1. BSP Circular no. 678
Rules and Regulations for the
Approval and Provision of Housing
Microfinance
Gerry Butardo
Bangko Sentral ng Pilipinas
2010 RBAP‐MABS Na.onal Roundtable Conference
Hya= Hotel and Casino, Manila
June 2‐3, 2010
2. 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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3. 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 procedures as well as the
microfinance best methodologies and
technologies.
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4. 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
5. 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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6. Secure Tenure Instruments and Valuations
Form of Nature and Terms and Appraisal Loan Valuation
Secure Tenure Description of Conditions Methodology
or Property Acceptable
Right Instrument
Usufruct Usufruct The term of Valuation of 70% of the
agreement or lease must not leasehold appraised value
contract be less than the interest of the collateral
term of the loan
Lease Lease The term of Valuation of 70% of the
agreement lease must not leasehold appraised value
contract be less than the interest of the collateral
term of the loan
Freehold OCT/TCT Market Data 90 of the
Interim Title, Adjustment of Approach appraisal value
Contract to Sell appraisal value of the collateral
or Conditional due to
Sale documentary
nature or status
of instrument
must be taken
into account 6
7. Secure Tenure Instruments and Valuations
Form of Nature and Terms and Appraisal Loan Valuation
Secure Tenure Description of Conditions Methodology
or Property Acceptable
Right Instrument
Right to occupy (1) Certification Adjustment of Market Data 70% of the
and/or build validly appraisal value Approach (as to appraised value
issued by due to improvement or of the collateral
the documentary housing unit)
appropriate nature or status
government of instrument
agency must be taken
(2) Certification into account
or written
acknowledg
ment from
the owner of
the property
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