BSP Circular no. 678 Rules and Regulations for the
Approval and Provision of Housing Microfinance
Gerry Butardo Bangko Sentral ng Pilipinas
2010RBAP‐MABSNa.onalRoundtableConferenceHya=HotelandCasino,ManilaJune2‐3,2010
Background Housing microfinance, which is the application of microfinance principles and methodologies in the provision of housing finance for poor and low income households. The Circular includes (1) the minimum criteria to ensure that banks have the capacity and technical capability to offer housing microfinance, (2) basic housing microfinance product characteristics, (3) appropriate risk management, (4) application procedure for BSP product approval, and the (5) regulatory treatment of housing microfinance loans.
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Minimum Criteria to Determine Bank’s Capacity to Offer Housing Microfinance. 1. Capacity and technical capability to offer
housing microfinance; and 2. Appropriate risk management systems
and p rocedures as we l l as the microfinance best methodologies and technologies.
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Minimum Requirements: 1. A track record of least 2 years in implementing
sustainable mf programs 2. An appropriate housing MF product manual 3. Appropriate verification of the ff:
a. Latest CAMELS rating of at least 3 with management score of at least 3
b. Capital adequacy ratio (CAR) of 12% or more c. No major supervisory concerns d. No arrearages in microfinance borrowings
4. Bank’s certification to implement guidelines set forth in the manual
Basic Product Characteristics: 1. Purpose 2. Eligibility 3. Loan Amount 4. Loan Value 5. Payment 6. Terms Except for the following: 1. Maximum loan amount up to P300K. 2. The loans have longer terms with a maximum of 5
years for home improvement/repairs and 15 years for house construction and house/lot acquisition.
3. For House construction and house/lot acquisition loans, secure tenure instruments will be used as collateral.
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Secure Tenure Instruments and Valuations Form of
Secure Tenure or Property
Right
Nature and Description of
Acceptable Instrument
Terms and Conditions
Appraisal Methodology
Loan Valuation
Usufruct Usufruct agreement or contract
The term of lease must not be less than the term of the loan
Valuation of leasehold interest
70% of the appraised value of the collateral
Lease Lease agreement contract
The term of lease must not be less than the term of the loan
Valuation of leasehold interest
70% of the appraised value of the collateral
Freehold OCT/TCT Interim Title, Contract to Sell or Conditional Sale
Adjustment of appraisal value due to documentary nature or status of instrument must be taken into account
Market Data Approach
90 of the appraisal value of the collateral
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Secure Tenure Instruments and Valuations Form of
Secure Tenure or Property
Right
Nature and Description of
Acceptable Instrument
Terms and Conditions
Appraisal Methodology
Loan Valuation
Right to occupy and/or build
(1) Certification validly issued by the appropriate government agency
(2) Certification or written acknowledgment from the owner of the property
Adjustment of appraisal value due to documentary nature or status of instrument must be taken into account
Market Data Approach (as to improvement or housing unit)
70% of the appraised value of the collateral
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