Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 3541

Introduced by Representative MICAELA S. VIOLAGO

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 from 3.5 million in 2010
to 5.5million in 2016 and projected to reach 6.7 million dwelling units by the year 2022
at the current pace of production and housing-needs growth 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.

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.

This bill has been filed in the 17 Congress by then Speaker Gloria Macapagal
Arroyo and is being refiled by this representative with the earnest hope that approval
of the same be given the highest priority it deserves.

a
ICAELA S. VIOLAGO
Ind District, Nueva\Ecija


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. messy

Introduced by Representative MICAELA S. VIOLAGO

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
2019".

Sec. 2. Amendatory Provisions. - For Purposes 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 Section 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.

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 agri-agra 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,

4) A minimum of Seventy Billion Pesos (Php 70,000,000,000.00) up toa
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) An annual 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:

1) 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-earning 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 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 willful
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.

c) 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.

4) 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.

€) The HUDCC, the Bangko Sentral ng Pilipinas (BSP), Department of
Finance (DOF), NHMFC and the Pag-IBIG Fung, 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.

f) The CHFP Fund shall be used exclusively for homebuyer 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.


g) 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.

h) 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, instill 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 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.

4) “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 CHFP-
Securitization.

b) 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.

c) 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.

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 guarantees 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. 2

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

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.

©) Loans for housing purchases shalll 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

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,