STATE-OWNED HOME GUARANTEE CORP. has sought equity infusion of at least P1 billion a year from the national government to expand its capacity to guarantee more housing loans.

HGC is hoping to get P1.2 billion from the national government in 2009 and another P1 billion in 2010 to help accommodate its short-term programs and expenditure requirements that it has already identified.

HGC president Gonzalo Bongolan said the company’s authorized capitalization was actually P50 billion, but that its paid-up capital from the national government has so far reached only P11 billion.

Aside from the request to get P1.2 billion and P1 billion in additional capitalization for the next two years, Bongolan said the company would also make a formal request to get at least P1 billion a year from 2011 and onward.

HGC, established through Republc Act 8763, provides guarantee to socialized and low-cost housing loans extended to credit applicants by financial institutions like Pag-IBIG. The objective of HGC is to support the national government’s goal of providing shelter to more Filipinos by making housing loans more accessible through a credit guarantee.

But Bongolan said that its capacity to provide guarantee was rather limited. “Equity infusion [from the national government] will help support our operations and will be used to serve general purposes. We want to expand our guarantee and refinancing capacity,” Bongolan said.

Earlier, Bongolan said HGC was planning to borrow P5 billion from the commercial market next year by selling long-term bonds. Proceeds will be used to expand its capacity to cover more loans.

But should the government grant HGC’s request of annual capital infusion of at least P1 billion, Bongolan said, the company might not need to borrow as much.

HGC expects to increase its guarantee exposure to as much as P83.5 billion worth of housing loans next year, 16 percent higher than the P72 billion recorded as of end-2007. He said the projected increase is attributed to steadily rising demand for housing.

To accommodate the rising demand for housing and to better fulfill its mandate, Bongolan said, HGC should be able to increase its financial muscle through its investment activities and with the help from the national government.

But Bongolan earlier said that HGC’s charter limited it to invest only in government securities. He said HGC’s charter should be amended so that it can invest in more sophisticated and higher-yielding instruments.

He said HGC was urging Congress to file a bill amending the company’s charter and make the legislative measures a priority in 2009.

Another outdated provision in HGC’s charter, Bongolan said, is the one that prohibits it from guaranteeing housing loans besides “socialized” and “low-cost.” But he said the term “socialized housing” is defined in the HGC charter as one that costs only P150,000 and below. Nowadays, he said, it is difficult to find developers offering a house for P150,000 or less. The real estate industry considers socialized housing as one that costs P300,000, he said.