Temporary Foreclosure On 50,000 Houses In Phillipines

June 16th, 2008

Balikatan Housing Finance has agreed to suspend temporarily foreclosures on 50,000 houses, much to the relief of speaker of the House Prospero C. Nograles. The company said that it is open to talks. Foreclosures would be proceeded with, only if all other doors close. It gives a breathing space to 50,000 families who were under the constant threat of eviction. Nograles has been given the assurance by Fedrico Cadiz, the president of Bahay Financial Services. The BFS is a company dealing with assets and loan management that had been engaged by Balikatan. It is a special company that is owned jointly the National Home Mortgage Finance Corporation (NHMFC), a government body and DB Real Estate Global Opportunities for servicing mortgage related operations.

On the initiative of Nograles a panel, headed by Rodolfo Valencia (of the Housing Committee on HUD) is investigating on the en masse foreclosure on low cost properties that had been sold by NHMFC to Balikatan. Valencia reiterated that Balikatan is laying stress on negotiations rather than foreclosures. All options would be taken into consideration so that the loans can be modified.

For quite sometime Nograles, author of Housing Loan Condonation Act of 1998, has been working hard to put a hold on all foreclosures related to delinquent low-cost housing mortgages. Most Filipinos are in critical financial condition because of the worldwide inflation aggravated by falling income and unemployment. He stresses that compassion is the call of the hour at a time when it is a question of basic food and shelter. The foreclosures on low cost socialized housing units will push back thousands of Filipinos to the slums. It will worsen the problem of urban slums.

During the initial hearing sessions of Valencia’s committee, the Alliance of Homeowners alleged that the transfer of the loan accounts from NHMFC to BHFI had been done without previously notifying the members. The latter cannot afford the steep down payments and today foreclosure is the imminent result. Another group of homeowners, Kapithahayan wanted restructuring of the loans to affordable levels. The alternative would for NHMFC to purchase back the accounts.

There are three bills in the offing aiming to restructure loans of delinquent borrowers. The target is to reduce a sizeable portion of the accrued interest, see to it that interest is not charged on the interest that still remains and to fix 6% interest on the principal loan.