Pag-IBIG Fund

Corporate Headquarters
Petron MegaPlaza
358 Sen. Gil Puyat Ave.,
Makati City

Circular No. 344

TO: ALL CONCERNED

SUBJECT: GUIDELINES IMPLEMENTING THE Pag-IBIG FUND TAKEOUT

MECHANISM FOR DEVELOPER-ASSISTED HOUSING PROGRAM

Pursuant to the approval of the Pag-IBIG Fund Board of Trustees in its 298th Meeting held
last 24 September 2013 as well as in its 300th Meeting held last 30 January 2014, the
Guidelines Implementing the Pag-IBIG Fund Takeout Mechanism for Developer-Assisted
Housing Program are hereby issued:

I. OBJECTIVES

The program seeks to achieve the following objectives:

1. To encourage the participation of developers in providing the needed housing

inventory that can be made available for sale to Pag-IBIG member-buyers via a
Pag-IBIG housing loan.

2. To define parameters in the allocation and disbursement of funds allocated for

housing, specifically for Developer-assisted housing loans.

II. COVERAGE

The coverage under these guidelines shall be optional for accredited Developers for
six (6) months from date of effectivity. Within the said period, accredited Developers
may still be evaluated and be subject to the terms of Circular Nos. 259, 287 and 298.
After 6 months from effectivity, coverage herein shall be mandatory.

III. MECHANICS

1. Pag-IBIG Fund .§hgll accredit Developers who shall participate in the program to
ensure that its objectives are met. --

2. The Fund and the accredited Developer shall enter into a Memorandum of
Agreement (MOA) providing for among others:

2.1. That the Fund shall provide a funding allocation to the Developer upon
compliance with the terms and conditions set by the Fund.

2.2. That the Developer shall receive, pre-process and deliver applications of
Pag-IBIG member-buyers for the purchase of a lot / house and lot /
condominium unit in the Developer's subdivision/condominium project.

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 2.3. That the Fund shall approve the applications for the purchase of a lot I hous,e
and lot I condominium unit of Pag-IBIG member-buyers th.at meet the Fund s
criteria as provided in the prevailing Pag-IBIG Fund Housing Program.

2.4. That the Fund and the Developer shall execute a Deed of Absolute Sale
(DOAS) for the residential unit chosen by the Pag-IBIG member-buyer. The.
Fund, in turn, shall execute a Deed of Conditional Sale (DCS) in favor of the
Pag-IBIG member-buyer.

Upon the written request of the member-buyer, and provided the loan-to-
value ratio does not exceed fifty percent (50%), the HL account may be a
REM account. The Developer shall execute a DOAS in favor of the member-
buyer, who shall, execute a mortgage on the property in favor of the Fund.

2.5. That the Developer shall process and shoulder the cost of transfer of the
certificate of title to the property from its name to the name of the Fund.

2.6. That the release of proceeds shall be made in accordance with the terms and
conditions provided in these guidelines.

2.7. That the Developer shall buyback the accounts that are affected by breach of
warranties.

2.8. The MOA between the Developer and the Fund shall be subject to cross-
default as defined in existing pro-forma loan documents prescribed by the
Fund.

3. The Developer shall submit to the Fund the Pag-IBIG member-buyer's application
. for the purchase of a lot I house and lot I condominium unit. The first submission
of applications shall be scheduled and must be carried out not later than sixty (60)
calendar days from the date of signing of the Memorandum of Agreement.

4. Applications delivered by accredited Developers shall be processed within fifteen

(15) working days from submission of the documents listed in the Checklist of
Requirements. A Notice of Approval (NOA) shall be issued if the Pag-IBIG
member-buyer meets the Fund's eligibility criteria in its prevailing housing
program. The NOA shall be valid for ninety (90) days only, reckoned from date of
receipt thereof. In case the requirements for the takeout of the account are not
submitted within the prescribed period, the Pag-IBIG member may re-file his
application subject to the payment anew of the filing fee.

If any negative findings on the application can be rectified, a Notice of Deficiency

shall be issued and the developer shall be given ten (10) working days from receipt
of the notice to make such corrections. If the affected application is re-submitted
beyond the 10-day period given to the developer, said application shall be
considered as a new application and the Pag-IBIG member-buyer shall be required
to pay the re-filing fee.

In case the application is disapproved, the Fund shall issue a Notice of

Disapproval, stating the grounds therefor.

5. A Developer may request for advance evaluation of borrowers or inspection of

completed units; provided, a written request is submitted to the Fund and the
corresponding filing fee is paid. The Credit Investigation Report (CIR), Buyer

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 Validation Sheet (BVS) and the receipt of the filing fee must be submitted to the
Fund when filing the Pag-IBIG member-buyer's housing application. The CIR and
BVS shall be valid for six (6) months only.

6. All developer-assisted accounts shall be supported by a DCS on the subject

property. The Pag-IBIG Fund may allow an account to be secured by Real Estate
Mortgage when the loan to collateral ratio does not exceed fifty percent (50%).

The Senior Management Committee shall set or adjust the limit on housing
packages that will adopt the DCS documentation as it may deem necessary.

7. The Fund shall accredit Developers who will enter into a Collection Servicing
Agreement (CSA) with the Fund and act as its collecting agent for one (1) year
from execution of the CSA, provided said Developer meets or exceeds the criteria
provided in Item XI Section 1 hereof.

IV. ACCREDITATION OF DEVELOPERS

1. The Fund shall accredit Developers who shall participate in the program annually,
in accordance with the following criteria:

1.1. Any of the Developer's key officers or shareholders must not be among those
blacklisted by the Fund from participating in any of its loan programs, or any
of the Developer's key officers or shareholders must not be a key officer or
shareholder of a Developer that has been blacklisted by the Fund. Key
officers refer to Board of Directors, president/general manager/chief
executive officer, corporate secretary, corporate treasurer and similar
positions.

1.2. The Developer must be duly authorized to operate as evidenced by a

Certificate of Registration from the Securities and Exchange Commission
(SEe) or the Bureau of Domestic Trade (BOT);

1.3. The Developer must at least have a satisfactory financial performance /

position as evidenced by its latest audited financial statements (stamped
received by the Bureau of Internal Revenue) with no adverse
opinion/disclaimer; and

1.4. The Developer must not be in the banks' or financial institutions' Negative
List.

2. The Developer must satisfy or disclose related real estate entities. Related real
estate entities refer to the parent company and subsidiaries of the Developer,and
to business entities engaged in the real estate business, whether or not they are
currently transacting with the Fund, either as developer, seller or marketing agent
of another developer or individual, in which the Developer or any of its key officers
is also a key officer or a shareholder.

If a Developer has related real estate development company/ies, the performance

of one of the related entities shall determine if the application for accreditation and
classification of the Developer under applicable guidelines will be approved or not,
and vice versa.

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 The Pag-IBIG Fund Housing Business Center which has the jurisdiction over the
principal place of business of the Developer shall evaluate the application for
accreditation and determine the corresponding classification of said Developer.
The Business Development Sector, however, shall evaluate said application and
accordingly determine its classification when the said Developer has a project in
the National Capital Region regardless of its principal place of business.

V. PROJECT EVALUATION

Subdivision/Condominium Projects shall be evaluated based on the following:

1. Permits and Licenses issued by the Local Government Unit and other regulatory
agencies for the subdivision/condominium project covered by the funding
allocation.

2. No outstanding Cease and Desist Order has been issued by HLURB against the
developer or any of its related real estate entities.

3. Status of project development - At least with model units for subdivision projects
or showroom for condominium projects.

VI. FUNDING ALLOCATION

A. TERMS AND CONDITIONS OF THE ALLOCATION

1. The Fund shall provide a Funding Allocation to the Developer for the takeout
of approved applications of eligible Pag-IBIG members, the amount of which
shall be based on the Developer's projected submission of applications for
each subdivision/condominium project for the year of signing of the MOA.
Approval of Funding Allocation shall be in accordance with the prevailing
approving/signing authorities.

For this purpose, the Developer shall submit the corresponding monthly
schedule of projected submission of applications, with the first submission
scheduled not later than sixty (60) calendar days from the date of signing of the
MOA.

2. The Developer's Funding Allocation shall be available from the date of

execution of the Memorandum of Agreement to December of the same year,
which is alternately called herein as "year of signing."

3. Utilization of the Funding Allocation shall be as follows:

3.1. The funding allocation is deemed utilized based on the loan amount of
applications submitted by the Developer for the given quarter, not on the
loan value approved by the Fund.

3.2. At the end of each quarter any unutilized allocation shall be automatically
added to the allocation for the succeeding quarter.

3.3. Any unutilized allocation by December of the year of signing shall be

forfeited.

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4. The Developer shall be required to apply for a new Funding Allocation for the
succeeding year and every year thereafter. It shall be evaluated based on the
criteria provided in accordance with Item IV Section 1 hereof and classified
accordingly pursuant to the Guidelines on the Classification of Developers and
the Grant of Incentives.

5. COMMITMENT FEE

5.1 The commitment fee is a charge that shall be imposed on the Developer
if it fails to fully utilize the budget allocation in a given quarter. The
commitment fee shall be based solely on the funding allocation of every
succeeding quarter or the quarter following the quarter in which the
Developer failed to meet its scheduled delivery.

5.2 As a rule the DEVELOPER shall not be charged with a commitment fee.
However, if at the end of a quarter, the Developer is unable to utilize at
least eighty percent (80%) of its budget allocation, it shall be charged with
a commitment fee equivalent to one-half percent (1/2%) of the budget
allocation for the succeeding quarter. The unutilized budget of the
preceding quarter that was added to the succeeding quarter shall not be
considered in computing the commitment fee.

5.3 If by the end of the succeeding quarter, the Developer is able to utilize at
least 80% of the budget allocation therefor, excluding the unutilized
budget of the previous quarter that was added, the commitment fee
collected shall be refunded to the Developer and no commitment fee shall
be charged in the following quarter.

6. RELEASE OF LOAN PROCEEDS

The takeout proceeds of housing loans that passed evaluation shall be

released to the Developer within three (3) working days from submission of
complete documents enumerated in the Notice of Approval, which shall include:

6.1. Deed of Absolute Sale executed by the developer in favor of the Fund
or of the Pag-IBIG member-buyer as the case may be;

6.2. Individual Transfer Certificate of Title (TCT) in the name of the Fund or
of the Pag-IBIG member-buyer as the case may be;

6.3. Deed of Conditional Sale between the Fund and the Pag-IBIG member-
buyer if the TCT is in the name of the Fund, or Loan and Mortgage
Agreement if the TCT is in the name of the Pag-IBIG member-buyer;

6.4. Notarized Promissory Note;

6.5. Tax Declaration on the land in the name of the Fund or in the name of
the Pag-IBIG member-buyer as the case may be;

6.6. Tax Declaration on the improvements in the name of the Fund or in the
name of the Pag-IBIG member-buyer as the case may be;

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 6.7. Updated Real Estate Tax Receipt for the quarter;

6.8. Occupancy Permit;

6.9. Certificate of Acceptance; and

6.10. Transfer Tax Receipt for lot and building.

A Developer who will request for the split payment of proceeds shall be charged
a service fee per additional check.

B. ADDITIONAL FUNDING ALLOCATION

In case the Developer's funding allocation for the year of signing has been fully
utilized before the end of the year, the Developer may request for funding
allocation in addition to the amount agreed in the MOA, subject to the following:

1. The Developer's over-all performance from all Pag-IBIG Fund branches that it
is transacting with as of date of request for additional allocation meets or
exceeds the criteria for the Developer's classification as provided in the
Guidelines on the Classification of Developers and Grant of Incentives.

2. The Developer has no buyback obligation beyond the prescribed buyback

period.

3. Pag-IBIG Fund has available funds for the additional allocation.

4. The Developer has not been downgraded.

VII. DEVELOPER'S WARRANTIES

The Developer shall provide the following warranties:

1. DOCUMENTATION

The Developer warrants that all documents, inclusive of the individual

Transfer/Condominium Certificates of Title (TCTs/CCTs) and the corresponding
Deeds of Absolute Sale, submitted to the Fund relative to the program, are valid,
binding and enforceable in all other respects that they purport to be.

2. TITLE/OWNERSHIP OF PROPERTY

The Developer warrants that it is the lawful owner of the property or in the case
of joint venture, that the purported owner lawfully owns the property and has
authorized the Developer to develop the property and sell the individually titled
saleable units in the subdivision or condominium project, subject of the MOA.
Likewise, the Developer warrants that the property is free from all liens,
encumbrances and adverse claims, that the title/ownership papers have no
vitiating defects.

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 3. PROJECT DEVELOPMENT AND HOUSE CONSTRUCTION

The Developer warrants that the project shall be developed and completed in
accordance with the developmental plans approved by the government agencies
and other regulatory bodies concerned, and that the residential units have been
constructed in accordance with the plans and specifications approved by the
concerned regulatory agencies, as well as with the local ordinances, and that
there are no hidden defects whatsoever in the construction of the said units.

The Developer commits to be bound solidarily with the architect, contractor or

engineer of the project and agrees to answer for any defects on house
construction (except those that are due to normal wear and tear) discovered by
the Pag-IBIG member-buyer and/or the Fund within 6 months from acceptance.
of the residential unit by the Pag-IBIG member-buyer, provided that the defects
have been communicated to the Developer and/or the HLURB within a
reasonable period after discovery. The developer shall rework/repair the
defective residential units to meet the specifications stated in the plan and the
standards set by HLURB, despite the transfer of title in the name of Pag-IBIG
Fund or the latter's member-borrower. The re-working/repair shall be for the
account of the Developer and shall be done within sixty (60) calendar days from
receipt of the notice or complaint relative to the house construction defects.

4. ACTUAL DELIVERY OF UNITS

The Developer shall turn over the properties to the Pag-IBIG member-buyers
upon release of the takeout proceeds, and the Pag-IBIG member-buyers can
occupy these properties immediately.

5. MISREPRESENTATION

The Developer warrants that any person or agent employed by the Developer,
or allowed to transact or do business in its behalf, has not committed any act of
misrepresentation. The Developer shall answer for damages caused by
misrepresentation to the Pag-IBIG member-buyers made by its employees or
agents, or that appeared on the marketing brochures.

6. COMPLIANCE WITH LAWS, RULES AND REGULATIONS

The Developer warrants that he complied with all pertinent laws, rules and
regulations.

VIII. BUYBACK OF ACCOUNTS

1. Without prejudice to any legal remedy, criminal, civil, or administrative, the

Pag-IBIG Fund may, at its option, require the Developer to buyback the accounts
affected by breach of warranties, in case the developer fails to correct or cure
the breach within the period given. The Fund shall issue a Notice of Buyback to
the Developer providing therein the period within which the Developer must
buyback the accounts.

2. BUYBACK VALUE

2.1. The buyback value to be charged to the Developer shall consist of the
outstanding principal balance, unpaid interest of the Pag-IBIG member-
buyer and penalties as of date of receipt of Notice of Buyback due to breach
of warranties.

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 2.2. The buyback value shall likewise bear an interest at the rate of 8.5% per
annum computed from date of receipt of the Notice of Buyback due to
breach of warranties up to actual date of settlement.

2.3. A penalty shall be charged equivalent to 1/20 of 1% of the amount due per
day of delay from the expiration of the prescribed buyback period up to date
of actual settlement.

3. MODE OF SETTLEMENT

The buyback of the accounts may be carried out through the following:

3.1. Over-the-counter Payment

The Developer shall pay directly to the Fund to settle its buyback obligation,
inclusive of penalties if any.

3.2. Offsetting from Takeout Proceeds (OTOP)

In case the Developer fails to buyback the accounts within the period given
in the Notice, the Fund shall immediately offset the amount due from the
takeout proceeds or from any other amount due the Developer. This
offsetting shall continue until the buyback value is fully paid.

4. The Developer may appeal its buyback obligation to the Vice President of the
Group concerned solely on the ground that the computation thereof is not in
accordance with the policies and procedures of Pag-IBIG Fund. The issue shall
be resolved within thirty (30) working days from receipt of the appeal. The period
given to the Developer to buyback the affected accounts shall be suspended and
no penalties shall be imposed on the outstanding buyback obligation during the
period that the appeal is still pending. Upon receipt of the resolution on the
appeal, the Developer shall be entitled to the remainder of the period given in the
Notice to settle its buyback obligation.

IX. COLLECTION SERVICING AGREEMENT

1. Only Developers who meet the following criteria may enter into a Collection
Servicing Agreement (CSA) with the Fund:

1.1. Must have a collection infrastructure;

1.2. Must have internet access; and

1.3. Must at least have a satisfactory financial condition.

2. The Fund reserves the right to reject applications for CSA or its renewal.

3. The Fund and the eligible Developer shall enter into a CSA, providing among
others:

3.1. That the Developer shall provide collection assistance to the Fund covering
outstanding housing loan accounts within its housing project.

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 3.2. That the Fund and the Developer shall agree on the accounts that will be
enrolled under the CSA prior to the execution of the agreement, which shall
be listed in the collection schedule. New accounts that will be taken out after
execution of the CSA shall be enrolled for collection only upon mutual
agreement of the Developer and the Fund. The Fund shall provide an
updated collection schedule monthly.

3.3. That the Fund shall pay a Collection Servicing Fee (CSF) to the Developer
for the latter's services as the Fund's collecting agent.

4. The Developer shall secure a surety bond from a reputable bonding company
that is acceptable to the Pag-IBIG Fund and duly licensed by the Insurance
Commission as guaranty for the remittance of collection proceeds, subject to the
following conditions.

4.1. Said bond shall be assiqned in favor of the Fund to cover the amount that
may be collected for a period of one (1) month but are not remitted by the
Developer. The amount of the surety bond shall be based initially on the
Collection Schedule provided by the Fund. The Fund shall increase the
amount of the surety bond or require the Developer to furnish a replacement
security if circumstances warrant.

4.2. It shall continue to be in full force and effect until the termination of the CSA.

4.3. The bond must provide that the Fund may call on it after ten (10) calendar
days from non-remittance of collections without need of prior demand from
the Developer.

5. In lieu of surety bond, the Developer may assign any of the following instruments:

5.1. Certificate of Time Deposit from any of the Top 30 Banks in the Philippines
in terms of assets;

5.2. Trust/Escrow Accounts;

5.3. Government Securities; or

5.4. Other assignable instruments acceptable to the Fund.

The value of the instruments above shall not be less than the amount stated in
Item IX Section 4.1 hereof.

6. The Fund shall issue Pag-IBIG Fund Receipt (PFR) booklets to the Developer,
for which the latter shall be held responsible for the issuance of the
corresponding PFRs to Pag-IBIG member-buyers from whom they collect
monthly payments. The PFRs to be issued by the Developer shall be stamped
with the name of the developer for easy identification and monitoring.

7. The Developer shall deposit the collection remittances to the Fund's designated
bank account in accordance with the following schedule:

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 Type of Remittance Date
Collection Period
Collection
Cash Monday to Sunday Not later than 5pm of the first working
day of the week following the applicable
collection period.

Check Monday to Tuesday Not later than 5pm of the first working
day of the week following the applicable
collection period.

Wednesday to Sunday Not later than 5pm of Thursday of the

week following the applicable collection
period.

The Developer must submit the collection reports by email to the Treasury
Department not later than 12 noon of the working day following the date of
collection.

8. The Developer shall be paid a CSF based on his collection performance for the
month, which shall be computed in the following manner:

Actual Number of Accounts that paid

Collection Performa nce = --T-o-t-a-I -E-n-ro-I-Ie-d-A-c-c-o-u-n-ts-a-t-t-h-e-s-ta-rt-o-f
-e-a-ch--
month

The CSF rate and the corresponding Developer's collection performance shall
be as follows:

Collection Performance CSF

>95% 2.5%

>90% - 95% 2.0%

>85% - 90% 1.5%

80% - 85% 1.0%

9. If a Pag-IBIG member, whose housing account is endorsed to the collection

agent, pays his amortizations to the Developer, the latter shall receive the
corresponding collection incentive at the rate it is entitled for the month. Said
collection, however, will not be included in the computation of the Developer's
collection performance.

10. Failure of the Developer to remit collections on scheduled date shall subject
the developer to a penalty of 12/365 of 1% per day of delay, compounded daily,
or PSOO, whichever is higher, reckoned from actual date of payment of the
Pag-IBIG member-buyer to the Developer up to date of actual remittance to the
Fund, or the date on which the proceeds of the surety bond sufficient to settle
the unremitted amount is actually received by the Fund, if a call is made on the
bond.

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.'

11. In addition to the penalty charges stipulated above and without prejudice to the
Fund's right to file appropriate action in court against the developer and/or any
of its officers, the Fund may also impose singly or collectively the following
sanctions, if warranted:

11.1. Cancel the CSA.

11.2. Suspend the acceptance of housing loan applications. The Pag-IBIG

member-buyer may file his housing loan application directly to Pag-IBIG
Fund.

11.3. Cancel the developer's accreditation and bar the said developer,
including its key officers, from any future availment or participation under
Pag-IBIG lending programs.

12. The CSA shall be valid for one (1) year from date of execution. However, it may
be renewed annually thereafter provided the Developer is able to meet the
following criteria:

12.1. The Developer is able to meet the criteria provided in Item IX Section 1
hereof.

12.2. The Developer's Collection Performance for the preceding year is at

least 80%.

X. REPEALING CLAUSE

All memoranda, rules, regulations and other issuances that are inconsistent herewith
are hereby repealed, except Circular Nos. 259, 287 and 298, which shall continue
to be in force for six (6) months from affectivity of these guidelines. The repeal shall
in no way affect contracts entered into by the Fund prior to the issuance of these
guidelines.

XI. ESCALATION

Any issue that may arise in the interpretation of these guidelines shall, as much as
possible, be resolved by the Department Manager III or escalated to the next higher
level of authority.

XII. AMENDMENTS

The Senior Management Committee may amend, modify, revise and/or update the
guidelines as needed; provided, the amendments, modifications, revisions and
updates thereof, are in furtherance of the objectives of this Program and consistent
with the mandate of the Fund under its Charter and existing laws.

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XIII. EFFECTIVITY

These guidelines shall take effect immediately.

~~
ATTY. DARLENE MARIE B. BERBERABE
Chief Executive Officer

Makati City,

July 24f20~4

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