NHMFC forms P100-M firm for low-income housing

The National Home Mortgage Finance Corp. (NHMFC) has formed a P100-million financing company to cater to housing programs catering to the low-income bracket.

The new company, Social Housing Finance Corp. (SHFC) was granted yesterday a certificate of authority to operate as a financing company by the Securities and Exchange Commission (SEC).

Based on documents filed, SHFC shall act as administrator of the government’s Community Mortgage Program (CMP) and other housing loan assistance that will primarily cater to the informal sector.

SHFC said loans shall be made available only to duly organized association of informal settlers in urban and urbanizing areas.

Loanable amount shall not exceed 100 percent of the appraised value of the lot offered for financing and at a maximum of P80,000 per beneficiary-household in highly urbanized cities and P60,000 per beneficiary in highly urbanized areas for residential lands with development.

SHFC said collection shall make use of peer pressure strategy where a duly registered community association shall collect from its member-beneficiaries and remit collections to the company.

By contract, loans with cumulative arrearages for at least three months may be a subject of extra-judicial foreclosure. Loans may be individualized after title to the property is subdivided.

SHFC’s target market will be the homeless urban poor who are informal occupants of properties owned by other parties or government lands intended for roads and other infrastructure projects. The company shall base its pricing policy on existing guidelines where interest rates are pegged at six percent per annum.

SHFC said additional operating capital requirement, if needed, shall be provided through service income from a P5 billion CMP loan receivables to be turned over by the NHMFC through a management contract. Any deficiency may be financed through equity infusion and grants from multilateral agencies such as the Social Security System (SSS) and local governments.

The financing business, according to SHFC, is attractive because of its low interest rates compared to other financial institutions.

The NHMFC is the first secondary mortgage market institution created in the country to tap funds from the capital market for low-income mass housing finance through the buying and selling of mortgages. It paved the way for the simplification of the home financing system and documents, and initiated the operation of a unified funding system for housing among the three government pension funds: Government Service Insurance System (GSIS), SSS and the Pag-IBIG Fund.

It is also charged with the development of a system that will attract private institutional funds into long-term housing mortgages.