CREBA’s Legislative Proposals in support of its 5-point Agenda for Housing

1 Towards Long-term and Affordable Funds for Socialized and Economic Housing

CREBA proposes a bill amending key provisions of Republic Act 7835 or the Comprehensive and Integrated Shelter Finance Act (CISFA) of 1994, to establish, among others, a unified housing and urban development fund, centralized home fi- nancing program and a securitization mechanism to make long-term and affordable financing for housing purposes finally accessible for the millions of low-income earners in need of a home of their own.

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 current backlog of 5.5 million dwelling units show that government effort have fallen short in addressing our problematic housing situation - an issue that heavily impacts on the economic and social development of the nation.

Hence, CREBA believes that a Centralized Home Financing Program (CHFP) must be established by tapping key fund sources that have already been identified by law: among them, R.A. 7835 or CISFA; R.A. 8282 or the amended SSS Charter; R.A. 8291 or the amended GSIS Charter; and R.A. 9679 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.

The program’s initial funding of P270 Billion shall be composed of annual investment in bonds by the following government agencies:

• 25 Billion Pesos invested by SSS, and 25 Billion Pesos invested by GSIS.

• A minimum of 70 Billion Pesos or all of the 70 percent of investible funds of the Pag-IBIG Fund which must be devoted to housing in accordance with law; and

• 100 Billion Pesos from the unused or residual agri-agra funds of banks

• Plus 50 Billion Pesos allocated by government for housing and ensured thru inclusion in the annual national budget. This should be ensured through mortgages at an interest of 2 percent a year.

Section 11(b) of CISFA provides that a set of non-budgetary funding sources shall be used to augment the funding provided by the national government, more specifically, “all unused agri-agra allocation funds from banks in the preceding year shall be invested in socialized and low-cost housing: Provided, that the used agri-agra portion has been solely devoted to agricultural or agrarian reform credit,” as affirmed by BSP Circular No. 190 series of 1999.

Under this program, all incomeearning citizens whether or not members of the SSS, GSIS or the Pag-IBIG Fund, who qualify as beneficiaries under UDHA, and who have not previously availed of housing assistance from any government institution, shall be eligible to avail of housing loans through CHFP. The CHFP funds shall then be the spring-board for the operation of a long-term Mortgage-backed Securitization Program.

Led by a Secondary Mortgage Institution (SMI) organized by government, this scheme shall entail the formulation and implementation of a Securitization, Capital and Secondary Market Operations Program for the development of the secondary market for home mortgages and other housing-related receivables, conveyances and financial instruments to increase and sustain funds available for housing development.

With ample funds pooled under the mortgage-backed securitization mechanism - fully clothed with en- hancement measures on top of the mandatory HGC guaranty cover - government can finally implement a financing system targeting socialized and economic housing packages with fixed interest rates for loans lasting 25 years:

With this system in place, government is finally afforded the opportunity to more speedily resolve the critical housing problem that has plagued our society for many years as it integrates into the formal stream the millions in the informal sector.

The compounded favorable impact on the purchasing power of the low-income and marginalized can then revitalize and expand the market for socialized and economic types of housing projects.

Having fixed and low interest rates and longer mortgage life will allow more homebuyers from both formal and informal sectors stable and continuing home financing assistance. In the process, it provides them the chance to acquire homes for their families and at the same time save hard-earned money for other equally-important purposes, such as health and education.

This would mean added confidence as well as better and clearer opportunities to plan and allocate his resources towards owning a home for himself and his family by being able to project his priorities and capacity for the next 25 years at today’s prices.