Thursday, February 12, 2009 [ sunstar.com.ph ]
By Stella A. Estremera
DAVAO City Mayor Rodrigo R. Duterte on Wednesday urged almost 6,000 homeowners facing foreclosure to file cases in court to stall the foreclosure procedures.
"I say, resist not violently, but resist," he said.
In an interview aired over ABS-CBN late afternoon Wednesday, Duterte blamed the government's negligence for the home foreclosures. He said there are two types of homeowners facing foreclosure under the Balikatan Home Financing Inc.: (1) those who were not able to pay their monthly amortizations, and (2) those who refuse to pay their monthly amortizations because their houses were built with substandard materials.
Most of the 6,000 are those who refuse to continue paying their amortizations.
"Kanang murag nakapalit ka ug mansanas na ang ibabaw lang ang maayo, bulok na ang naa sa ilawom (It's like you bought a basket of apples wherein only the ones on top were in good condition and all others were rotten)," Duterte said in describing what the homeowners ended up with.
Because these are low-cost housing projects, the government should have long ago stepped in and sanctioned or released the homeowners from their mortgages after receiving damaged goods, he said.
But this did not happen. The government just let these contractors proceed with their projects, not sanctioning anyone found to have used substandard materials, Duterte said. "Inutil 'ning gobyerno diri (The government is useless)."
The housing sector is governed and regulated by several agencies, including the National Home Mortgage and Finance Corporation and the Housing and Land Use Regulatory Board.
A research on the controversial Balikatan last December showed it was created sometime in 2004 along with Bahay Financing Services Inc. (BFSI) to help resolve the backlog in mortgage payments in the housing sector.
BFSI was created for servicing, management, and administration of mortgage loans and related collateral property in the Philippines held by BHFI, a holding company set up and owned by DB Real Estate Global Opportunities IB, LP (DBGO) and National Home Mortgage Finance Corporation (NHMFC).
BHFI even received a P1.6-billion loan from the Asian Development Bank (ADB) in May 2005 to help NHMFC collect highly delinquent mortgage loans.
An ADB press release dated May 31, 2005 stated that the non-performing liabilities (NPL) portfolio sold by NHMFC has a total outstanding principal balance of P13.45 billion.
These are from 53,000 individual low-and middle-class housing loans in 500 housing subdivisions all over the country.
"In May 2004, following a competitive auction, DBGO signed a loan sale purchase agreement with NHMFC. DBGO, a $360 million fund that invests globally in real estate and real estate-related assets, is managed by DB Real Estate, the real estate asset management arm of Deutsche Bank AG. Managing more than $56 billion, DB Real Estate is the world's largest real estate fund manager based on assets under management," the press release stated.
In the 2007 Annual Report of the ADB, it recalled how and why BFSI and BHFI were created.
The report said what prompted the creation was NHMFC's difficulty collecting mortgage payments from those who took out low-and middle-ncome housing units starting in the late 1980s
.
"As the houses were built, NHMFC purchased the mortgage-secured loans extended to home buyers by accredited financial institutions and housing developers using funds borrowed from the Social Security System (SSS), Government Service Insurance System (GSIS), and Home Development Mutual Fund (Pag-ibig), the funders," the report said.
But low repayment rates snowballed, thus by 1996, uncollected loan accounts made the funders give more support.
The highly delinquent loans were auctioned off in May 2004 and the DB Real Estate Global Opportunities IB, L.P. (DBGO) won the bid.
"ADB provided debt financing of up to $33 million to Balikatan Housing Finance Inc., the special-purpose vehicle jointly owned by DBGO and NHMFC and which acquired the non-performing loans from NHMFC. ADB also invested in a 10 percent equity stake in Bahay Financial Services Inc., a loan-servicing company established by DBGO to restructure and service the loans in behalf of Balikatan Housing Finance. A Philippine-peso bond issue -- a first for ADB -- provided the necessary funding," the report said.
"This transaction marked the first time that a local financial entity had sold non-performing assets (NPAs) of such magnitude to a foreign investor, and showed domestic and international investors that the country was determined to solve its NPA problem," the report continued.
The portion about the NHMFC auction of the NPAs was highlighted in the non-sovereign operations portion of the report as an example of how ADB assisted in "dealing with non-performing loans to bolster housing in the Philippines."
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