Housing body acts to prevent foreclosure attempt by GSIS

The National Home Mortgage Finance Corp (NHMFC) is invoking the Arroyo administration’s moratorium on the foreclosure of housing loans against the Government Service Insurance System (GSIS).

NHMFC’s move came in the wake of GSIS’ expressed intention to foreclose on some P6.5 billion worth of assets of the NHMFC, saying it is in a better position to directly collect from delinquent borrowers.

According to NHMFC president Angelico Salud, the NHMFC has paid GSIS at least P6.8 billion for its loans covering the period 1988 to 1995.

Salud explained that the NHMFC loan from the GSIS was used exclusively to finance the housing loans of GSIS members. He said the NHMFC entered into an agreement with the GSIS in 2002.

Salud said the 2002 agreement involved the turnover of NHMFC residential mortgages currently valued at P11 billion. These mortgages, he said, secured the housing loans of GSIS members.

"We turned over the mortgages as payment for the remaining balance of NHMFC’s loan," Salud said.

Salud argued that the GSIS was also prevented from foreclosing after Malacañang issued an executive order freezing all delinquent housing loans until the government has sorted out what it intended to do with them.

GSIS has already called on its guarantees on the borrowings of the NHMFC after the agency defaulted on its payments, asking the National Government to pay the corresponding amounts of the loans.

According to GSIS president and general manager Winston Garcia, the government pension fund decided to take over the NHMFC assets and assume the collection of payments directly from the beneficiaries of the housing program.

Official records show that NHMFC borrowed a total of P11.07 billion from the GSIS with the National Government extending an unconditional guarantee on up to 22 percent of this principal.

Records also show that NHMFC had defaulted on its loan payments and GSIS originally wanted the National Government to "comply with its obligations to pay the corresponding amount of the loan it guaranteed."

According to Garcia, however, the GSIS had decided to foreclose on the portions of the loan that are not guaranteed by the NG and take over the collection.

"We’re in a good position to do this because we have direct access to the beneficiaries of these housing projects," Garcia said. "We can compel them to settle their housing arrears or risk losing access to other GSIS benefits that they would otherwise be entitled to."

Documents reveal that in December 1986, the NHMFC borrowed a total of P11.07 billion from the GSIS for the implementation of the National Shelter Program of the Aquino administration.

The National Government then issued a guarantee on Sept. 15, 1987 to secure payments of the loan. In the loan agreement, the National Government had agreed to extend an unconditional guarantee on 22 percent of the principal amount.

According to official records, NHMFC had already defaulted in the payment of its financial obligations to the GSIS and the loan had become due and demandable as early as April 2003.