous public places in the city or municipality accrued/unpaid interest. Borrowers are advised to update/pay where the property is situated. their accounts at the NHMFC Head Office or in any m.2 It shall be subject to other applicable provisions of R.A.

No. 3135, as amended, otherwise known as an Act to Regulate the Sale of Property under Special Powers of Attorney Inserted In or Annexed to Real Estate Mortgages. m.3 A written notice of foreclosure shall be sent to the borrower at his/her last known address. Section 8. Computation - The computation of total outstanding obligation and restructured loan shall be as follows: a. Determine the total outstanding obligation at the time of availment as to penalty, MRI, Fire, interest, principal, and other charges and expenses, including foreclosure expenses if any. b. Deduct all accumulated unpaid penalties, including 10 or 5% (depending on date of application of borrower) of the accrued interest. In the case of borrowers who applied for loan restructuring and condonation under the Special Repayment Program (SRP), the amount of penalties to be condoned upon approval of application under R.A. 9507 shall be the accumulated penalties after the availment of the SRP. c. The remaining balance shall be divided into: c.1 Interest bearing portion This refers to the sum of the outstanding principal balance, unpaid principal, unpaid insurance premiums, foreclosure taxes and other incidental

expenses, if any. c.2 Non-interest bearing portion This refers to the remaining accrued interest due net of condoned interest. d. The monthly amortization of the restructured loan shall be composed of the amortization for the interest bearing and the non-interest bearing portions. e. See sample computation in Annex A. 7Sample Computation: (10% interest condonation) Original Loan Details Original Loan Amount 300,000.00 Interest Rate 16% Term in Years 24 Original Monthly Amortization 4,230.45 Birthday 07/30/1971 Take-out Date 11/08/1991 Age upon loan take-out 20 Age upon loan restructuring 37 Assumption: 38 months in arrears Balances as of 01/31/2009 MRI Due Fire Due 3,989.42 1,340.64

Interest Due 114,479.08

Principal Due

40,497.38 9,652.98

Consolidated Value 362,195.58 Total Restructured Loan (Interest Bearing) 249,511.43 Remaining term in months (RTIM) 360 8*with 30 years extension Interest Rate 12% Monthly Amortization (Interest Bearing Portion) 2,526.20

Interest on Unpaid Principal Due Penalty Due 48,218.33

Theoretical Principal Balance 203,223.99 Loan Restructuring under RA 9507 Interest Bearing Principal MRI Fire 40,497.38

add: Unpaid Interest (Non-Interest Bearing Portion) 0.00 313.01 112,684.15 / 360 30 years extension Monthly Amort + (Pe+I/RTIM) add: MRI 9,652.98 249,511.43/1000 * .41 102.30 Fire 38.74 Total Monthly Amort. Due 2,980.25 NOTES: 1. No downpayment requirement 2. For purposes of presentation, 10% of the unpaid interest shall be condoned 3. Non-capitalized interest spread over the new restructured loan term Original Amortization 4,230.45 Monthly Amortization with non-capitalized interest 2,980.25 Difference in Amortization 1,250.20 Sample Computation: (5% interest condonation) Original Loan Details

3,989.42 1,340.64 46,277.44

Non-interest Bearing Interest 114,479.08 Interest on Unpaid Principal Penalties 48,218.33 172,350.39 Less: Condoned Interest (10%) 11,447.91 Condoned Penalties 48,218.33 59,666.24 112,684.15

Total Arrearages for Loan Restructuring 158,961.59 Restructured Loan Amount Interest Bearing Portion Interest Bearing Arrearages 46,277.44 Outstanding Principal Balance 203,233.99 249,511.43 Non-Interest Bearing Portion Non-interest Bearing Arrearages (Unpaid Interest) 0.00 112,684.15

9Original Loan Amount 300,000.00 Interest Rate 16% Term in Years 24 Original Monthly Amortization 4,230.45 Birthday 07/30/1971 Take-out Date 11/08/1991 Age upon loan take-out 20 Age upon loan restructuring 37 Assumption: 38 months in arrears Balances as of 01/31/2009 MRI Due Fire Due 3,989.42 1,340.64

Non-interest Bearing Interest 114,479.08 Interest on Unpaid Principal Penalties 48,218.33 172,350.39 Less: Condoned Interest (5%) 5,723.95 Condoned Penalties 48,218.33 53,942.28 118,408.11 9,652.98

Total Arrearages for Loan Restructuring 164,685.55 Restructured Loan Amount Interest Bearing Portion Interest Bearing Arrearages 46,277.44 Outstanding Principal Balance 203,233.99 249,511.43 Non-Interest Bearing Portion Non-interest Bearing Arrearages (Unpaid Interest) 0.00 118,408.11 Consolidated Value 367,919.54 9,652.98 Total Restructured Loan (Interest Bearing) 249,511.43 Remaining term in months (RTIM) 360 *with 30 years extension Interest Rate 12% 10Monthly Amortization (Interest Bearing Portion) 2,526.20

Interest Due 114,479.08 Principal Due 40,497.38

Interest on Unpaid Principal Due Penalty Due 48,218.33

Theoretical Principal Balance 203,223.99 Loan Restructuring under RA 9507 Interest Bearing Principal MRI Fire 40,497.38

add: Unpaid Interest (Non-Interest Bearing Portion) 0.00 328.91 118,408.11 / 360 30 years extension

3,989.42 1,340.64 46,277.44

Monthly Amort + (Pe+I/RTIM) add: MRI 249,511.43/1000 * .41 102.30 Fire 38.74 Total Monthly Amort. Due 2,996.15 NOTES: 1. No downpayment requirement 2. For purposes of presentation, 5% of the unpaid interest shall be condoned 3. Non-capitalized interest spread over the new restructured loan term Original Amortization 4,230.45 Monthly Amortization with non-capitalized interest 2,996.15 Difference in Amortization 1,234.30 11