Last Saturday, I read at least 14 petitions for extra judicial foreclosures of real estate mortgages published in local newspapers. The petitioner is a government financial institution called the Home Development Mutual Fund (Pag-IBIG Fund). The public auctions are set on different forward dates. According to the advertisements, the sum total of the assets up for sale is almost P 11,000,000.00.
Six of these foreclosures involve parcels of land that are located in a barangay in the municipality of Minglanilla, Cebu. The total minimum bid price for all six lots is more than six million pesos. All four of the six lots have an area of only 38 square meters. I noticed that the floor price of one such property is extremely expensive. It is pegged at a whopping price of more than P 1,200,000.00. Let me restate it for clarity. A 38 square meter property is for sale at a minimum price of P1,200,000.00. Of course, I assume that there is a house built on this land and that house is necessarily included in the projected sale.
Of these petitions for foreclosure sale, there are 5 lots that are located in Lapu-Lapu City. The individual area of each of these parcels is not quite different from the assets in Minglanilla. Two lots have an area of 48 square meters while the size of each of the two others is 40 square meters and the last remaining property has 44 square meters area. From the petitions, we can glean that the lowest priced property in Lapu-Lapu City is a 40 square meter lot for P 500,000.00 plus. If the Pag-IBIG Fund succeeds in selling all of these Lapu-Lapu City assets to bidders, it will realize a total minimum sales proceeds of three million seven hundred thousand pesos plus.
In practice, a homeless person, usually coming from the lower middle class of our society, who desires to provide a roof for his family scouts around for house and lot to buy. More often, he finds this in socialized housing projects where real estate companies cut home lots into easily saleable sizes of from 40 square meters or thereabout to a hundred.
When the prospective homeowner has come to like a unit, he goes to Pag-IBIG for financing. As soon as documentary requirements are completed including the giving of the equity of about ten per cent of the value of the property, Pag-IBIG Fund pays the full value to the developer and the would-be homeowner comes to his new home happily. It is when he starts paying his monthly dues to Pag-IBIG that his woes begin. Moreover, the moment he computes that for the usual period of 25 years, his total payment is a huge sum, he vacillates. A very careful evaluation of the petitions for foreclosures that were published last Saturday, I like to posit, must bear similar basis.
Why am I writing of this topic? I am a Pag-IBIG member. I contributed to the kind of money that Pag-IBIG loaned to the exuberant new homeowner but actually paid to the developer. My contribution is supposed to earn interest when the homeowner pays his loan. And that is the risk. Many borrowers default. Upon such failure Pag-IBIG wants to recover the principal and the interest for which reason it forecloses on the security.
But, can Pag-IBIG show to us, its members, that there are active bidders for most of the assets subjected to foreclosure? For example, who will want to buy the Minglanilla property with an area of 38 square meters ONLY for one million two hundred thousand pesos? When nobody bids for it, like I suspect would happen, that property becomes at best, a non-performing asset, worth much only in figures but not in cash. On the downside of the transaction, I really believe that some individuals led the government to enter into a deal that is grossly disadvantageous to it and it sounds to me, Anti-Graft, worth investigating.