HOUSING: MARKET ANALYSIS AND HOUSING FINANCE

Loan

A sum of money lent at interest

Mortgage

A temporary, conditional pledge of property

to a creditor as security for performance of an

obligation or repayment of a debt.

Collateral

property acceptable as security for a loan or other obligation

Foreclosure

Legal action to bar a mortgagor's claims to property after default has occurred.

Amortization

The systematic and continuous payment of

an obligation through installments until such time as that

debt has been paid off in full.

Term

The time limit within which a loan must be repaid in full

Debt Service

A term normally associated with commercial loans; it means the periodic payment of principal and interest.

Development Loan

Money loaned for the purpose of improving land by the building of streets and utilities so as to create lots suitable for sale or use in building homes.

Construction loan

A type of mortgage loan to finance construction, which is funded by the lender to the builder at periodic intervals as work progresses.

Government loans

source of borrowing for low- to medium-cost housingsour

Government House Financing

SSS

GSIS

HDMF/Pag-IBIG

PNB

LBP

Private House Financing

Banks

Financial Institutions

Relatives, friends, etc.

Own Resources

Housing Cooperatives

Private company loans

In-house developer loans

1. Individual homeowners financing

2. Community financing

3. Developers financing

3 Types of gov't. house financing system

9%

Loan Term for Up to Ph 180,000 in SSS, GSIS, HDMF/PAG-

IBiG, and LBP/PNB

12%

Loan Term for Up to Ph 180,000 in Private Banks

13%

Loan Term for Above Ph 180,000 - 500,000 in SSS and LBP/PNB

16%

Loan Term for Above Ph 180,000 - 500,000 in GSIS

12%-16%

Loan Term for Above Ph 180,000 - 500,000 in HDMF/PAG-IBiG

None

Loan Term for Above Php 500,000 - 5M for SSS

Market

Loan Term for Above Php 500,000 - 5M for GSIS, HDMF/PAG-

IBiG, LBP/PNB and Private Banks

In-House Borrowing

1. The buyer pays the full down payment and monthly amortization to the developer.

2. The developer keeps title under their name until the Lot or House and Lot (H/L) is fully paid by the buyer

Borrowing From A Private Bank Not Under the Multi-Window Lending System (MWLS)

1. The buyer pays the full down payment to the developer and submits the loan documents for the bank loan.

2. The developer or buyer submits the loan documents to the bank for approval

3. The bank checks the project site or housing unit. After the inspection, the bank approves the loan. The developer then transfers the title to the buyer's name (borrower). The bank releases the loan amount to the developer.

4. The buyer pays the bank monthly installments for the loan.

NHMFC

main funding agency

National Home Mortgage Finance Corporation

NHMFC stands for

NHA, HGC, NGOs, LGUs

Originators and provide technical and legal assistance

Community associations/organization (CA)

Implementors. Collection and remittance of their member’s

monthly loan amortization and the enforcement

of sanctions

3 Stages of CMP Implementation

1. Release of funds for land acquisition

2. Funds for site development including water

supply, drainage, sanitation, etc.

3. For housing improvements or construction

Lot Acquisition, Home Improvement, Construction

CMP Loan packages

25 years

CMP Loanable amount has max. of ______ to pay

Ph 30,000

[CMP Loanable amount] ______ per undeveloped lot at 6% interest

Ph 45,000

[CMP Loanable amount] ______ per developed lot at 6% interest

Ph 80,000

[CMP Loanable amount] ______ per house and lot at 6%

Land Market

[Problems and Issues in House Financing] inefficient land administration and management, i.e., legal and regulatory framework.

management, i.e., legal and regulatory framework.

• Unreliable information re: land ownership, location boundaries, actual land uses, land values

• Bureaucratic - sale and transfer of property rights, issuance of development

32%

Ave. housing price appreciation in the Philippines = ___

per year (highest among the major cities in Asia)

5x

The cost of servicing raw land increases to ___ its amount.

Ph 60/sq.m.

• Price of agricultural land (outskirts of Metro Manila) = _____

• It rises to 2.5 to 3x when the same land is zoned for urban use.

• It further rises to 5.3 to 6.7x the zoned land price when the

area is developed.

True

[True/False] Limited sources of long-term funds restrict the supply

of housing.

False; long-term

[True/False] The banking system has been reluctant to hold short-term mortgages as assets because of risks and

thus, extends only to high-income households (HH) to

minimize the risks.

True

[True/False] The low- to middle-income households have been

largely dependent on gov’t. social security funds which

are limited and cater mainly to HH in the formal sector.

Source of Financing for House Construction 1990

True

[True/False] Under the new HDMF law (2009), membership to

the Pag-IBIG Fund is made mandatory for all SSS- and

GSIS-covered employees; uniformed members of the AFP,

BFP, BJMP and PNP; as well as Filipinos employed by

foreign-based employers.

Ph 150,000

HDMF – For a min. housing cost of _____, only HH with an annual income of Ph

150,000 (Ph12,500 monthly) or higher can avail of a loan equal to Ph 150,000 even at subisidized interest rate of 9%

77%

____ of HH in the country are unable to secure from the formal sector

40%

NHA is ____ for programs that provide only

serviced plots

26%

[percentage] for house and lot

74%

[percentage] for resettlement

53%

[percentage] for sites and services

25%

[percentage] for slum-upgrading

True

[True/False] Community Mortgage Program (CMP) has a high dependence on government

capital financing.

True

[True/False] CMP carries no penalties to the originators of

the community loan.

Tondo Foreshore

Development Project

One of the lessons learned in the _____ – by providing free lots, it

created a disincentive to previous beneficiaries to pay their housing loans.

community self-help approach

Shifting the responsibility to the principal stakeholders

through ________ for slum

upgrading reduced direct gov’t. intervention and improved the collection performance.