We may herald the positive effects of this Housing Loan Condonation Bill endorsed by House Speaker Prospero Nograles as very beneficial to delinquent borrowers since this Bill will condone the penalties and interest accumulated due to non-payment of its monthly amortization. Who would refuse such opportunity when it’s beneficially offered? Who would refuse when foreclosure in this Bill would be suspended giving the borrowers another chance to save their house of abode?

Who can blame the House Speaker in endorsing such bill to the Congress when this Bill would really benefit thousands of housing loan borrowers? Who would blame other political leaders in riding the same bandwagon just to be noticed when the national election is coming soon? Who would blame the media in hyping the same topic over the airwaves just for a higher station rating without consulting the affected agencies first and doing some research to give light and fairness to the tackled topic?

But do they really took the time and evaluate the Bill’s negative effects?

BORROWERS LEARNING IRRESPONSIBILITIES

Penalties and interest is a vehicle to pressure housing loan borrowers to pay their monthly amortization. Remove this pressure and they will delay their payment in their monthly amortization. Execute this scheme and they will prioritize in their budget their due.

Let me take for example the case of Pag-IBIG Fund. Loan borrowers of this housing institution are charged with two interest rates in their loan availment. A lower interest rate is charged when payment is made before the 15 days grace period after the due date. And they called this a discounted rate. But when payment is committed after the 15 days grace period the same loan availment will be charged with a higher interest rate.

A borrower whose loan availment amounting to Three Hundred Forty Four Thousand (P344,000.00) for example will be billed Two Thousand Two Hundred Fifty Nine Pesos and 61/100 (P2,259.61) a month if he will pay his amortization before the 15 days grace period after the due date. This is under the 6% per annum interest rate (lower rate) of his loan availment. But if he fails to pay after the grace period his amortization will jump to Two Thousand Seven Hundred Twenty One Pesos and 30/100 (P2,721.30). This is under the higher interest rate of 8% per annum (higher rate). This method is effective in their collection effort.

If this Condonation Bill pushed by House Speaker Nograles will become a Law do you think these borrowers will prioritize their monthly amortization? I don’t think so. In fact, even now that this Bill is still a bill some housing loan borrowers choose not to pay their amortization dues waiting for this Bill to become a Law. In other words they choose to be irresponsible.

BORROWERS FACES FORECLOSURE

Housing loan borrowers put all their stakes to this Bill since they are so willing to lag their amortization. Good if this Condonation Bill becomes a law as soon as possible for all their penalties and interest will be cancelled. But if not their housing units will be foreclosed. Who is then on the losing side? Isn’t the housing borrowers? For sure housing agencies both government and public alike will initiate foreclosure as a last resort to recover funds if delinquencies are already so high.

BANCRUPCY OF HOUSING LOAN AGENCIES

One of the inclusions of this Condonation Bill is the suspension of foreclosure proceedings. As an effect the collection of the housing loan agencies will collapse and eventually will cause their disbandment. Take for example National Home Mortgage Finance Corporation (NHMFC). Their Unified Housing Loan Program (UHLP) which was created to be a continuous self-sustaining program through repayments of its borrowers was a failure due to high delinquencies. To recover these delinquencies NHMFC sold to Balikatan Housing Finance, Inc (BHFI) these highly delinquent accounts.

One agency that would surely be hit by this Bill is Pag-IBIG Fund. Considering that a member is just to have a fund of Four Thousand Eight Hundred Pesos (P4,800.00) (total contribution of employee with employer counterpart for two years) in his membership to avail a loan of up to Five Hundred Thousand Pesos (P500,000.00). Now where did Pag-IBIG Fund get the money? Of course, from the other members of the Fund. If this sole borrower will not pay his amortization and these members where the funding comes from will withdraw his membership/funds where would Pag-IBIG Fund get the money to release to these members? Now multiply the number of delinquent members, what will happen to the agency?

There are more other negative effects that I have not explored. But for the sake of arguments I have enumerated what are very obvious. I pray that these might become an eye-opener to the author and supporters of the Bill. And if we are not keen enough to what transpired around us this Bill might pave the way for economic collapse like what happened to United States. This time it will be the Philippines.