Developers worried by tightening of Pag-IBIG credit

MANILA, Philippines – The state-controlled Home Development Mutual Fund or Pag-IBIG Fund has tightened its loan disbursement in the aftermath of the Globe Asiatique scandal, raising concern among subdivision and housing developers catering to the mass-housing market.

In a press briefing on Friday, officials from the Subdivision and Housing Developers Association (SHDA) also cited kinks in the computerization of the Land Registration Authority (LRA) as another major challenge to the industry.

As the LRA implemented a computerization program, that same process aimed at streamlining business processes and linking all the Registries of Deeds nationwide, had ironically extended transaction processing from several days to more than three months, the association said.

“We’re in the middle of a perfect storm,” said SHDA president Manuel Crisostomo, citing these two major challenges to the industry. As such, he said the association was now in continuing dialogues with the government agencies concerned, alongside the Housing Urban Development Coordinating Council, to address these bottlenecks.

As Pag-IBIG imposed more stringent housing loan rules in the aftermath of the Globe Asiatique controversy, SHDA said there was a sharp decline in the agency’s loans since mid-2010.  Thousands of loan applications – most of which are being sought by people in dire need of housing – have either been severely delayed or disqualified, the association said.

The average loan takeout of the housing fund has fallen by 37 percent to about P2.4 billion per month this year versus the P4 billion monthly average in 2009 or prior to the Globe Asiatique scandal.

About 65 percent of local housing finance is typically covered by Pag-IBIG while only 35 percent is covered by the banking system.  The average loan size is P750,000 up to P1 million but SHDA, which also includes the country’s largest developers like Ayala Land, Robinsons Land and SM Development Corp., also caters to “socialized” housing or those selling units costing about P400,000.

Because banks usually cater to higher income groups and shy away from low-cost housing, Pag-IBIG’s tightening was effectively disenfranchising buyers, Crisostomo said.  The proposal from SHDA would thus be for Pag-IBIG to “ease up a bit” and “simplify” procedures so as not to penalize the law-abiding developers.

Globe Asiatique, which has been accused of using fraudulent home borrowers to avail itself of hefty loan takeouts from Pag-IBIG, is not a member of SHDA, Crisostomo said.

“The Globe Asiatique problem was isolated to that particular developer but because of that problem, Pag-IBIG reacted in a way that affected many of our developer members who follow the rules,” he said.