MANILA, Philippines - State agency Home Guaranty Corp. (HGC) has approved the guidelines for the implementation of a guaranty program for microfinance housing loans.
HGC is a key shelter agency under the Housing and Urban Development Coordinating Council (HUDCC) chaired by Vice President Jejomar C. Binay. HGC is mandated to mobilize private investments in housing through a system of guarantees and incentives. HGC’s charter tasked the corporation to prioritize low-cost and socialized housing.
The guaranty for microfinance housing loans will cover loans of up to P400,000 extended by microfinance institutions (MFI) to their individual members and clients for the acquisition, reconstruction or renovation of the houses they own.
MFI members and clients include those who are gainfully employed but without fixed compensation, such as vendors, fisher folk, farmers, carpenters and those engaged in the informal economy. Without documentary proof of income to establish paying capacity and collateral to offer, these sectors are traditionally excluded from the formal credit and financing system.
The HGC guaranty will encourage MFIs to provide more credit for housing purposes without the need for real estate collateral. The microfinance guaranty program, according to HGC president Manuel R. Sanchez, is part of the agency’s overall strategy for expanding its business to serve the marginalized sectors and those in the countryside.
HGC’s marketing efforts in the countryside resulted in the approval of P695 million worth of guaranty lines to 12 rural banks since July 2010.
Guaranty line applications from five rural banks namely: Rural Bank of Tanza Inc., Rang-ay Bank Inc., Rural Bank of Guinobatan Inc, Cantilan Bank Inc. and Rural Bank of Mabitac, Inc. were approved during the July 24 meeting of the HGC board. VP Binay, who sits as vice-chairman of the HGC board, presided over the meeting.