Developers back bills on asset management, securitization

The Subdivision and Housing Developers Association (SHDA) has called for the immediate enactment of two key economic reform bills that could clear financial obstacles for banks to resume lending to housing by taking out their non-performing loans from their balance sheets, at the same time generate fresh funds for housing finance through securitization of these assets.

Noel S. Gonzales, SHDA national president, also hailed Speaker Jose C. de Venecia, Jr., for pushing for the early passage of these legislative measures on securitization; and the creation of an asset management company to handle the non-performing loans of the banking sector, which would benefit not only the housing industry but also the whole economy in general.

The securitization bill seeks to provide the legal and regulatory frameworks to enable banks to convert their loans and other financial assets to a special purpose vehicle for the issuance of asset-backed securities to be sold to investors, Gonzales cited.

Despite the high liquidity being experienced by banks and in spite of the regime of low interest and inflation rates, banks are hesitant to lend to housing and other businesses because of their equally high level of non-performing loans, which include exposures to housing development and real estate mortgage financing, he said.

"With the enactment of these two bills, banks and financial institutions could get themselves out of the "liquidity trap" and resume their lending operations, when their non-performing loans are removed from their balance sheets and when they start to generate funds for loans from the securitization of these assets," according to Gonzales.

He pointed out that time and again, the assurance of sustainable funds for housing development and homebuyers’ loans has hounded the industry; and the enactment of these two critical bills would address the perennial lack of housing funds.