HOME DEVELOPMENT MUTUAL FUND (Pag-IBIG FUND) Makati, Metro Manila HDMF CIRCULAR NO. 080 __ TO: ALL CONCERNED SUBJECT : GUIDELINES ON THE PAG-IBIG GROUP LAND ACQUISITION AND DEVELOPMENT PROGRAM * x * x x * * x * * x Pursuant to Board Resolution No. 90-346, Series of 1990 approving managenent’s proposal for a lending program for the acquisition of rawlands for groups of twenty (20) or more, the following guidelines on the Group Land Acquisition and Development Progran are hereby promulgated: A. OBJECTIVE The Group Land Acquisition and Development Program aims to provide financial assistance to organized groups of at least 20 Fund members for the acquisition and development of rawland or partially developed land which shall serve as the site of their housing units. B. FINANCING MECHANISM Financial assistance for land acquisition and site development shall be in the form of adirect loan to the member-beneficiary/employee-group or community association. The loan proceeds for land acquisition shall be released directly to the landowner/s while that for site development shall be paid to the developer/s engaged to undertake site development for the employee-group or community association Loans for house construction shail be coursed through originating banks in accordance with Pag-IBIG guidelines on additional loans for house construction. C. ELIGIBILITY REQUIREMENTS . The beneficiaries or project proponents must be organized into employee-groups or community associations, with a minimum of 20 members, duly registered with the proper agencies which will vest them with legal personality (E.g., the Securities and Exchange Commission (SEC), the Bureau of Cooperative Development , or the Home Insurance and Guaranty Corporation (HIGC).] All members of the employee-group/community association must be active Pag-IBIG members and must be eligible for loans under the Expanded Housing Loan Program (EHLP) at the time of loan availment. D. LOAN REQUIREMENTS The employee-group or community association must comply with the following: 1. The land proposed for acquisition must be covered by a Torrens Certificate of Title(s) free from any and all~ liens and encumbrances. ~ 2. There must be an appraisal report of the Home Insurance and Guaranty Corporation (HIGC) certifying that subject property is rawland or partially developed land and indicating therein the appraised value of the land. 3. Subject property must be duly classified as residential per zoning classification of the town/city plans prior to June 15, 1988. Otherwise, DAR conversion clearance must be presented. 4. A written document must be drawn up clearly stating the commitment to sell on the part of the landowner/s and intent to buy on the part of the employee-group or community association i 5. There must be a written agreement duly concurred to by | all the beneficiaries stating the following 5.1 the timetable for land development, to commence not later than ten (10) months from date of initial loan release, and to be completed within two (2) years therefron. 5.2 the timetable for individualization of the mother title, with submission of complete documents to the Register of Deeds, not to exceed two (2) years from date of inital loan release. 5.3 consent of individual beneficiaries to abide by the majority decision as regards — lot subdivision/allocation, choice of developer and physical development plans 5.4 guidelines on the substitution/addition of beneficiaries and sanctions against defaulting member-beneficiaries. \ E. LOAN TERMS 1, Loan Amount The total loan to the employee-group or community association shall be the aggregate of the amounts extended to the individual member-beneficiaries. ‘The maximum loan entitlement per individual beneficiary shall be: a) Forty-six times (46x) the Fund salary for employees with employer counterpart, whether the counterpart is shouldered by the member or his employer. b) Thirty-six times (36%) the Fund salery for employees without employer counterpart An individual may draw up to thirty percent (30%) of his loan entitlement for rawland acquisition; up to twenty (20%) percent for land development; and the remaining fifty (50%) for house construction. For acquisition of partially developed/developed land, the individual beneficiary may draw a maximum of fifty percent (50%) of his loan entitlement. Ee pe~ ~~ 2. Interest Rate Interest rate on the total loan shall be based on the individual beneficiaries’ total loan entitlements, in accordance with prevailing rates of the Pag-IBIG Expanded Housing Loan Program (EHLP) guidelines at the time of loan availment. In cases where the actual total development and construction costs fall below the individual’s maxinun loan entitlement which was the basis of his interest charges, resulting in a lower interest rate level, he shall be entitled to a rebate which shall be applied to payment of the loan principal. If the individual beneficiary’s loan entitlement increases, he may avail of a higher loan amount subject to the corresponding increase in interest rate reckoned from the date of availment of the higher loan amount 3. Loan to Collateral Ratio The loan shall be secured by a First Real Estate Mortgage (REH] on the land itself and all improvements thereon. The loan amount shall not exceed ninety percent (90%) of the appraised value of the collateral. 4. Loan Releases Loan proceeds for rawland acquisition shail be released in full subject to either the loan-to-collateral value ratio of eighty percent (80%), the actual need or the approved loan, whichever is lower Loan releases for land development, on the other hand, shall be made on a staggered basis within two (2) years from date of initial loan release, depending on the work progress. Initially, a mobilization fund equivalent to ten percent (10%) of the appraised value of the collateral shall be released for site development. Subsequent progress releases shall be subject to a ninety percent (90%) loan-to-collateral value ratio, provided that there are no arrears in loan amortization payments. Individual loans for house construction may be availed of after completion of site development and issuance of individual titles to member-beneficiaries. The loan shall be paid in accordance with the following schedule: Interest - Interest payment shall commence one (1) month from date of initial release; monthly payments thereafter until loan maturity. 5. Loan Payments b. Principal - For projects up to site development only, the principal payments on the loan shall commence not later than the twenty-fifth (25th) month from date of | initial loan release or one (1) month after final loan release for site me a