REPUBLIC ACT NO. 5488 - AN
ACT AMENDING FURTHER REPUBLIC ACT NUMBERED FIVE HUNDRED AND EIGHTY,
OTHERWISE KNOWN AS THE "HOME FINANCING ACT," AS AMENDED BY REPUBLIC ACT
NUMBERED ONE THOUSAND FIVE HUNDRED AND FIFTY-SEVEN
Section 1. Section three of Republic Act Numbered Five
hundred eighty as amended by Republic Act Numbered One thousand five
hundred and fifty-seven is hereby further amended to read as follows:
"Sec. 3. Membership. — The Commission shall be
composed of five members appointed by the President of the Philippines
with the consent of the Commission on Appointments. The President shall
designate one of the members as Chairman of the Commission who shall
receive a compensation of twenty thousand pesos per annum. Any member
of the Commission may be removed by the President for cause. Two of the
members appointed shall be officers or directors of non-governmental
mortgagee-institutions participating in the insured mortgage program in
accordance with the provisions of this Act. The members shall receive
for each meeting of the Commission attended a per diem of fifty pesos;
Provided, however, That a member shall receive a total of not more than
three thousand pesos a year in per diems. The Chairman shall held
office for five years. The members of the Commission shall likewise
hold office for five years, with the exception of the members first
appointed who shall serve one, two, three and four years, respectively,
as stated in their appointments. Thereafter, the person appointed to
succeed a member of the Commission whose term shall have expired shall
continue to serve for the full five-year term, and, except in the case
of vacancies caused otherwise than the expiry of the term, only one
member shall be appointed to the Commission each year. In the event of
vacancy, the successor appointed to fill the same shall serve only the
unexpired portion of the term of the member he succeeds. Any person who
is directly or indirectly interested in a construction company or in a
firm dealing in building and construction materials and accessories,
real estate development companies and financial institutions that may
have transactions with the Home Financing Commission shall be
disqualified from being a member thereof, except for the two members
who are officers or directors of non- governmental
mortgagee-institutions, participating in the insured mortgage program
who shall be appointed as provided in this section."
Sec. 2. Subparagraph (d) of Section four of the
same Act is hereby amended to read as follows:
"(d) To issue bonds, debentures, securities,
collaterals, notes and other obligations with the approval of the
President after consultation with Monetary Board of the Central Bank of
the Philippines, but in no case to exceed at any one time the aggregate
amount of the principal obligations of all mortgages and accounts
insured under Chapter II and III of this Act plus the amount authorized
for the Home Financing Fund in accordance with the provisions of
section six of this Act. These bonds and other obligations shall be
issued under such terms and conditions as are provided in this Act and
the rules and regulations prescribed by the Commission and shall be
redeemable at the option of the Commission at or before maturity and in
such manner as may be stipulated therein and shall bear such rate of
interest as may be fixed by the Commission but not more than seven per
cent per annum. Such obligations shall be secured by the assets of the
Commission, including the stocks, bonds, debentures and other
securities underwritten, purchased or held by it under the provisions
of this Act. The Commission shall provide for appropriate reserves for
the redemption or retirement of said obligations. Such obligations may
be issued and offered for sale at such price or prices as the
Commission may determine, and shall be exempt from taxation as to
principal and interest, except estate, inheritance and gift taxes. The
said obligations shall be and are hereby fully and unconditionally
guaranteed both as to principal and interest by the Government of the
Republic of the Philippines and such guaranty shall be expressed on the
face thereof. Bonds issued by the Commission shall be registered at the
request of the holder thereof under such rules and regulations as may
be prescribed by the Commission."
Sec. 3. Section nine by the same Act as amended is
hereby further amended to read as follows:
"Sec. 9. With a view to encourage the repair of
existing residential buildings, and the rehabilitation requirements and
recovery from damage caused by the elements, the Home Financing
Commission shall prescribe rules and regulations to govern the
insurance authorized under this section in accordance with the
provisions set forth hereunder:
"(a) The Commission is authorized to insure banks,
insurance companies, building and loan associations and other qualified
lending institutions against losses which they may sustain as a result
of eligible property improvement loans.
"(b) Two classes of loans may be issued under this
section at the discretion of the Commission:
"(1) Loans covering the cost of repair, alteration or
improvement of an existing structure, such loans not to be in excess of
ten thousand pesos and to mature in not to exceed ten years on a
monthly amortization basis;
"(2) Loans covering the cost of alteration, repair,
improvement or conversion of an existing structure used or to be used
as a dwelling for two or more families, such loans not to be in excess
of twenty thousand pesos and to mature in not to exceed twenty years on
a monthly amortization basis."
Sec. 4. Subsection (b) of Section ten of the same
Act amended is hereby further amended to read as follows:
(b) To be eligible for insurance under this section a
mortgage shall —
(1) Involve a principal obligation (including such
initial service charges, appraisal, inspection, and other fees as the
Commission shall approve) in an amount —
"(a) not to exceed thirty thousand pesos per family
unit including house and land nor in any case ninety-five per centum of
the appraised value (as of the date the mortgage is accepted for
insurance) of a property, whether urban, suburban, or rural upon which
there is located or to be constructed a dwelling designed principally
for a single-family residence: Provided, That no mortgage shall be
insured under this paragraph unless the mortgagor shall be the owner
and occupant of the property at the time of insurance and shall have
paid on account of the property, in cash or its equivalent, at least
five per centum of the appraised value thereof.
"(b) not to exceed nine thousand five hundred pesos
per family unit including house and land nor in any case one hundred
per centum of the appraised value of a property, whether urban,
suburban, or rural, upon which there is located or to be constructed a
dwelling, designed principally for a single-family residence: Provided,
That no mortgage shall be insured under this paragraph unless the
mortgagor shall be the owner and occupant of the property at the time
of insurance.
"(2) Have a maturity satisfactory to the Commission,
but not to exceed forty years.
Sec. 5. Subparagraph (c) of Sec. 13 of the same
Act is hereby amended to read as follows:
"(c) Bear interest (exclusive of premium charges for
insurance) at a rate not to exceed ten per centum per annum on the
amount of the principal obligation outstanding at any time;
Sec. 6. Subsections (a) and (b) of Sec. 14 of the
same Act as amended are hereby further amended to read as follows:
"(a) In the event the mortgagor becomes in default in
accordance with regulations of the Commission, the mortgagee shall be
entitled to receive the benefit of the insurance as hereinafter
provided, upon (1) the prompt conveyance to the Commission of rights to
the property and (2) the assignment to it of all claims of the
mortgagee against the mortgagor or others. Upon such conveyance and
assignment, the obligation of the mortgagee to pay the premium charges
for insurance shall cease and the Commission shall at its option, pay
in cash or issue to the mortgagee debentures in an amount equivalent to
the balance outstanding and due on the mortgage as hereinafter
provided.
"(b) For the purpose of the above-subsection (a), the
balance outstanding and due on the mortgage shall be determined, in
accordance with the rules and regulations prescribed by the Commission,
by adding to the amount of the principal obligation of the mortgage
which was unpaid on the date of the conveyance and assignment by the
mortgagee to the commission of all its rights and valid claims against
the mortgagor, the amount of all payments which have been made by the
mortgagee for taxes, ground rents, and water rates, which are liens
prior to the mortgage, special assessment which are noted on the
application for insurance or which become liens after the insurance of
the mortgage, insurance on the mortgage property, and any mortgage
insurance premiums paid thereafter.
Sec. 7. Subparagraph (d) of Sec. 14 of the same
Act as amended is hereby further amended to read as
follows:
"(d) the debentures issued under this chapter to any
mortgagee with respect to mortgages or loans insured under Chapters II
and III shall be executed in the name of the Home Financing Commission
as obligor, and signed for the Commission by the Chairman-General
Manager by either his written or engraved signature, and shall be
negotiable, exempt from taxation, attachment, execution or seizure,
redeemable at the option of the Commission at or before maturity and
fully guaranteed as to principal and interest by the Republic of the
Philippines. All such debentures shall be dated as of the date the
mortgage conveys and assigns to the commission its right under the
mortgage and valid claims against the mortgagor, and shall bear
interest not exceeding the interest rate established for the principal
obligation. The interest on the debentures shall be payable
semi-annually on the first day of January and the first day of July of
each year, and the debentures shall mature ten years after date on
which the debentures were issued or three years after July first
following the maturity of the mortgage on the property in exchange for
which the debentures were issued whichever is the shorter period, and
may be used at the option of the mortgagee in the payment of insurance
premiums due the Commission."
Sec. 8. Subsection (e) of Section 14 of the same
Act is hereby repealed and the succeeding subsections are hereby
redesignated accordingly.
"(a) The term "mortgage" means a first mortgage on
real estate in fee simple, or on the interest of either the lessor or
lessee thereof under a lease having a period of not less than forty
years to run from the date the mortgage was executed, upon which there
is located or upon which there is to be constructed a building or
buildings designed principally for residential use; and the term "first
mortgage" means such classes of first liens as are commonly given to
secure advances on, or the unpaid purchase price of, real estate
together with the credit instrument or instruments, if any, secured
thereby, and may be in the form of trust mortgages or mortgage
indentures of deeds of trust securing notes, bonds, or other credit
instruments."
Sec. 9. Subparagraph (a) of Sec. 22 of the same
Act is hereby amended to read as follows:
"(a) The term "mortgage" means a first mortgage on
real estate in fee simple, or on the interest of either the lessor or
leasee thereof under a lease having a period of not less than forty
years to run from the date the mortgage was executed, upon which there
is located or upon which there is to be constructed a building or
buildings designed principally for residential use; and the term 'first
mortgage' means such classes or first liens as are commonly given to
secure advances on, or the unpaid purchase price of, real estate
together with the credit instrument or instruments, if any, secured
thereby, and may be in the form of trust mortgages or mortgage
indentures of deeds of trust securing notes, bonds, or other credit
instruments."
SECTION 10. Sec. 25 of the same Act as amended is
hereby further amended to read as follows:
"(a) All banking institutions, trust companies,
personal finance companies, mortgage companies, building and loan
associations, savings and loan associations, installment lending
companies, insurance companies, the Government Service Insurance
System, the Social Security System, and the Development Bank of the
Philippines and other government financial institutions, are hereby
authorized to invest part of their funds for the purpose of giving
loans and advance of credit contemplated and provided in this Act, as
well as on the purchases of obligations representing loans and advances
of credit made pursuant to the provisions of this Act, any provision of
their respective charters or by-laws to the contrary notwithstanding.
All housing loans within the loan ceiling of the Commission to be
granted by the foregoing government financing institutions from the
date of effectivity of this amendatory Act shall be insured by the
Commission under the provisions of the Home Financing Act. All
mortgagee institutions participating in the mortgage insurance program
shall be bound by the terms and conditions of insured mortgage loans as
may be approved by the Commission. Any amount invested by all the
foregoing entities in the financing of mortgage loans for housing
development under this Act, shall be guaranteed both as the principal
and interest by both Home Financing Commission and the Government of
the Republic of the Philippines.
"(b) The Development Bank of the Philippines, the
Government Service Insurance System, and the Social Security System are
hereby authorized to constitute the secondary market for insured
mortgages and shall:
"(1) Purchase, service or sell mortgages which are
insured under the provisions of this Act.
"(2) Subject to the approval of the Monetary Board
issue bonds, debentures, securities, collateral and other obligations
against the security of mortgages insured under this Act, in such
amount and in such proportion to the face value of such mortgage as
their respective boards may designate and such obligations may be
issued and offered for sale at such price or prices as the particular
government institution may determine, and shall be negotiable and
exempt from taxes both as to principal and interest. The said
obligations shall be and are hereby fully and unconditionally
guaranteed both as to principal and interest by the Government of the
Republic of the Philippines and such guarantee shall be expressed on
the face thereof and the President is hereby authorized to endorse such
debentures for the Government of the Republic of the Philippines as
prime obligor in such form as may be designated by the International
Bank for Reconstruction and Development.
"(c) Interests accumulated by lending institutions on
mortgages insured under the provisions of this Act shall be exempt from
all taxation."
SECTION 11. Out of any funds in the National Treasury
not otherwise appropriated, the sum of five million pesos is hereby
appropriated to augment the original funds of the Home Financing
Commission.
SECTION 12. This Act shall take effect upon its
approval.
Approved: June 21, 1969
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