Fourteenth Congress

Second Regular Session

Begun and held in Metro Manila, on Monday, the twenty-eight day of

July, two thousand eight.

REPUBLIC ACT No. 9507 October 13, 2008

AN ACT TO ESTABLISH A SOCIALIZED AND LOW-COST

HOUSING LOAN RESTRUCTURING AND CONDONATION
PROGRAM, PROVIDING THE MECHANISMS THEREFOR, AND
FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled:

Section 1. Short Title.- This Act shall be known as the "Socialized and
Low-Cost Housing Loan Restructuring Act of 2008".

Section 2. Declaration of Policy. - It is the policy of the State to

undertake a continuing program of urban land reform and housing
that will make available at affordable cost decent housing to
underprivileged and homeless citizens.

Toward this end, a rational loan restructuring and condonation

program shall be instituted that takes into consideration the credit
wothiness and credit discipline of the borrowers, and the financial
viability of the lending institutions.

SECTION 3. Coverage of the Restructuring Program for Delinquent

Socialized and Low-Cost Housing Loan Accounts. - There is hereby
established a Socialized and Low-Cost Housing Loan Restructuring
and Condonation Program. Under this program:
(a) for a period of eighteen (18) months after the issuance of the
implementing rule and regulations of this Act, all socialized and low-
cost housing loans, the original principal amount of which are within
the housing loan ceilings as determined by the Housing and Urban
Development Coordinating Council (HUDCC), with any of the
government financial institutions (GFIs) and agencies involved in the
National Shelter Program (NSP), including, but not limited to, the
Government Service Insurance System (GSIS), Social Security System
(SSS), Home Development Mutual Fund (HDMF) or Pag IBIG Fund,
National Home Mortgage Finance Corporation (NHMFC), Social
Housing Finance Corporation (SHFC), Home Guaranty Corporation
(HGC), and the National Housing Authority (NHA) that have at least
three (3) months of unpaid monthly ammortizations as of the
effectivity of this Act are hereby declared covered by the benefits of
this loan restructuring and condonation program notwithstanding
that the same accounts have availed of the benefits of a previous
restructuring or condonation program: Provided, That the original
principal amount of the housing loans shall not exceed Two Million
Five Hundred Thousand pesos (P2,500,000.00). Provided, further,
That every year after the effectivity of this Act, HUDCC is authorized
to increase the amount herein stated;

(b) an application for restructuring shall only be charged a processing

fee and no downpayment which shall be required for a borrower to
apply for the benefits of this loan restructuring and condonation
program;

(c) all penalties and surcharges shall be condoned upon approval of

the restructuring application under this Act. Provided, That a
reasonable portion of the accrued interest on the housing loan shall
also be condoned, the amount or percentage of which shall be
determined by the respective boards of the GFIs and housing agencies
mentioned in Section 3(a) hereof. Provided, further, That all
remaining accrued interests shall be treated as non-interest bearing
principal to be equally repaid during the term of the restructured
loan. Provided, moreover, That an interest rate of not more than the
interest of the original loan or more than twelve percent (12%)
whichever is lower, shall be imposed upon the restructured loan:
Provided, finally, That all corresponding penalties and surcharges
which the NHMFC and SHFC may have to pay their funders as a
result of the implementation of this Act may be adjusted and
condoned;
(d) Pag-IBIG Fund, GSIS and SSS may allow the borrower-applicant
to use the total accumulated value of his/her membership
contribution or savings to update his/her housing loan;

(e) the term of a housing loan account being applied for restructuring
may be extended for a period longer than its original term in order to
lower the amount of the monthly amortization. Provided, That in no
instance shall the extension of the restructured loan exceed the
difference between the borrower’s age at the time of application and
age seventy (70). In the event that the borrower fails to pay three (3)
consecutive monthly amortization during the term of the restructured
loan, the concerned GFI or housing agency may pursue foreclosure
proceedings on the property;

(f) in case of permanent physical incapacity of a borrower, his/her

legal heirs and successors-in-interest may assume payment of his/her
outstanding housing loan; Provided, That in case of death of the
borrower, the proceeds of the Mortgage Redemption Insurance (MRI)
shall have been fully applied: Provided, further, That such legal heirs
and successors-in-interest must pass the GFIs' and/or housing
agencies' eligibility requirement before they are allowed to assume
payment of the borrower's loan obligation;

(g) the loan restructuring under this Act may be availed of only once
except in case of force majeure affecting the ability of the borrower to
fulfill his/her financial obligation; and

(h) the loan restructuring and condonation program provided for in

this Act shall be construed as a separate and distinct program from
the ones being implemented by the respective GFIs and housing
agencies mentioned in Section 3(a) hereof, and the borrower has the
option to choose which loan restructuring and condonation program
he/she may avail of.

Section 4. Authority to Continue the Restructuring Program. -

Notwithstanding the lapse of the period provided in Section 3 (a) of
this Act, the governing boards of HDMF/Pag-IBIG Fund, SSS, GSIS,
NHMFC, SHFC, HGC and NHA are hereby authorized to continue the
loan restructuring and condonation program under this Act.

Section 5. Exclusion from Coverage. - In no instance shall the

following housing loan accounts be covered by this Act:

(a) any account without a single payment since take out;

(b) an account which housing unit has been abandoned by the

borrower-owner for more than one (1) year from the date of
delinquency;

(c) an account which housing unit is occupied by a third party other

than the original registered beneficiary or his/her legal heirs;

(d) an account that has been foreclosed or a contract-to-sell that has

been cancelled, or has been surrendered to the GFIs or housing
agencies through dacion en pago, the title of which has already been
consolidated/transferred in the name of the GFI or the housing
agency; and

(e) Pag-IBIG Fund contract-to-sell accounts covered by the

developers's buy-back guaranty.

Section 6. Remedies Against Delinquent Accounts. - Without

prejudice to the resort to foreclosure as provided for by law or
contract in proper cases, the GFIs and housing agencies shall
continue to exercise their right to foreclose properties covered by
accounts excluded in subparagraphs (a) through (e) under Section 5
hereof or of delinquent accounts of borrowers who shall fail to avail of
the benefits under this Act and that such foreclosure proceedings
shall be exempt from publication in newspapers: Provided, that
posting of the date and place of auction shall be made in at least three
(3) conspicuous public places similar to that provided for under Act
3135 as amended, otherwise known as An Act To Regulate The Sale of
Property Under Special Powers Inserted In Or Annexed To Real-
Estate Mortgages: Provided, further, That notice to the borrower at
his/her last known address shall likewise be made: Provided, finally,
That the foreclosure proceedings mentioned above should be
observed in the event that the borrower avails of the benefits of this
Act but subsequently defaults under the loan restructuring and
condonation program.

Section 7. Incentive for Prompt Payment of Monthly Amortization. -

Upon the effectivity of this Act, all accounts whose monthly
amortizations are paid on time shall be entitled to incentives,
including but not limited to, a reasonable discount on loan interest,
the amount or percentage of which shall be determined by the
respective boards of the (GFls) and housing agencies.

Section 8. Implementing Rules and Regulations. - There is hereby

created an interagency committee, headed by the HUDCC and
composed of all the government institutions and agencies
enumerated in Section 3(a) hereof, tasked to promulgate the
implementing rules and regulations within sixty (60) days from the
effectivity of this Act.

Section 9. Congressional Oversight Committee. - There is hereby

created a Congressional Oversight Committee composed of the
Chairman of the Senate Committee on Urban Planning, Housing and
Resettlement and the Chairman of the House Committee on Housing
and Urban Development, four (4) members of the Senate and four (4)
members of the House of Representatives. The members from the
Senate shall be appointed by the Senate President from among the
members of the Senate Committee on Urban Planning, Housing and
Resettlement based on the proportional representation of the parties
or coalition therein. The members from the House of Representatives
shall be appointed by the Speaker from among the members of the
House Committee on Housing and Urban Development based on the
proportional representation of the parties or coalitions therein.

The Oversight Committee upon review and approval of the

Implementing rules and regulations shall become functus officio and
therefore cease to exist: Provided, however, That the GFIs and
housing agencies cited in Section 3(a) hereof shall submit to the
Committee on Urban Planning, Housing and Resettlement of the
Senate and the Committee on Housing and Urban Development of
the House of Representatives an annual report on the availment of
the loan restructuring and condonation program under this Act.
Section 10. Repealing Clause. - All laws, including Republic Act No
8501, otherwise known as the Housing Loan Condonation Act of
1998, executive orders, rules or regulations, or any part thereof,
inconsistent with any provisions of this Act are hereby repealed or
modified accordingly.

Section 11. Separability Clause. - If any provision of this Act is held

invalid or unconstitutional, the provisions not otherwise affected
shall remain valid and subsisting.

Section 12. Effectivity Clause. - This Act shall take effect fifteen (15)
days after its complete publication in the Official Gazette or in at least
two (2) newspapers of general circulation.

Approved

(Sgd.) PROSPERO C. NOGRALES

Speaker of the House of Representative

(Sgd.) MANNY VILLAR

President of the Senate

This Act which is a consolidation of Senate Bill No. 1987 and House
Bill No. 4220 was finally passed by the Senate and the House of
Representative on August 27, 2008 and August 26, 2008,
respectively.

(Sgd.) MARILYN B. BARUA-YAP

Secretary General
House of Representative

(Sgd.) EMMA LIRIO-REYES

Secretary of the Senate
Approved: OCT 13, 2008

(Sgd.) GLORIA MACAPAGAL-ARROYO

President of the Philippines

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