Bicam okays HIGC bill to push shelter program

Congress is set to approve next week the Home Guaranty Corp. Act of 2000, a priority bill of the Estrada administration to push the government's national shelter program by drawing private sector investment in socialized and low-cost housing intended for the country's low-income homeless families.

The bicameral conference committee chaired by Sen. Juan Ponce Enrile hammered out last Wednesday a consolidated bill to reconcile the conflicting versions of the Senate and the House. The final measure extends by another 50 years the corporate life of the Home Insurance and Guaranty Corp. (HIGC), re-named as the Home Guaranty Corp. (HGC), and increases its authorized capital to P50 billion, with an initial P10 billion government equity infusion.

The Chamber of Real Estate and Builders Associations (CREBA) had earlier expressed its support for President Estrada's commitment to housing, especially the low-income beneficiaries. Last Monday at Malacañang, the Home Development Mutual Fund (Pag-IBIG Fund), Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP) and Philippine National Bank (PNB) agreed to provide a total of P40 billion to backstop the government's mass housing program.

CREBA cited the impact of a vigorous housing program on the national economy. With its multiplier effects on other industries, especially the manufacturing of basic building materials, the construction sector, and the various service groups, housing is recognized by economists as an effective pump-primer of the economy.

The HGC board will be chaired by the secretary of finance, and co-chaired by the chairperson of the Housing and Urban Development Coordinating Council (HUDCC), with the HGC president, the director-general of the National Economic and Development Authority (NEDA) as members, along with three other members to be appointed by the President.

Through various mechanisms, the HGC functions are expected to contribute significantly to the development of a viable and sustainable home finance system.

Its pro-poor provisions include giving preference and more incentives to socialized housing. Among these are allocating guaranty capacity for socialized housing at 40 percent, low-cost housing at 30 percent, medium-cost housing at 20 percent, and open housing at only 10 percent.

The HGC's guaranty cover on yearly interest earnings will be 11 percent for socialized housing, 10 percent for low-cost; 9.5 percent, medium cost; 8.5 percent, open housing.

The tax exemption on interest earnings will be 11 percent for socialized housing; 10 percent, low cost; 9.5 percent for medium cost; and 8.5 percent for open housing.

The guaranty premium fees will be one-half of one percent of outstanding principal obligation; three-fourth of one percent for low cost; one percent for medium cost; and 1.5 percent for open housing.

Safeguards and guaranty limitations have been incorporated in the HGC bill such as limiting the extent of National Government guaranty to 20 percent of the net worth of the corporation, and limiting the corporate borrowings to the aggregate amount of the principal obligations of all mortgages and accounts guaranteed by the HGC.

The HGC bill provides for a cap on the amount of the loan to be guaranteed. Thus, individual loans will not exceed P5 billion per housing package, while the maximum guarantee cover on development accounts will not exceed three times the net worth of the proponent.

The programs that will start upon the passage of the HGC Act are:

1. Provision of guarantees on soft-term foreign loans for large-scale socialized housing projects.

2. Provision of guaranty support for the National Home Mortgage Trust.

3. Provision of guaranty support to the Multi-Window Lending system.

4. Provision of guaranty cover on special housing bonds.

5. Provision of technical appraisal services to the P40 billion multi-window lending program to be carried out through government and private financial institutitions.