Republic of the Philippines
HOUSE OF REPRESENTATIVES

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 3837

Introduced by
HON. FERDINAND MARTIN G. ROMUALDEZ

AN ACT ESTABLISHING A UNIFIED HOUSING AND URBAN DEVELOPMENT
FUND AND A CENTRALIZED HOME FINANCING PROGRAM, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 7835, OTHERWISE KNOWN AS THE
“COMPREHENSIVE AND INTEGRATED SHELTER FINANCING ACT (CISFA) OF
1994”

EXPLANATORY NOTE

Effective global development models prove that long-term and cheap sources
of funds for housing remain an important key in government's provision of homes for
its people.

However, our perennially-increasing housing backlog estimated at 5.5million
dwelling units as of 2014 indicate that government efforts have fallen short in
addressing our problematic housing situation — an issue that heavily impacts on the
economic and social development of the nation.

This bill seeks to amend key provisions of Republic Act No. 7835 or the
Comprehensive and Integrated Shelter Finance Act (CISFA) of 1994, to establish,
among others, a secondary mortgage market system to make long-term and
affordable financing for housing purposes finally accessible for the millions of
qualified low-income eamers in need of a home of their own even if they are not
members of the Social Security System (SSS), Government Service Insurance
System (GSIS) or the Pag-IBIG Fund.

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The bill further aims to establish a Centralized Home Financing Program
(CHFP) that will be sourced out by tapping key fund sources that have already been
identified by law: among them, RA 7835 or CISFA, RA8282 or the amended SSS
Charter, RA 8291 or the amended GSIS Charter and RA9679 or the new Pag-IBIG
Fund Charter.

The CHFP shall be designed exclusively for home financing assistance to
individual home loan borrowers with no component for development financing. It
shall likewise provide emphasis on socialized and low-income beneficiaries with
funding and lending mechanisms designed to ensure continuing viability, stability and
sustainability.

In view of the foregoing, amendment to certain sections of the law is earnestly
sought

FERDII RTIN ,OMUALDEZ

Representative, 1st District of Leyte

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Republic of the Philippines
HOUSE OF REPRESENTATIVES

EIGHTEENTH CONGRESS
First Regular Session
3837

House Bill No

Introduced by
HON. FERDINAND MARTIN G. ROMUALDEZ

AN ACT ESTABLISHING A UNIFIED HOUSING AND URBAN DEVELOPMENT
FUND AND A CENTRALIZED HOME FINANCING PROGRAM, AMENDING FOR
THE PURPOSE REPUBLIC ACT NO. 7835, OTHERWISE KNOWN AS THE
“COMPREHENSIVE AND INTEGRATED SHELTER FINANCING ACT (CISFA) OF
1994”

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled: .

SECTION 1. Short Title. — This Act shall be known as the “CISFA
Amendments of 2017".

Sec. 2. Amendatory Provisions. — For purposed of this Act, there are hereby
inserted four new sections after Section 11 of Republic Act No. 7835, otherwise
known as the “Comprehensive and Integrated Shelter Financing Act of 1994,” to be
designated as Sections 12, 13, 14, and 15 to read as follows:

a) “Section 12. Establishment of a Unified Housing and Urban
Development Fund. — There is hereby established a Unified Housing and
Urban Development (HUD) Fund composed of all the funds enumerated in
Sections 10 and 11 of this Act, all funds identified under Republic Act No.
7279, otherwise known as the “Urban Development and Housing Act of 1992”,
and such other funds as may hereafter be made available for housing and
urban development purposes.

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The Unified HUD Fund shall be administered by the Housing and
Urban Development Coordinating Council (HUDCC).

The mechanics of the fund shall be formulated by the HUDCC, the
Department of Finance, the Department of Budget and Management and
other concerned agencies in accordance with pertinent policies and subject to
established auditing and accounting procedures.

No portion of the fund shall be used for administrative or operational
cost of HUDDCC or any of its attached corporations or agencies other than
fees and expenses as expressly authorized by this Act.

b) “Section 13. Establishment of a Centralized Home Financing
Program. — There is hereby established a Centralized Home Financing
Program (CHFP) to be administered jointly by the National Home Mortgage
Finance Corporation (NHMFC) and the Home Development Mutual Fund
(HDMF) or the “Pag-IBIG Fund”.

a) The initial funding for the CHFP shall be composed of
investments by the following for five (5) consecutive years from
the effectivity of this Act:

1) One Hundred Billion Pesos (Php 100,000,000,000.00)
from the unused portion of the agridagra funds of banks,
provided for under Section 11 (b) of RA 7835;

2) Twenty-five Billion Pesos (Php 25,000,000,000.00) from
the Social Security System (SSS) pursuant to its Charter,

3) Twenty-five Billion Pesos (Php 25,000,000,000.00) from
Government Service Insurance System (GSIS) pursuant to its
Charter;

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°)

4) A minimum of Seventy Billion Pesos (Php
70,000,000,000.00) up to a maximum of seventy percent (70%)
of the Pag-IBIG Fund's total investible funds which must be
invested in housing pursuant to its Charter, whichever is higher;

5) Anannual budgetary allocation of Fifty Billion Pesos (Php
50,000,000,000.00) which shall be allocated through the
General Appropriations Act (GAA) for twenty (20) consecutive
years commencing upon the year immediately succeeding the
effectivity of this Act; and

6) Such other funds as may be later generated pursuant to
law.

b) The CHFP shall have two (2) components, namely:

14) CHFP-Loans Program, hereinafter referred as “CHFP-
Loans’; and

2) CHFP-Securitization, Capital and Secondary Market
Operations Program, herein referred to as “CHFP-
Securitization”.

“Section 14. Implementation of the CHFP — Loans Program.”

a) The lead implementing agency for the CHFP-Loans
Program shall be the Pag-IBIG Fund.

b) All income-eamning citizens whether or not members of
the SSS, GSIS or the Pag-IBIG Fund, who qualify as
beneficiaries under the Urban Development and Housing Act
(UDHA) and who have not previously availed of any housing

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assistance from any government institution shall be eligible to
avail of a housing loan under the program, subject to the
appropriate credit standards by the Pag-IBIG fund.

The Pag-IBIG is hereby empowered to appoint employers,
whether from the public sector or private, to act as collecting
agent for the mandatory deduction of monthly housing loan
amortization payments in two (2) instalments from the salaries of
their employees each month.

Failure of any person to comply with this provision resulting from
wilful neglect, or failure to account for and remit such amounts
collected for the purpose stated in this provision in the dates
prescribed on behalf of the homebuyer shall merit penalties as
may be prescribed by law.

©) Upon the effectivity of this Act, all direct home lending
operations of the SSS, GSIS and the Pag-IBIG Fund shall
cease and will be fully undertaken under the program.

[)

Within thirty (30) days from effectivity of this act, the banks,
SSS and the GSIS shall turn-over to the Pag-IBIG Fund their
respective contributions in exchange for the Pag-IBIG Fund
bonds, promissory notes and/or other similar instruments
with maturities of not less than five (5) years and fully
guarantees by the Home Guaranty Corporation (HGC) as to
principal and interest.

e)

The HUDCC, the Bangko Sentral ng Pilipinas (BSP),
Department of Finance (DOF), NHMFC and the Pag-IBIG
Fund, in coordination with the Bankers’ Association of the
Philippines (BAP), shall devise the appropriate mechanics or
instruments, or both, to immediately effect the provisions of
this section.

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f) The CHFP Fund shall be used exclusively for homebuyer

9)

h

financing, and no part of the fund shall be used for
developer's financing or for administrative or operating
expenses of the implementing agencies other than fees and
expenses as expressly authorized by this Act.

The Pag-IBIG Fund shall create a sinking fund to ensure
repayment of the maturing notes, bonds or similar
instruments issued pursuant herein, and all annual interest
accruals thereof.

Within fifteen (15) days from effectivity of this Act, the Pag-
IBIG Fund, in coordination with HUDCC, concerned agencies
and private sector organizations shall determine the
program's lending parameters which shall ensure the
integrity and soundness of housing loans, instil credit
discipline, afford the highest loan repayment rate, the
‘strongest security position and the least risk for the financing
institutions, while at the same time providing the
beneficiaries with the most reasonably convenient manner of
loan availment at affordable rates and terms.

i) For this purpose:

1. Loan origination shall utilize the contract-to-sell (CTS),
mortgage or any other appropriate lending instrument that
shall ensure the most effective loan repayment rate;

2. Instalment sales of house-and-lot packages residential
condominium units, and other similar housing packages
under a conditional deed of sale, contract to sell or other
similar devices which are intended for refinancing under
the CHFP or any of the government-managed and/or
sponsored home financing program, shall, in case of

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cancellation for non-payment, be wholly exempt from the
provisions of Republic Act 6552;

3. The mortgage redemption period prescribed under
Commonwealth Act 142 is hereby reduced to three (3)
months; and

4. The Pag-IBIG Fund may impose a regular set of fees for
loan servicing and collection not exceeding one-fourth of
one percent (0.25%) per annum of the average
‘outstanding balance of total loans during the year.

d) “Section 15. Implementation of the Securitization, Capital and
Secondary Market Operations Program (CHFP-Securitization). - The CHFP-
Securitization for the development of the secondary market for home
mortgages and other housing-related receivables, conveyances and financial
instruments and the development/promotion of and investments in new
housing-related financial instruments and investment vehicles and the capital
markets thereof, to increase and sustain funds available for housing and
home development shall be implemented as follows:

a) The NHMFC shall be the lead implementing agency for the

b)

ic)

CHFP-Securitization.

The NHMFC, in coordination with the HUDCC, DOF, BSP,
Pag-IBIG Fund and HGC and other concerned agencies and
private sector organizations, shall formulate a program, the
proceeds of which shall accrue to the CHFP Fund.

The Pag-IBIG Fund, using the CHFP-Loans Program, shall
provide on a yearly basis quality housing loan receivables to
‘serve as asset pool for the securitization program.

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e) The NHMFC, as the lead agency for the implementation of the
CHFP-Securitization Program, shall manage the whole securitization process
which includes the following activities: determining the eligibility criteria for the
asset pool; defining the preliminary structure of the notes, bonds and/or
instruments to be issued; third parties to be hired; and education/briefing of
target investors for all the issues.

f) The Home Guaranty Corporation shall provide the necessary
guarantee/s as to the principal and the two percent (2%) interest for all the
issues at the lowest or minimum guaranty fee as mandated by the HGC
Charter.

g) NHMFC and CHFP-issued bonds, notes and securities shall be
exempt from the registration requirements under the Securities Regulation
Law in order to accelerate the issuance of its housing-related securities/
financial instruments and, thus, more reasonably provide the necessary funds
for housing development.

h) Transactions by banks involving the purchase and sale of housing
bonds, debentures and such other similar instruments shall be exempt from
the twenty percent (20%) final tax on income, documentary stamps tax, gross
receipts tax, and value added tax;

i) The investors’ yield or income from any socialized housing or
economic housing-related bond or asset-backed securities issued by NHMFC.
directly or through a special-purpose entity under the Securitization Act shall
be exempt from income tax. Such issuances shall enjoy all the tax exemptions
granted under Republic Act No. 9627 or the Securitization Act of 2004
pursuant to the State's policy of promoting the securitization of mortgage and
housing-related receivable of government housing agencies, to generate
investment and accelerate the growth of the housing finance sector, especially
for socialized and economic housing.

j) Housing bonds and other similar instruments issued by NHMFC
may be applied as payment for taxes, duties, fees and other government
charges at their discounted value, for which purpose the BIR shall promulgate
the necessary implementing rules and regulations.

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k) The amount invested by participating banks under this Program
‘shall be eligible as a substitute for reserve requirements pursuant to the Agri-
Agra Law, subject to the rules promulgated by the Bangko Sentral ng
Pilipinas.

|) The amount invested by other participating financial institutions
including non-banks and insurance companies providing mortgage
redemption insurance or other life or non-life insurance to end-users and
investors shall be considered as a reserve eligible instrument, subject to the
rules promulgated by the Bangko Sentral ng Pilipinas and/or the Insurance
Commission, as may be applicable.

m) Bonds purchased by private real estate developers shall be
considered eligible as an alternative compliance to the balanced housing
requirement under Sec.18 of RA 7279, as amended by RA10884, subject to
the rules promulgated by the Housing and Land Use Regulatory Board
(HLURB).

n) The NHMFC may impose a regular set of securitization fees not
exceeding one-fourth of one percent (0.25%) per annum of average balance
of total outstanding securities during the year.

0) Loans for housing purchases shall be provided to qualified
homebuyers for a fixed minimum term of thirty (30) years or shorter, at the
option of the homebuyer, under fixed interest rates with no re-pricing, as
follows:

1) Loans for socialized housing packages composed of residential
subdivision units and residential medium-rise condominium units
to be sold at price ceilings herein set as being above P450,000
but not more than P1,500,000 per unit, subject to review and
updating by the HUDCC within two (2) years from the effectivity
of this Act and every two (2) years thereafter as necessary
pursuant to law based on prevailing economic conditions, shall
have a fixed interest rate of three percent (3%) per annum; and

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2) Loans for economic housing packages composed of residential
subdivision units and residential medium-rise condominium units
to be sold at price ceilings herein set as being above
P1,500,000 but not more than P3,199,200 per unit, subject to
periodic review and updating by the HUDCC within two (2) years
from the effectivity of this Act and every two (2) years thereafter
as necessary pursuant to law based on prevailing economic
conditions, shall have a fixed interest rate of four percent (4%)

Sections 12,13,14,15,16,17, and 18 are hereby re-numbered as Sections
13,14,15,16,17, and 18 respectively.

Sec. 3. Implementing Rules and Regulations. - Within sixty (60) days from
the effectivity of this Act, the HUDCC, in consultation with non-government
organizations and people’s organizations involved in housing rights and urban poor
advocacy, as well as the private sector, shall formulate and promulgate the rules and
regulations necessary to implement the provisions of this Act.

Sec. 4. Separability Clause. — If, for any reason, any provision of this Act is
declared invalid or unconstitutional, the remaining provisions not affected thereby
shall continue to be in force and effect.

Sec. 5. Repealing Clause. - All laws, decrees, executive orders,
proclamations and administrative regulations, or parts thereof inconsistent herewith
are hereby repealed or modified accordingly.

Sec. 6. Effectivity. This Act shall take effect fifteen (15) days after its
publication in at least two (2) national papers of general circulation.

Approved,

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