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Corporate Headquarters
The Atrium of Makati
Makati Avenue, Makati City

HDMF Circular No. 80 - J

TO: ALL CONCERNED

SUBJECT: AMENDED GUIDELINES OF THE Pag-IBIG GROUP LAND

ACQUISITION AND DEVELOPMENT (GLAD) PROGRAM

Pursuant to the approval by the HDMF Board of Trustees during the 191st Board
Meeting last October 16, 2002, the Amended Guidelines of the Pag-IBIG Group
Land Acquisition and Development (GLAD) Program, are hereby issued:

A. OBJECTIVE

The Group Land Acquisition and Development Program aims to provide financial
assistance to organized groups of formally employed Fund members for the
acquisition and development of rawland or partially developed land, which shall
serve as the site of their housing units.

B. FINANCING MECHANISM

Financial assistance for land acquisition and site development shall be in the
form of a direct loan to the community association.

The loan proceeds for land acquisition shall be released directly to the
landowner/s while that for site development shall be paid to the
developer/contractor engaged to undertake site development for the community
association.

Financial assistance for house construction shall be in accordance with Pag-IBIG

guidelines on additional loan for house construction.

C. ELIGIBILITY REQUIREMENTS

The beneficiaries or project proponents must be organized into community

associations with a minimum of 30 members to a maximum of 250 members,
duly registered with the proper agencies which will vest them with legal personality.
(e.g., the Securities and Exchange Commission (SEC) or the Cooperative
Development Authority (CDA) and the Housing and Land Use Regulatory Board
(HLURB).

The community association must have been existing for at least six (6) months prior
to loan application.

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 The officers of the association must satisfy the following requirements:

1. Must have a minimum term of office of at least two (2) years without
prejudice to removal from office due to disciplinary action.

2. Must have been regularly paying the dues under the group loan.

3. Must have an updated account and in good credit standing.

All beneficiaries of the housing project must be active and formally employed Pag-
IBIG members, eligible for loans under the existing Consolidated Guidelines of the
Pag-IBIG Housing Loan Program at the time of loan availment.

All members of the community association must also attend the Pag-IBIG Fund’s
seminar/workshop on the Group Land Acquisition and Development (GLAD)
Program and the Pag-IBIG Housing Loan Program.

D. LOAN REQUIREMENTS

The community association must comply with the following:

1. The land proposed for acquisition must be covered by an Original Certificate of

Title (OCT) or Transfer Certificate of Title (TCT) free from liens and
encumbrances.

2. There must be an appraisal report conducted by Pag-IBIG Fund certifying that

the subject property is a rawland or partially developed land and indicating
therein the appraised value of the land.

3. The subject property must be duly classified as residential per zoning

classification of the town/city plans prior to June 15, 1988. Otherwise, DAR
conversion clearance must be presented.

4. A written document must be drawn up clearly stating the commitment to sell on

the part of the landowner/s and intent to buy on the part of the community
association.

5. The subdivision plan and development plans of the subject property are already
approved by the concerned Local Government Unit (LGU) or by the Housing and
Land Use Regulatory Board (HLURB).

6. The community association must have already collected and deposited in a bank
the required equity for land acquisition and land development as well as interest
payments equivalent to three (3) months.

7. The community association must engage the services of a qualified housing

developer/contractor acceptable to Pag-IBIG Fund, to undertake land
development and to assist the community association in the process of
individualizing the mother title and in the process of converting the GLAD loan
into individual lot purchase loans.

8. There must be a written agreement duly concurred to by all the beneficiaries

stating the following:

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 8.1 The timetable for land development, to commence not later than six (6)
months from date of initial loan release, and to be completed within two (2)
years therefrom.

8.2 The timetable for individualization of the mother title and conversion of the
GLAD loan into individual lot purchase loans, not to exceed two (2) years
from date of initial loan release.

8.3 The consent of individual beneficiaries to abide by the majority decision with
regards to lot subdivision/allocation, choice of developer and physical
development plans.

8.4 Guidelines on the substitution/addition of beneficiaries and sanctions against

defaulting member-beneficiaries.

E. LOAN TERMS

1. Loan Amount

The total loan to the community association shall be the aggregate of the
amounts extended to the individual member-beneficiaries.

The member’s loan entitlement per individual beneficiary shall be proportionate

to his Pag-IBIG contributions (inclusive of the employer counterpart contributions)
based on the following schedule:

Membership Monthly Loan

Category Contribution Entitlement

Pag-IBIG I / P 100 Up to P 125,000

Pag-IBIG II 200 Over P 125,000 - P 250,000
300 Over P 250,000 - P 375,000
400 Over P 375,000 - P 500,000
600 Over P 500,000 - P 750,000
800 Over P 750,000 - P 1,000,000
1,000 Over P1,000,000 - P 1,250,000
1,200 Over P1,250,000 - P 1,500,000
1,400 Over P1,500,000 - P 1,750,000
1,600 Over P1,750,000 - P 2,000,000

2. Interest Rate

The interest rate on the total loan of the community association for land
acquisition and site development shall be nine percent (9%) per annum. Once
the loan share of the community association’s member is converted into lot
purchase loan, the interest rate shall be adjusted in accordance with the
Consolidated Guidelines of the Pag-IBIG Housing Loan Program rates prevailing
at the time of loan availment.

Likewise, for projects up to house construction, the interest rate shall be based
on the individual beneficiaries’ total loan entitlements in accordance with the
Consolidated Guidelines of the Pag-IBIG Housing Loan Program rates prevailing
at the time of housing loan availment. This rate shall be charged once loan
releases for house construction are effected.
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3. Loan to Collateral Ratio

The loan shall be secured by a First Real Estate Mortgage (REM) on the land
itself and all improvements thereon. The loan amount shall not exceed ninety
percent (90%) of the appraised value of the collateral.

4. Loan Releases

Loan proceeds for rawland acquisition shall be released in full subject to either
the loan-to-collateral value ratio of ninety percent (90%), the actual need or the
approved loan, whichever is lowest. Loan releases for land development, on the
other hand, shall be made on a staggered basis based on the approved work
schedule and work progress of the developer, not to exceed two (2) years from
date of initial loan release.

Subsequent progress releases shall be subject to a ninety percent (90%) loan-to-

collateral value ratio, provided that there are no arrears in loan amortization
payments.

Individual loans for house construction may be availed of after completion of site
development and issuance of individual titles to member-beneficiaries.

5. Loan Payments

The community association shall be responsible for the collection of loan

payments from member-beneficiaries and the remittance of the same to Pag-
IBIG Fund while the loan is still considered as an obligation of the group. During
this period, only the interest shall be paid, with the first payment due 30 days
from the date of the initial loan release.

The loan principal shall be paid by the proceeds of the conversion of the
community association’s GLAD loan into individual lot purchase loan. The
member-beneficiary’s share in the loan obligation of the community association is
deemed paid once the title of the lot assigned to him is transferred to his name
and the mortgage covering his lot purchase loan is annotated on the said title.

Once individual Promissory Notes are executed, the member-beneficiaries

themselves shall remit loan amortizations directly to the Pag-IBIG Fund.

Any member-beneficiary of the community association can fully pay anytime his
share in the obligation of the community association (GLAD loan) in cash or
through lot purchase loan subject to the following:

1) Land development is already completed and the mother title has been
individualized.

2) He has secured a clearance from the community association allowing him to

fully pay his loan in cash or through lot purchase loan.

3) His membership contribution is updated.

In case of delinquent GLAD accounts, the member-beneficiary shall also pay

his corresponding share in the penalty and overdue interest obligations of the
community association. If payment is through lot purchase loan, the member-
beneficiary shall pay the penalty and interest portions in cash.
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6. Loan Period

The total loan amount to the community association shall be paid within two (2)
years from the date of initial loan release.

7. Processing Fee

A loan processing fee equivalent to P100 per project beneficiary or P10,000,

whichever is higher, shall be charged to the community association, to be paid as
follows:

▪ P7,000 upon filing of application (non-refundable); and

▪ Balance upon loan approval.

8. Penalty Charges

Failure to pay the loan obligation when due shall subject the community
association to a penalty charge equivalent to 1/20 of 1% of any unpaid amount
for each day of delay or 18% per annum.

9. Insurance

The community association shall be covered by a Group Mortgage Redemption

Insurance (GMRI).

In case of death of any member-beneficiary, his principal share in the loan

obligation of the community association shall be paid by the GMRI claims
proceeds.

10. Default

The community association shall be considered in default if it fails to pay any

three (3) consecutive monthly amortizations and other obligations on the loan.

Likewise, the group shall also be considered in default if it fails to complete land
development and if it fails to convert the group’s loan obligation into individual lot
purchase loans within two (2) years from date of initial loan release.

11.Effects of Default

In the event of default, the entire outstanding loan obligation (principal, interest,
penalty, other fees) shall become due and demandable.

12.Other Conditions

a. The resulting per square meter cost of the community association’s saleable
lots must be significantly lower than the prevailing selling prices of similarly
developed lots in the vicinity.

b. Majority of the members of the community association must come from only
one agency/company or employee-group.

c. Structures to be erected in the project site may take the form of

medium-rise buildings comprised of at least 16 units (four storeys with
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 four units per floor), with a minimum floor area of 18 square meters per
unit.

F. EFFECTIVITY

The amendments included herein shall take effect immediately and shall be
applicable also to all outstanding GLAD loans.

G. AMENDMENTS

These guidelines may be amended, revised or modified by HDMF Management,

subject to confirmation by the HDMF Board of Trustees.

This Circular takes effect immediately.

Makati City
18 October 2002