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REPUBLIC ACT NO. 580 - AN
ACT TO CREATE THE HOME FINANCING COMMISSION, TO STIMULATE HOME BUILDING
AND LAND OWNERSHIP AND TO PROMOTE THE DEVELOPMENT OF LAND FOR THAT
PURPOSE, PROVIDE LIBERAL FINANCING THROUGH AN INSURED MORTGAGE SYSTEM,
AND DEVELOP THRIFT THROUGH THE ACCUMULATION OF SAVINGS IN INSURED
INSTITUTIONS |
Section 1. This
Act shall be known and cited as the "Home Financing Act." CHAPTER I Sec. 2. There is hereby created a body corporate to be known as the Home Financing Commission which shall have its principal place of business in the City of Manila and shall exist for a period of fifty years. The functions of this Commission shall be — (a) To operate a mortgage insurance program as provided in this Act. (b) To encourage,d or initiate the organization or incorporation of Savings and Loan Associations as provided in this Act. (c) To promote home building and land ownership and the development of land for that purpose, and to promulgate rules and regulations to carry out the provisions of this Act. Sec. 3. Membership. — The Commission shall be composed of five members appointed by the President of the Philippines with the consent of the Commission on Appointments. The President shall designate one of the members as Chairman of the Commission who shall receive a compensation of twelve thousand pesos per annum. Two of the members appointed shall be officers or directors of non-government mortgagee-institutions participating in the insured mortgage program in accordance with the provisions of this Act. Unless holding other offices in the Government or a position with fixed compensation in any Government corporation or instrumentality, the members shall receive for each meeting of the Commission attended a per diem of twenty pesos: Provided, however, That a member shall receive a total of not more than one thousand pesos a year in per diems. The Chairman shall hold office for five years. The members of the Commission shall likewise hold office for five years, with the exception of the members first appointed who shall serve for one, two, three and four years, respectively, as stated in their appointments. Thereafter, the person appointed to succeed a member of the Commission whose term shall have expired shall continue to serve for the full five-year term, and, except in the case of vacancies caused otherwise than the expiry of the term, only one member shall be appointed to the Commission each year. In the event of a vacancy, the successor appointed to fill the same shall serve only the unexpired portion of the term of the member he succeeds. Sec. 4. Powers. — The Commission shall have the
following powers: Sec. 5. Procedure. — The Chairman of the Commission shall preside over its deliberations and shall be its General Manager. The decisions of the Commission shall be made by a vote of the majority of all its members. Sec. 6. Home Financing Fund. — There is hereby authorized to be appropriated an amount not exceeding five million pesos to be designated as a Home Financing Fund, which shall be used by the Commission to carry out the provisions of this Act; and for this purpose the Commission is hereby authorized, with the approval of the President, to borrow such amounts as may be necessary from any government office, agency, or instrumentality or private financing entity or entities authorized to give loans. This loan may be negotiated in the form of bonds under the authority contained in section four (d) of this Act. Sec. 7. (a) Accountant. — The accountant of the
Commission and the subordinate personnel of the Accounting Office shall
be appointed by the Commissioner of the Budget. The Commission shall
fix the salary of the accountant and the number and rates of salaries
of the personnel of the Accounting Office. Sec. 8. Report. — The Commission shall submit an
annual report to the President and to the Congress of the Philippines,
after the first day of January of each year but not later than the
first day of April, regarding its activities under this Act for the
previous year. CHAPTER II Sec. 9. With a view to encourage the financing of new construction for small business, agricultural and residential units in a limited amount, the repair of existing residential, small business or agricultural buildings and the rehabilitation requirements and recovery from damage caused by the elements, the Home Financing Commission shall prescribe rules and regulations to govern the insurance authorized under this section in accordance with the provisions set forth hereunder: (a) The Commission is authorized to insure banks, insurance companies, building and loan associations and other qualified lending institutions against losses which they may sustain as a result of eligible property improvement loans. The lending institutions shall be charged with the responsibility or exercising the proper credit judgment in making the loans. (b) The lending institution shall be insured against loss up to ten per centum of the aggregate net amount loaned over a given period. (c) Four classes of loans may be insured under this section at the discretion of the Commission even though they may be subject to existing mortgages: (1) Loans covering the cost of repair, alteration or improvement begun after the date of the approval of this Act of an existing structure, such loans not to be in excess of six thousand pesos and to mature in not to exceed five years on a monthly amortization basis; (2) Loans covering the cost of alteration, repair, improvements or conversion begun after the date of the approval of this Act of an existing structure used or to be used as a dwelling for two or more families, such loans not to be in excess of twenty thousand pesos and to mature in not exceeding ten years on a monthly amortization basis; (3) Loans covering the construction of a new structure begun after the approval of this Act to be used for small business or agricultural purposes, such loans not to be in excess of six thousand pesos and to mature in not exceeding six years on a monthly amortization basis; (4) Loans covering the construction of a new structure begun after the date of the approval of this Act to be used for a combination of residential and small business purposes or for a combination of residential and agricultural purposes, such loans not to be in excess of ten thousand pesos and to mature in not to exceed ten years on a monthly amortization basis. Section 10. (a) The Commission is authorized, upon
application by a qualified mortgagee, to insure in accordance with the
provisions of this Act, any mortgage offered to it which is eligible
for insurance as hereinafter provided, and, upon such terms as the
Commission may prescribe, to make commitments for the insuring of such
mortgages prior to the date of their execution or any disbursement
thereon. Section 11. (a) The Commission is authorized upon
application by the mortgagee, to insure, in accordance with the
provisions of this Act, any mortgage offered to it which is eligible
for insurance as hereinafter provided and upon such terms as the
Commission may prescribe (including advance on such mortgages during
construction), if the mortgage covers property held by — Section 13. In order to assist in relieving the acute shortage of housing which now exists and to promote the production of housing at moderate prices or rentals, through the application of modern industrial processes, the Commission is authorized to insure loans to finance the manufacture of housing or the materials to be used in the construction of houses, when such loans are eligible for insurance as provided in the rules and regulations to be prescribed by the Commission, with the approval of the President of the Philippines. Section 14. In order to assist in developing rural
areas and to encourage development of agricultural areas by individuals
and associations, the Commission is authorized to insure the loans as
hereinafter provided: GENERAL PROVISIONS Section 15. (a) Notwithstanding the foregoing provisions, the Commission may, as a matter of sound business policy, set a limit on the total amount to be insured under each section of this chapter and in no case shall the aggregate amount of the outstanding principal obligations of mortgages insured under this chapter exceed five hundred million pesos at any one time. (b) The Commission shall fix, in accordance with sound actuarial practice and the risk characteristics involved, the rates of insurance premiums for each class of loans or mortgages as prescribed under each section of this chapter: Provided, however, That no insurance premium for any particular class of loans or mortgages shall be fixed at less than one fourth of one per centum nor more than one per centum of the amount of the outstanding principal obligation. (c) The Commission may, in accordance with the provisions of the mortgage, or in the absence thereof, upon such terms and conditions as it may prescribe, release part or parts of the mortgaged property from the lien of the mortgage. (d) The Commission may charge and collect such amounts as it deems reasonable for the appraisal of a property or project offered for insurance and may likewise charge and collect such amounts as it deem reasonable for the inspection of such property or project during construction: Provided, That such charges for appraisal and inspection shall not aggregate more than one per centum of the principal face amount of the mortgage. Section 16. To be eligible for insurance under this
chapter, a mortgage shall — PAYMENT OF INSURANCE Section 17. (a) In any case in which the mortgagee in a mortgage insured under this chapter shall have foreclosed and taken possession of the mortgaged property in accordance with regulations of the Commission, the mortgagee shall be entitled to receive the benefit of the insurance as hereinafter provided, upon (1) the prompt conveyance to the Commission of rights to the property, and (2) the assignment to it of all claims of the mortgagee against the mortgagor or others. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the Commission shall, subject to the cash adjustment hereinafter provided, issue to the mortgagee debentures having a total face value equal to the value of the mortgage and a certificate of claim, as hereinafter provided. (b) The debentures issued under this chapter to any mortgagee with respect to mortgages or loans insured under Chapters II and III shall be executed in the name of the Home Financing Commission as obligor, and signed for the Commission by the Chairman-General Manager by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date the foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default, and shall bear interest from such date at a rate to be determined by the Commission, with the approval of the President after consultation with the Monetary Board, but not to exceed three per centum per annum, payable semi- annually of the first day of January and the first day of July of each year, and shall mature ten years after the date on which the debentures were issued. (c) The aggregate amount at any one time of all such debentures issued to mortgagees with respect to mortgages or loans insured under this Act shall be fixed by the Commission with the approval of the President after consultation with the Monetary Board, which shall in no case exceed the aggregate amount of the outstanding principal obligations of all mortgages insured under this Act. INVESTMENT OF FUNDS Section 18. Moneys in the Fund, not needed for the current operations of the Home Financing Commission, shall be deposited with the Treasurer of the Philippines to the credit of the Fund, or invested in bonds or other obligations issued or guaranteed as to principal and interest by the Government. The Commission may purchase in the open market debentures issued under the provisions of this Act. Debentures so purchased shall be cancelled and not reissued. CHAPTER III Section 19. (a) In order to provide local mutual thrift institutions for the accumulation of savings and for the financing homes, the Commission is authorized, under such rules and regulations as it may prescribe, and in accordance with the provisions of existing laws, to encourage,d or initiate the organization and incorporation of associations to be known as "National Savings and Loan Associations," to provide for their examination, regulation, and operation, and to issue contracts of insurance for the accounts of such associations in accordance with the best practices of known mutual thrift and home-financing institutions. (b) Such associations shall raise their capital only in the form of payments on such shares as are authorized in their charter or articles of incorporation. No deposit shall be accepted and no certificates of indebtedness shall be issued except for such borrowed money as may be authorized by regulations of the Commission. (c) Such associations shall lend their funds only on the security of their shares, or on the security of first liens upon homes or combination of homes and business property, or, upon the approval of the Commission, on any insured mortgage on property located within the area designated in their charter or articles of incorporation as their respective sphere of operation: Provided, however, That no loan exceeding fifty thousand pesos shall be made on the security of first liens upon any one such property nor in any case an aggregate of fifteen per centum of the assets of such association on the security of such first liens: And provided, further, That a portion of the assets of such associations may be invested in bonds and obligations issued or guaranteed by the Republic of the Philippines. (d) The Commission shall have full power to provide in the rules and regulations herein authorized for the reorganization, consolidation, merger, or liquidation of such associations in accordance with existing laws, including the power to appoint a conservator or a receiver to take charge of the affairs of any such association, and to require an equitable readjustment of the capital structure of the same; and to release any such association from such control and permit its further operation. (e) The Commission is authorized to subscribe for preferred shares in such associations which shall be preferred as to the assets of the association and which shall be entitled to a dividend, if earned, after payment of expenses and provision for reasonable reserves, to the same extent as other shareholders: Provided, however, That the subscription by the Commission to the shares of any one such association shall not exceed one hundred thousand pesos, and no such subscription shall be made unless in the judgment of the Commission the funds are necessary for the encouragement of reasonable local home financing in the community to be served. In case of the liquidation of any such association, the shares held by the Commission shall be retired on the same basis as payments are made to other shareholders in accordance with existing laws. (f) Such associations, including their franchises, capital, reserves, and surplus, and their loans and income, shall be exempt from all taxation now or hereafter imposed by the Government. Sec. 20. (a) Notwithstanding the foregoing
provisions, the total amount of accounts of National Savings and Loan
Associations insured under this chapter shall not exceed the sum of
five hundred million pesos at any one time. Sec. 21. Each institution whose application for insurance under this Chapter is approved by the Commission shall be entitled to insurance up to the par value of the shares of each of its shareholders: Provided, however, That no shareholder shall be insured for an aggregate amount in excess of ten thousand pesos. Sec. 22. The Commission is hereby authorized to prescribe, in accordance with existing laws, rules and regulations governing the procedure to be followed in the event of a default by any insured institution including the rehabilitation of liquidation of such insured institution. Sec. 23. To enable the Commission to encourage local thrift and local home financing and to promote, organize and develop the associations herein provided for, the Commission is hereby authorized to use money from the Fund. The sums expended under this section shall be used impartially in the promotion and development of local thrift and home financing institutions. Sec. 24. Each association organized under this
Chapter shall use the words "National Savings and Loan Association" in
their corporate names in addition to any other specific designation
that may be used, and, further, that no other corporation or
association other than those organized under this Chapter shall be
permitted to use the words "National Savings and Loan Association." CHAPTER IV Sec. 25. Definitions. — As used in this Act: (a) The term "mortgage" means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof under a lease for not less than ninety-nine years which is renewable or under a lease having a period of not less than fifty years to run from the date the mortgage was executed, upon which there is located or upon which there is to be constructed a building or buildings designed principally for residential use; and the term "first mortgage" means such classes of first liens as are commonly given to secure advances (including but not being limited to advances during construction) on, or the unpaid purchase price of, real estate together with the credit instrument or instruments, if any, secured thereby, and may be in form of trust mortgages or mortgage indentures in deeds of trust securing notes, bonds, or other credit instruments. (b) The term "mortgagee" means the original lender under a mortgage, and its successors and assigns, and includes the holders of credit instruments issued under a trust mortgage or deed of trust pursuant to which such holders act by and thru a trustee herein named. (c) The term "mortgagor" means the original borrower under a mortgage and its successors and assigns. (d) The term "maturity date" means the date on which the mortgage indebtedness would be extinguished if paid in accordance with the periodic payments provided for in the mortgage. (e) The term "slum or blighted area" means any area where dwellings predominate which, by reason of dilapidation, overcrowding, faulty arrangement or design, lack of ventilation, light or sanitation facilities, or any combination of these factors, are detrimental to safety, health, or morals. (f) The term "rental housing" means housing, the occupancy of which is permitted by the owner thereof in consideration of the payment of agreed charges, whether or not, by the terms of the agreement, such payment over a period of time will entitle the occupant to the ownership of the premises. (g) The term "Commission" means the Home Financing Commission. Sec. 26. Amendatory provisions. — Sec. 27. Penalties. — (a) Whoever, for the purpose
of obtaining any loan or advance of credit from any person,
partnership, association, or corporation with the intent that such loan
or advance of credit shall be offered to or accepted by the Home
Financing Commission for insurance, or for the purpose of obtaining any
extension or renewal of any loan, advance of credit, or mortgage
insured by the said Commission, or the acceptance, release or
substitution of any security on such a loan, advance of credit, or for
the purpose of influencing in any way the action of the said Commission
under this Act, makes, passes, utters, or publishes, or causes to be
made, passed, uttered, or published any statement, knowing the same to
be false, or alters, forges, or counterfeits, or causes or procures to
be altered, forged, or counterfeited, any instrument, paper, or
document or utters, publishes, or passes as true, or causes to be
uttered, published, or passed as true, any instrument, paper, or
document, knowing it to have been altered, forged, or counterfeited, or
wilfully overvalues any security, asset, or income, shall be punished
by a fine of not less than the amount of the loan or loans involved or
by imprisonment for not more than ten years, or both. Sec. 28. Separability provisions. — If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby. Sec. 29. All laws or parts of laws inconsistent
with the provisions of this Act are hereby repealed. Approved: September 15, 1950 |
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