Table of Contents
The Home Guaranty Corporation (HGC) is a vital component of the public housing sector with exclusive mandates to guaranty housing credits
Presently known as the Home Guaranty Corporation, the HGC has come a long way since its inception in 1950 as the Home Financing Commission (HFC). In 1986, by virtue of Executive Order 90, the HFC became known as the Home Insurance and Guaranty Corporation (HIGC). This government owned and controlled corporation (GOCC) was later renamed HGC as its corporate life was extended by another 50 years by virtue of Republic Act 8763 or the HGC Act of 2000.
Along with the name changes throughout its existence, are other aspects that define the HGC.
1. The HGC Operates under the Housing and Urban Development Coordinating Council (HUDCC)
The HGC is a key shelter agency under the supervision of the Housing and Urban Development Coordinating Council (HUDCC). As of 2023, the present Chairman of HGC is Carlos G. Dominguez III.
Accompanying the HGC under the HUDCC umbrella are the National Housing Authority (NHA), National Home Mortgage and Finance Corporation (NHMFC), Housing and Land Use Regulatory Board (HLURB), Social Housing and Finance Corporation (SHFC), and Home Development Mutual Fund (HDMF) or more commonly known as the Pag-IBIG Fund.
2. Extending Guaranty Lines to Lenders
While housing agencies such as the aforementioned Pag-IBIG Fund and NHMFC directly lend money to housing developers and borrowers, the HGC extends guaranty lines to lenders, encouraging these financial institutions to lend to individual homebuyers and housing developers.
HGC’s clientele include banks, building and loan associations, investment houses, trust companies, insurance companies, lending institutions, cooperatives, microfinance entities, and housing developers that specialize in funding homebuyers and housing developments.
3. HGC Presently Offers Three Guaranty Programs
A. Developmental Loan Guaranty
This covers loans extended to developers for the development of subdivisions, townhouses, dormitories, apartments, and other residential dwellings.
B. Retail Loan Guaranty
This covers loans and credit facilities extended for the purchase or acquisition of single-family residences.
C. Guaranty for Securitization Schemes
This provides guaranty cover on securities or the financial instruments issued to raise funds for housing. It can also guaranty the mortgage receivables backing up said securities.
4. Many Institutions Can Avail of These Guaranty Programs
Banks, government and private financial institutions, and housing developers can apply for the HGC Guaranty programs. Building and Loan Associations (BLA), which encourage and promote affordable means of capital formation for housing, are also eligible, as the HGC is mandated to issue contracts of guaranty for the loan accounts of the BLAs. These institutions must apply for a Guaranty Line from HGC and, upon approval, may enroll their accounts against their approved Guaranty Line.
5. Availing of HGC Guaranty Offers a Number of Benefits
• It guarantees the payment of the guaranteed loan/credit plus interest/yields of up to 11 percent.
• It exempts the interests/yields from the loan to all forms of taxes (up to 11 percent rate of interests).
• For socialized housing, those with contract prices of Php450,000 and below are entitled to the maximum cover and tax-exempt interest of up to 11 percent.
• Housing loan borrowers can borrow up to 90 percent of the appraisal value of collateral property.
• Banks are exempt from the Banko Sentral ng Pilipinas (BSP) capital reserve requirement for HGC guaranteed loans.
• Banks are freed up from administrative burden when a loan defaults.
• The Philippine government guarantees the payment of HGC’s obligations.
6. The HGC Act of 2000 Increased the Corporation’s Capitalization
Apart from giving HGC an additional 50 years of corporate life after its expiration in 2000, Republic Act 8763 also authorized an increase in HGC’s capital stock from Php2.5 billion to Php50 million, making it possible for the national government to guarantee the payment of the corporation’s obligations. RA 8763 also mandates the HGC to promote the secondary mortgage market and prioritize socialized and low-cost housing projects.
7. Leading International Standards Compliance in the Philippine Public Sector
International Standards Organization (ISO) certifying body TÜV Rheinland has confirmed HGC as the first key shelter agency, the first government financial institution, and the first GOCC to be conferred ISO 9001:2015 certification for all its business processes. ISO 9001:2015 is the latest in the series of International Quality Management System standards.
HGC is also the first government agency in the Philippines to have an ISO/IEC 27001:2013 certification conferred on its Information Security Management System. Compliant to ISO 9001:2015 and ISO/IEC 27001:2013, HGC scores another first in its Integrated Quality and Information Security Management System.
8. HGC Acquires Assets and Properties from Borrowers Who Default on Amortization Payments
In the event that the borrowers default in their amortization payments, the bank involved calls on the guaranty of the HGC. Once the Corporation pays its guaranty obligations to the bank, the latter assigns all its rights over the assets or mortgages in favor of HGC.
If the original borrower cannot settle the arrears, HGC will accept purchase proposals for the property upon publication of the Notice of Sales in newspapers of general circulation.
The properties shall be sold in full compliance with all the governing laws regarding the sale of acquired and foreclosed properties of government agencies.
For HGC, every asset disposed is a portion of exposure recovered and shelter sold.
9. HGC’s Acquired Assets and Properties Are Sold on an “as-is, where-is” Basis
Acquired assets of the HGC are normally disposed of via the following schemes:
A. Outright Cash
1. The highest ranked cash bidder shall be required to submit a bank guaranty or its equivalent within 15 days from receipt of notice. Failure to submit the same shall disqualify them from award of sale of the property. In which case, the property shall be offered to the next ranked cash bidder who shall also be required to submit a bank guaranty or its equivalent. The same process is repeated until the property is awarded to the successful bidder.
2. The winning bidder shall be required to remit full payment for the selling price of the property within 5 days from receipt of Notice of Award of Sale.
B. Proceeds of Financing by Bank/Financial Institution
1. A down-payment equivalent to 10 percent of the bid price shall be required from the winning bidder to be paid within 5 working days from receipt of Notice of Award of Sale.
2. While awaiting release of the loan proceeds, the winning bidder shall execute a Contract to Sell with a term of 10 years with HGC. The winning bidder shall pay the required monthly amortization until the proceeds of the loan is remitted to HGC.
3. The winning bidder shall be required to submit a Letter of Guaranty or Notice of Loan Approval issued by a bank/financial institution within 2 months from the execution of the CTS. The winning bidder shall remit the take-out proceeds covering full payment of the property within 6 months from the execution of CTS.
4. The authority to move in/occupy the property shall only be issued to the winning bidder upon submission of the Letter of Guaranty or Notice of Loan Approval.
C. Installment Scheme
Applicable only to properties that have any or all of the following characteristics:
• Have illegal occupants
• Titles still in the names of the previous owners and for transfer in the name of HGC
• Titles with liens and encumbrances or with annotation of “lis pendens”
1. In-House Financing Terms
• Minimum down payment: 10 percent of the bid price
• Balance shall be payable within a maximum period of 15 years, provided that the age of the bidder does not exceed 70 at the end of the contract term. The following interest rates shall apply.
2. One-Year Installment Scheme
• Minimum down payment: 10 percent of the bid price
• Balance shall be payable within a period of one year in equal monthly installment at zero percent interest.
D. Rent-to-Own Program
• Minimum monthly lease rate: Prevailing rental rates within the vicinity as recommended by the HGC commissioned appraiser.
• Term of Lease: Maximum period of 5 years
• Lease rate is subject to a 10 percent annual escalation
• Initial cash out: 1 month advance and 2 months deposit (based on the monthly lease rate)
• The Lessee may exercise his/her option to purchase the property within the 5-year term by paying for the property in cash based on the published selling price.
• Portion of payments made by the Lessee during the term of the lease shall be applied as partial payment of the selling price of the property, as follows:
E. Bidders Are Required to Pay a Bid Security
A bid security shall be paid in cash or manager’s check at the HGC Cashier’s Office located at the 2nd Floor Jade Building 335 Sen. Gil J. Puyat Ave., Makati. Prior to paying, the prospective bidder shall secure a Payment Acceptance Order (PAO) from the Asset Management and Disposition Group (AMDG). The amount of bid security shall be based on the corresponding percentage of the selling price of the property, as follows:
A copy of the HGC Official Receipt shall be included in the bid proposal to be dropped at the bid box at the AMDG office located at the 4th Floor Jade Building 335 Sen. Gil J. Puyat Ave., Makati. The bid securities of disapproved purchase proposals shall be refunded immediately upon award of the property to the winning bidder. Bid security paid by the winning bidder shall form part of the required down payment for the sale.
F. Documentary Requirements
For individuals:
• Photocopy of two valid IDs (company ID and/or any two government-issued IDs)
• Photocopy of any of the following proof of income:
• Latest payslip signed/certified by an authorized personnel
• Certificate of employment and compensation
• Latest income tax return duly received by BIR
• Other supporting documents, if any (e.g. Affidavit of Support, Special Power of Attorney, etc.)
For companies or corporations:
• Articles of incorporation
• Business permit
• Photocopy of latest income tax return duly received by BIR
• Board resolution and secretary’s certificate designating the authorized representative to bid for and in behalf of the company
• Two government-issued IDs of the authorized representative
10. HGC’s Residential Properties for Sale Are Listed Online
HGC lists its properties for sale on its official website. Its inventory includes lots, townhouses, condominium units, house and lots, and other residential properties offered at affordable prices and easy payment terms. The pertinent forms for purchase/lease are also available in the HGC website as well as an amortization calculator to help interested buyers to estimate their future payments.
The Corporation’s website also posts invitations to Bid for various real estate properties including developmental projects, Asset Participation Certificates funded projects guaranteed by HGC. The schedule of bidding and instructions on how interested parties can participate in public biddings are also detailed in the HGC website.
Main image via Home Guaranty Corp.
