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Date: October 12-14, 2011

HOME GUARANTY CORPORATION. TRAINER’S TRAINING. Date: October 12-14, 2011. Venue :. HISTORICAL BACKGROUND. FOUNDED IN 1950 THRU R.A. 580 - HOME FINANCING COMMISSION 1978 - BECAME CORPORATION UNDER E.O. 535

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Date: October 12-14, 2011

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  1. HOME GUARANTY CORPORATION TRAINER’S TRAINING Date: October 12-14, 2011 Venue :

  2. HISTORICAL BACKGROUND • FOUNDED IN 1950 THRU R.A. 580 • - HOME FINANCING COMMISSION • 1978 - BECAME CORPORATION UNDER E.O. 535 • (PLACED UNDER MINISTRY OF HUMAN SETTLEMENTS) • 1986 - RENAMED HOME INSURANCE AND • GUARANTY CORPORATION UNDER E.O. 90 • 2000 -RENAMED AS HOME GUARANTY • CORPORATION - RA 8763 • - Signing Date : March 7, 2000 • - Effectivity Date : March 29, 2000

  3. OUR MANDATES • Promote sustainable home financing by providing risk cover • or guarantees and tax/fiscal incentives to banks, investors and • financial institutions, granting loans, credits, and financing for • housing developments and acquisition. • Pursue the development and sustainability of secondary • mortgage market. • Supervision and regulation of building and loan associations • (RA 8791). • Administer and control the cash flow guaranty system for • the Abot-Kaya Pabahay Fund ( RA 6846).

  4. Guaranty Homebuyers Developers Financing Institution Guaranty Concept Developmental Loans Home Loans Home Acquisition Subdivision Development

  5. Retail Guaranty GUARANTY PROGRAMS • Guaranty coverage on loans/credit facility extended for the purchase/acquisition or lease of a single family-residence.

  6. GUARANTY PROGRAMS... Developmental Loan Guaranty • A guarantee facility covering loans extended for the development of subdivisions, townhouses, dormitories, apartments and other residential dwellings.

  7. Covers either the • Receivables backing-up the securities/bonds; or the • ABS, RMBS, Bonds Guaranty Programs Guaranty for Securitization Schemes

  8. BENEFITS OF THE HGC GUARANTY RISK COVER - on outstanding principal obligation plus interest and yields on guaranteed loans FISCAL INCENTIVE -Tax exemption on Interests and yields earned on guaranteed loans Sales PackageInterest/Yield Earned Socialized Housing Up to 11.0% Low-Cost Housing Up to 10.0% Medium-Cost Housing Up to 9.5% Open Housing Up to 8.5% SOVEREIGN GUARANTY ON HGC OBLIGATIONS – Up to twenty (20) times its networth.

  9. TYPES OF GUARANTEE COVERAGE TYPES OF GUARANTY COVERAGE

  10. MODES OF DISPOSITION OF ACQUIRED ASSETS: • Competitive public bidding (outright purchase, straight sub- lease transaction or joint venture arrangement) • Negotiated Sale • Partner with Local Government Units

  11. GUIDELINES IN THE DISPOSITION OF ACQUIRED ASSETS B. Installment sale: MINIMUM DOWN PAYMENT: 10% OF THE BID PRICE Balance of the bid price shall be payable for a maximum period of thirty (30) years at the following interest rates:

  12. E. BID SECURITY The amount of Bid Security shall depend on the sales package of the property, as shown below:

  13. F. Documentary Requirements:

  14. DISPOSITION GUIDELINES FOR HGC’S NON-RETAIL ACCOUNTS

  15. I. MODES OF DISPOSITION A. Public Bidding • For purposes of transparency, disposition of all developmental and big-ticket accounts shall be subject to a public bidding where the Minimum Disposition Price (MDP) is announced. 2. The Invitation to Apply for Eligibility and to Bid shall be published in a newspaper of general circulation for two (2) consecutive weeks or days and posted in the HGC website (www.hgc.gov.ph). If the project is located in a region, province or locality which has its own broadly circulated newspapers, the Invitation is also published in one (1) of such local newspaper. 3. The MDP shall be based on the average appraisal values of two (2) external appraisers. The appraisal shall be effective for two (2) years; updating may be undertaken even before the 2-year period expires, if warranted.

  16. A. Public Bidding (Cont’d) 4. The MDP shall be approved by the following: The approval of the HGC Board of Directors is also obtained for the following: • Terms of Reference (TOR); • Criteria for the evaluation of the eligibility requirements and financial proposals; • the short listing of eligible bidders; and • the award for the winning bidder.

  17. Negotiated Sale After a failed public bidding, the Board may, upon the recommendation of Management, approve the conduct of another public bidding with a revised and/or adjusted MDP, or undertake disposition through a negotiated arrangement. The project/asset shall be disposed through negotiations with interested buyers. Offers for negotiated sale shall be published and solicited formally. The negotiated disposition may come in the form of: • outright sale; • lease; • joint venture (JV); or • other similar or variant schemes.

  18. B. Negotiated Sale (Cont’d) For purposes of negotiation, the following may be considered as applicable bases for determining the offer most advantageous to the Corporation: • The computed MDP based on the Net Effective Return (NER) computed as follows: Current Market Value Add/Deduct : (expected increase or depreciation for the next 2.5 years) = Adjusted Market Value Less: • Carrying Cost (real estate taxes, fire insurance, appraisal fee, security expenses) • Applicable Discount • Foregone Interest (if the proposal is accepted and the proceeds of sale invested) = Minimum Disposition Price

  19. Negotiated Sale (Cont’d) • The bid/s received during the previous bidding/s but was/were not acceptable to HGC; • The appraised value adjusted by the transaction and development costs subject to Investment Rate of Return (IRR) analysis; • The discounted MDP, i.e., MDP less the severity of loss; and • Pertinent COA rules and regulations. Disposition through Retail Basis After failing to dispose a developmental project on a wholesale, “as-is, where-is” basis, and if said project has lots and/or houses and lots that can be disposed of individually, disposition of the non-retail account can be made on a retail basis. Short Term Leases Developmental accounts may also be published for lease but only for a short term of one to five years.

  20. II. TERMS OF SALE • Cash Sale • A discount of 10-15% of the selling price may be applied for outright cash sale. • Installment Sale

  21. HOME GUARANTY CORPORATION 4th Floor Jade Building No. 335 Sen. Gil Puyat Avenue, Makati City Tel Nos. 896-04-25; 897-31-49; 897-32-34 www.hgc.gov.ph

  22. The End…

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