P6.5-B GSIS loan almost fully paid, says NHMFC

The National Home Mortgage Finance Corp. (NHMFC) has remitted to date a total of P6 billion to the Government Service Insurance System (GSIS) as payments for its original P6.5-billion loan granted by GSIS to NHMFC for the period 1988-1995, which funds were used by NHMFC exclusively to finance the housing loands of GSIS members.

This was announced by Angelico T. Salud, NHMFC president, to clarify published reports attributed to GSIS president Winston Garcia, on the GSIS plan to foreclose on the NHMFC loan.

Salud also reported that on top of these payments, NHMFC has also entered into an agreement in 2002 for the turn-over to GSIS of the residential mortages currently valued at P11 billion securing the housing loads of GSIS members, as payment for the remaining balance of the NHMFC loan.

The GSIS loan to NHMFC arose from the issuance of Executive Order 90, on Dec. 17, 1986, under the Freedom Constitution of President Aquino, which mandated GSIS, SSS and the Pag-IBIG Fund to channel funds to NHMFC for on-lending to their respective members for housing acquisition under the so-called Unified Home Lending Program.

"The remaining balance of the NHMFC’s loan is more than suffuciently covered by residential mortgages to be turned over by NHMFC to GSIS," Salud pointed out. GSIS has, therefore, no basis to call on the Department of Finance’s National Government warranty.

It may be recalled that under the GSIS loan conditions, NHMFC is limited to a spread of 0.81% for the use of the GSIS funds, way below the prevailing normal spread rate of five percent. This makes lending to GSIS members’ housing loans highly subsidized by NHMFC, Salud emphasized.

Unlike GSIS, NHMFC’s other creditors – the SSS and Home Development Mutual Fund (Pag-IBIG fund) – have recognized NHMFC’s ability to fulfill its loan obligations to them by entering into a loan restructuring agreement with NHMFC. GSIS refused to restructure NHMFC’s loan.

GSIS’s expressed intention to foreclose on the housing loans of its members and its intenton to call on the national government guaranty on the NHMFC loan may be considered contrary to the government’s moratorium program on housing loan foreclosures and it will put an undue burden on the national government because of current deficit levels, Salud concluded.