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HDMF Circular No.~

TO: ALL CONCERNED

SUBJECT: ADDITIONAL AMENDMENTS TO HDMF CIRCULAR NO. 259

Pursuant to the authority granted to the Senior Management Committee in ItemNo. XI of HDMF Circular No. 259 to amend, modify or revise said guidelines, thefollowing policies amending certain provisions of the said guidelines are hereby issued:

A. INSPECTION OF UNITS

Alongside the inspection of units with corresponding loan applications, developersmay request for the advance inspection of other completed units in hissubdivision/condominium project; provided, a written request is submitted to theFund and the corresponding inspection/appraisal fees are paid.

B. RETENTION FOR UNDERTAKINGS

The retention for the developer's undertakings on lacking documents anddeficiencies in the provision of utilities shall be released to him upon compliance withthe said undertakings, except if there is an overdue buyback obligation. In such acase, the retained amount shall be applied to the developer's overdue buybackobligation.

C. CONVERSION OF CTS ACCOUNTS TO REM

The following provisions relating to Conversion of CTS accounts to REM are herebyamended and shall read as follows:

1. Substantial Compliance

The last paragraph of Item II-A Section 2.6

"A developer who is able to submit a copy of proof of payment to the BIR(for Expanded Withholding Tax and Documentary Stamp Tax) and theCity/Municipal Assessor's Office (for Transfer Tax) shall be deemed ashaving substantially complied with the conversion requirement. Theoriginal receipts must be presented for authentication purposes.

Within thirty (30) working days from presentation of such proof, thedeveloper must submit a copy of the Certificate Authorizing Registration(CAR) to the Fund. In case there are delays on the issuance of the CAR onthe part of the BIR, the developer shall submit a report to the Fund relativeto Ithe affected accounts.

Within fifteen (15) working days thereafter, the developer must also submita copy of proof of payment to the Registry of Deeds."

2. Warranty on Conversion of CTS accounts to REM

Item V-H

"The developer shall convert the security for eligible accounts from CTS to REMbut it shall not go beyond the 24th month of the seasoning period forWindow 1 and Window 2 accounts, or 36th month of the seasoning periodfor Window 1 (Elite) accounts."

3. Conversion Period

ItemVII-B Sections 1 and 2

"The developer shall begin converting eligible CTS accounts to Real EstateMortgage (REM) on the 18thmonth from date of loan takeout. In the case ofWindow 1 (Elite), conversion shall commence on the so" month from date ofloan takeout. The developer may convert the CTS account earlier than the18th or 30th month from loan takeout but it must be completed not later thanthe 24th or 36th month of the seasoning period, whichever is applicable.Conversion shall be reckoned from the release of the documentsnecessary for conversion."

4. Assignable Instruments in lieu of Retention

ItemVII-C Section 4

"In case the developer opted to use other instruments (such as Certificate ofTime Deposit, Pag-IBIG Housing Bonds, Trust/Escrow account, governmentsecurities, etc.) instead of retention for conversion purposes, the Fund shallprocess the release of the assigned instrument to the developer only uponhis compliance with the following:

4.1. Presentation of the notarized Deed of Absolute Sale;

4.2. Issuance of another assignable instrument or cash bond toreplace the one that will be released, in case the assignableinstrument covers several accounts with different conversionperiods. The new instrument or cash bond must be equivalent tothe retention of the remaining CTS accounts that are not yet duefor conversion. The CTS accounts covered by the new instrumentor cash payment must be the same as the remaining accountscovered by the instrument to be released.

4.3. Execution of a Deed of Assignment of the instrument in favor ofthe Fund, in case a new instrument is used;

Within seven (7) working days from compliance with the required documentation,the assigned instruments shall be released to the developer or his representativeupon presentation of a duly notarized authorization letter."

5. Item VII-D Section 1.1

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If the account is still not converted at the end of the seasoning period, thedeveloper may request for extension to complete the process ofconversion. He shall not be required to buyback the account and shall begranted the extension, provided the following conditions are met:

5.1. The account subject of conversion is updated;

5.2. The developer has already paid the appropriate taxes before the BIRand the City/Municipal Treasurer's Office.

However, the extension will .depend on what stage of conversion theaccount is in. It shall be reckoned from the expiration of the seasoningperiod. As a consequence of extension, the developer's buyback guarantyshall likewise be extended in the same manner.

D. BUYBACK OF ACCOUNTS

1. Item VIII-E Sections 1 and 2 shall be amended, and shall read as follows:

"The buyback value to be charged to the developer shall consist of theoutstanding principal balance, unpaid interest and penalties at point of default orreceipt of Notice of Buyback due to breach of warranties, whichever is applicable.

1.1 The buyback value shall likewise bear an interest at the rate of 8.5%per annum computed from the date of default or receipt of Notice ofBuyback due to breach of warranties, whichever is applicable, up tothe actual date of settlement. No interest will be charged beyond thebuyback period.

1.2 The buyback value shall be paid within ninety (90) days from receipt ofNotice of Buyback in case of default, or within fifteen (15) days fromreceipt of Notice of Buyback for breach of warranties.

I1.3 A penalty shall be charged equivalent to 1/20 of 1% of the amount due per

day of delay from the expiration of the prescribed buyback period up to theactual date of settlement"

2. The remedies available to the developer, as provided in Item VIII-D of Gir. 259(borrower's updating and replacement of accounts), shall only be applicable toaccounts that are taken out under Cir. 259 but not to accounts taken out underGir.287.

3. Full updating by the borrower must be a one-time payment of all arrearages.

4. If after the developer has already bought back the GTS account, the member-borrower signified his intent to update his account within the gO-day buybackperiod, the developer shall be entitled to a refund of the buyback value previouslypaid. However, the Fund shall return said amount only after the member-borrower has fully updated his account.

5. In case of failure of the developer to buyback the account or failure to avail of anyacceptable remedies within the specified 90-day grace period, HDMF shallautomatically offset the total amount due against subsequent takeout proceedsor from any amount due the developer, if any, within five (5) calendar days fromthe date the 90-day grace period expires. Similarly, offsetting shall be carried out

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within five (5) calendar days from expiration of the 15-day grace period given tothe developer in case the call for buyback is due to breach of warranties.

6. The developer may file an appeal to the Group Vice President regardingaccounts for buyback within five (5) working days from receipt of Notice ofBuyback/Breach of Warranties only if the issuance of the said notice or thecomputation of the buyback value was arrived at in disregard of HDMF policies orprocedures. The issue must be resolved before the expiration of the ninety-dayor fifteen-day period, whichever is applicable.

E. BUYB ACK GUARANTY OF ACCOUNTS TAKEN OUT UNDER HDMF CIRCULARNO. 287

Accounts that are taken out under HDMF Circular No. 287 shall no longer becovered by the developer's buyback guaranty, except in cases of breach ofwarranties.

F. EFFECTIVITY

These guidelines takes effect immediately.

Makati City,o_c_t_o_be_r_2_B __ , 2011

~~;4ATTY. DARLENE MARIE B. BERBERABE

ChiefExeCUlivefr

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