October 31, 2013 11:13 pm [
manilatimes.net ]
by JOHN CONSTANTINE G. CORDON
REPORTER
AFTER 11 years of “continuous losses,”
the financial resources of the Home Guaranty Corp. (HGC) have been depleted and
the agency now risks losing the capacity to provide guarantees for housing
loans, according to the Commission on Audit (COA).
The HGC’s “losing streak” prompted COA
to sound the alarm after discovering during its audit conducted in 2012 that
the government-owned and –controlled corporation (GOCC) has racked up a deficit
of P13.296 billion.
Government auditors said that for the
last 11 years, HGC’s performance was “underwhelming” because of its previous
defaults on its guaranteed mortgages.
“[This] resulted in accumulated
deficit of P13.296 billion as at December 31, 2012, thereby further depleting
HGC’s financial resources that diminishes its capability to provide guarantee
for loans supporting a viable shelter program,” the audit report noted.
Auditors said that the accumulation of
losses over time reduced the retained earnings of the company “to a negative
balance.”
The HGC provides risk coverage or
guarantees and tax/fiscal incentives to banks and financial institutions
granting housing development loans and home financing.
It performs its mandate by working
closely with the Department of Finance, Housing and Urban Development Coordinating
Council, the National Economic and Development Authority and with other
government housing agencies such as the National Home Mortgage Finance
Corporation, Home Development Mutual Fund or Pag-ibig, Social Housing Finance
Corporation, Housing and Land Use Regulatory Board and the National Housing
Authority.
State auditors said that the P2
billion loss, including the “comprehensive loss” of P575 million incurred in
2012, has seriously affected the financial condition of HGC.
The audit agency said that the GOCC
started its losing streak in 2002. It said that except for years 2007 and 2009,
the HGC posted net income before charges were deducted.
However, after making the deduction,
the “yearly losses from 2002 to 2012” were discovered.
These financial charges refer to
interest worth P9.21 billion and other charges worth P640 million, attributed
from sourcing the funds through bond flotation of P7 billion, P3 billion and
P12 billion Zero Coupon Bonds.
Included also in the financial charges
was the interest on the issuance of debenture bonds in payment of HGC’s
defaulted guaranteed accounts amounting P1.14 billion from 2006 to 2012.
“The authorized capitalization of HGC
is P50 billion, however, the paid-in capital received by the corporation from
the releases of the national government stood at P14 billion only as of 2012
yearend,” COA said.
The commission recommended that HGC
strengthen its linkages with the national government, through the Department of
Budget and Management, for the release of much needed capital. However, HGC
officials claimed that in 2011 and 2012, there were notable increases in the
outstanding guaranty, renewals and guaranty premium.
The gross revenue also increased by
10.41 percent from 2011 to 2012 and the net income from operations rose by
14.39 percent for the same period, they said.
“The foregoing showed that confidence
of clients in HGC’s as a guarantor has been restored,” the company said.
In its official website, the HGC said
that it had P9 billion worth of housing securities in its portfolio as of 2007,
and has issued a total of P 72.82 billion worth of guarantees to client /
partner banks.
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