Delivering Shelter Security, Building a Stronger Housing Sector

With nearly a million families benefiting from various programs on shelter security and affordable home financing, the National Shelter Program has truly flourished under President Gloria Macapagal Arroyo’s administration. Behind this achievement is a dynamic housing sector strengthened by key reforms, bold initiatives and revitalized programs.

Redefining Relocations.

One of the major legacies of the Arroyo administration is the biggest and most successful resettlement program ever undertaken by the government. Under the hand-on supervision of the country’s housing Czar. Vice President Noli De Castro, the Rail Relocation and Resettlement Program will provide secure housing tenure and healthier living environments to almost 100,000 families upon completion, while clearing the way for the economic development program for Central and Southern Luzon.

Thus far 71% of the censused families have been relocated and total of 34 resettlement sites in Metro Manila, Bulacan, Pampanga, Cavite and Laguna have either been developed or in various stages of development.

This accomplishment provides a new model for humane resettlement, characterized by a clear and comprehensive framework, beneficiary-led approach to the choice of relocation sites, participatory decision-making, an alternative strategy that involves home financing in developed sites rather than development of raw land and provision of housing units, adoption of post-relocation interventions including livelihood development, grant of price subsidy of affordable terms to beneficiaries, and direct communication with affected families to ensure swift resolution of problems in the relocation process.

Giving Pro-Poor Housing a Boost

The disposition of idle government properties for housing purposes, while not a new program, reached unprecedented heights under the Arroyo administration. The President signed 111 proclamations declaring more than 27,300 hectares of government land as housing sites, which will benefit nearly 255,600 homeless families.

Government’s shelter financing programs for the lowest earning sectors of society also flourished-a testament to the administration’s resolve to address the shelter needs of low income families and its strong commitment of the Millennium Development Goal of improving the lives of slum dwellers.

To invigorate the Community Mortgage Program (CMP), President Arroyo created the Social Housing Finance Corporation (SHFC to address the need for a government agency that will undertake social housing programs for formal and informal sectors in the low-income bracket.

In the last eight year, a total of 885 CMP projects were approved and funded at a cost of P4.96 billion, surpassing the accomplishments of the program during its first 12 years.

Revitalizing Housing Finance

The Arroyo Administration empowered a record number of new homebuyers through its focus on affordable housing loans. Once of the earliest moves of the administration is to liberalized the housing loan program of the Home Development Mutual Fund, or Pag-IBIG Fund, by increasing the loanable amount, lowering interest rates, and extending repayment periods. Dynamic reforms in the loan guidelines continued throughout the last eight years.

Today, Pag-IBIG has the lowest interest rates in the market at terms of up to 30 years for loan packages as high as P3 million. Monthly amortizations are very low: P2,398.20 for a P400,000 loan and P4,496.63 for a P750,000 loan, payable in 30 years.

This has made home ownership a more viable and practical alternative to rental housing. It has also encouraged more Pag-IBIG members to buy their own homes, with housing loans growing almost eight-fold from P3.8 billion in 2001 to P34.0 billion in 2008, the Fund’s biggest since its creation.

Last July 21 President Arroyo’s signed of RA 9679 or the Home Development Mutual Fund Law of 2009 which will further boost the Funds housing loan program. With its tax exemption now restored and its Board now authorized to set contribution rates, Pag-IBIG will be able to meet its growing funding requirement for housing.

Ensuring Sustainable Financing

The housing sector under the Arroyo administration took important steps to ensure a sustainable source a sustainable source of funds for housing by raising liquidity.

Among these steps is the development of a secondary mortgage market by the National Mortgage Finance Corporation (NHMFC) to finance mortgage take-outs and fast-track the disposition of existing mortgages. On March 23, 2009, NHMFC, with Standard Chartered Bank as the Arranger and Underwriter, launched the maiden issue of the P2.1 Billion Bahay Bonds, the first Residential Mortgage Backed Securities (RBMS) issued in the country by a government agency.

In 2003, the government also launched the Balikatan Program which was able to dispose some 52,000 highly delinquent mortgage accounts to the Deutschebank  Global Opportunities Group.

The proceeds of the sale were used to settle part of the obligations of the NHMFC (under the Unified Home Lending Program) to SSS, GSIS and HDMF.

Engaging the Private Sector and Local Governments

Realizing that the National Government alone cannot provide all the housing requirements of our people, the government formulated policies to make the environment more conductive for the private business and other sectors to participate in the housing sector.

In 2004 the government made socialized and low cost mass housing eligible for incentives under the Investment Priorities Plan, allowing developers to save from P50,000 to P100,000 in construction cost per unit, which should be passed on to the homebuyers.

To streamline housing-related processes, President Arroyo signed Executive Order No. 45 which prescribed timeframes for the processing of applications and issuance of necessary housing permits, licenses and clearances by concerned agencies. The Housing and Land Use Regulatory Board also established one-stop shops for housing in all regions to assist private developers in securing the necessary permits, licenses and clearances for their housing projects.

To encourage banks to lend funds for housing purposes the government, through the Home Guaranty Corporation, buyers risk-free with tax and fiscal incentives.

The Government also actively engaged other stakeholders, particularly the local government units, non-government organizations and people’s organizations in developing new approaches to provide more affordable housing and effective processes.

Various issuances empowered LGUs to create Local Interagency Committees (LIACs) that will determine socialized housing projects and beneficiaries for proclaimed lands, serve as clearing house for demolition and eviction activities in their jurisdiction and to create their own Local Housing Boards.

Financing facilities for LGU socialized housing programs were created such as the Localized CMP, the Development of Poor Urban Communities Sector Project (DPUCSP) of HUDCC and DBP, with assistance from the Asian Development Bank, and the LGU Developmental Loan of Pag-IBIG Fund.

The HLURB also provided technical assistance to LGUs in formulation their Comprehensive Land Use Plan, while the NHA continues to provide technical assistance.

NGOs such as Gawad Kalinga and Habitat for Humanity, meanwhile, have been exempted from the licensing requirements of HLURB. NGOs have also been accredited by SHFC to serve as originators of the CMP, with 151 NGOs accredited as of 2008.

Recent Actions

Apart from the signing of the new HMDF charter, other recent developments showcase the administration’s unflagging commitment to housing.

On July 14, President Arroyo signed Republic Act No. 9653, otherwise known as the Rent Control Act of 2009, which imposes a one-year moratorium on rent increases in residential units to protect more than 1.5 million low-income tenants form indiscriminate rent increases.

On July 21, the President broke ground for a government housing project within the New Bilibid Prison compound in Muntinlupa which will benefit 3,000 government employees from the Office of the President, Department of Environment and Natural Resources, the Department of Justice and its attached agency the Bureau of Correctional and the City of Munitinlupa.

The President also signed into law R.A. 9507 otherwise known as the Restructuring and Condonation Act of 2009. This law is intended to benefit 415,000 home owners with housing loans which are in arrears through restructuring of loan payment and condonation of penalties and interests.

With all these specific projects as well as long term programs and reforms, this administration has indeed built a strong housing sector that is better equipped to address the problem of homelessness in the country.

By the Numbers Housing Sector Accomplishments 2001-May 2009

• 69,752 families relocated under the Northrail-Southrail Linkage Resettlement Projects.

• 34 resettlement sites developed in Metro Manila, Bulacan, Pampanga, Cavite and Laguna with 84,111 housing units

• 255,600 families expected to benefit from 111 proclamations signed declaring over 27,300 hectares of government land as housing sites.

• 63,400 beneficiaries of proclamations granted Certificates of Lot Awards (CELA)

• 102,632 families acquired lots through 885 CMP projects taken out at a cost of P4.96 billion.

• Over 312,100 residential lots built or purchased by Pag-IBIG members through housing loans.

• 31,450 families left homeless by Typhoon Reming benefited from the Bicol Calamity Assistance and Rehabilitation Effort (Bicol-CARE) through resettlement or housing materials assistance.

• 144,647 beneficiaries of government retail and developmental guaranties by HGC for loan amounts totaling P102.76 billion.

• 1,143,982 housing units covered by 16,903 Licenses to Sell issued by HLURB

• 6,030 Homeowners Associations registered and 127,168 permits and clearances issued

Reprinted from MANILA BULLETIN, Saturday July 25, 2009