Overview of the NPL Sale On May 18, 2004, the NHMFC conducted and successfully completed the country’s first open competitive building for its non-performing portfolio of mortgage loans.
The transaction is the first of its kind in the country and is significant due to its size and impact on the housing loans and portfolio markets. The sale of the NPLs to the Balikatan Housing Finance, Inc. – Joint venture corporation between NHMFC (44%) , IFC (5%) and the DB Global opportunities 1B Group (51%) – involved some 52,000 non-performing mortgage loans originated through the UHLP and accounts for about ¼ of the original size of the UHLP portfolio and is worth about Php 12.8 billion in outstanding principal. Being the first large scale NPL transaction for housing, it proves the existence of a market for Non-Performing loans, both for housing and commercial loans. Benefits of the NPL Sale to the NHMFC - Maximizes the overall cash recovery to NHMFC and its Funders;
- Sale of High Del accounts to minimize losses from non-collection and infuse needed liquidity;
- Mitigates potential criticism about a “Fire Sale Price” following the sale;
- Reduces NHMFC’s obligations to the Funders under the proposed Debt Restructuring Plan;
- Reduces the amount of the Funder’s claim against the RP Guaranty upon sale of the assets;
- As-is basis and Bulk Sale Strategy” are sound alternatives to meet the needs of NHMFC and Funders for immediate cash flow relief; and
- Provides the greatest economic recovery and permits the disposition process to move forward without delay.
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