Read Part 1: Firm breaks Pag-IBIG rules on loans

(Last of two parts)

CITY OF SAN FERNANDO?The housing projects of Globe Asiatique Realty Holdings Corp. in Bacolor, Mabalacat and Angeles City in Pampanga appear to have been funded by Pag-IBIG loans taken out by the developer on behalf of people who were clueless that they were availing themselves of the loans.

Inquirer sources in the Home Development Mutual Fund (Pag-IBIG Fund) said hundreds of supposed buyers of townhouses in Xevera Bacolor and Xevera Mabalacat were fake Pag-IBIG members.

A validation conducted by Pag-IBIG found that Globe Asiatique passed off as ?buyers? of its townhouses people ineligible for membership in Pag-IBIG. Others could not be located, were dead at the time they applied for loans or were not living at the addresses given.

Pag-IBIG also found that Globe Asiatique took out the loans although the housing units had yet to be completed.

This borrowing scheme was so effective for Globe Asiatique that it got P2 billion on top of the P5 billion in funding commitment line from the national savings and shelter financing agency.

Its 8,973 Xevera accounts (3,295 in Bacolor and 5,678 in Mabalacat) were more than four times the original target of 2,000 accounts in June 2008 or 1,125 accounts more than the revised target of 7,848 units in February 2009.

More problems

The big volume of Xevera accounts, coming at an average of P400 million a day, caused the Pag-IBIG branch?s housing division in San Fernando to operate up to three shifts daily 24/7.

The division has less than 30 staff members and 10 validators.

Loan approval took only one to three days instead of the usual seven for a contract-to-sell scheme, resulting in processors turning a blind eye to a host of deficiencies on the documents submitted by borrowers.

A Pag-IBIG internal audit of contract-to-sell accounts on Nov. 12-26, 2009, verified the deficiencies and found more:

? Lack of signatures on loan documents by the borrower, approving officer and Pag-IBIG representative/account officer.

? Missing documents such as the notice of installments and amortization, and the certificate of house-and-lot acceptance.

? Incomplete details of the membership status-verification slip (MSVS). The slip is a vital documentary requirement that determines a borrower?s eligibility for a housing loan. The effect was non-compliance with housing loan-documentary requirements.

? Delay in the verification of a borrower?s membership.

? Approval of the MSVS by another person due to ?voluminous takeouts.?

? Non-submission of photocopies of updated real estate tax receipts by borrowers for the year, risking an auction of the properties by the local government.

Unoccupied, closed houses

The audit also showed that of 302 houses in Xevera Bacolor, 256 were unoccupied while 32 were closed.

Of 1,470 houses in Xevera Mabalacat, 1,186 were unoccupied and 230 were closed.

These fueled suspicions that borrowers took more than one unit or Globe Asiatique used dummies to raise cash to build more houses in the same Xevera projects.

Many of the unoccupied units had updated amortization payments, though.

It was difficult to identify the payor because Globe Asiatique has a collection service agreement, authorizing it to collect payments and the borrowers need not pay directly to Pag-IBIG. Globe Asiatique earns a 2-percent interest on the total collection.

Globe Asiatique president Delfin Lee said there was no law against buying several units. ?There are cases when one buyer buys five to six units and he will use different names. But the point is nagbabayad siya (he is paying),? he said.

Lee said his obligation to Pag-IBIG was to make sure his buyers pay their obligation to Pag-IBIG. ?Who actually use the house? There is no way for me to check,? he said.

Sameera housing

Despite these problems, Pag-IBIG allowed Globe Asiatique to do a socialized housing project, called Sameera, in Angeles City.

The same problems that occurred in Xevera Bacolor and Mabalacat are happening in Sameera, according to letters sent by Pag-IBIG to Lee.

The 451 unfinished units between March and June 2010 in Sameera belonged to 672 accounts, with a loan value of P292.5 million, according to documents.

Again, Globe Asiatique was able to take out the loan proceeds of the borrowers although rules state that they have to sign documents that, among other things, attest to the houses being completed.

Buy back bad accounts

If breaches of warranties occurred, Pag-IBIG has grounds to demand that Globe Asiatique buy back bad accounts and assume these to protect the money of Pag-IBIG members.

Pag-IBIG issued the developer notices to buy back bad accounts but these were few. Globe Asiatique bought back 163 accounts, a document showed. But it was not known if these involved breaches of warranties or default on mortgage payments for three consecutive months.

Lee declined to say how many accounts his company bought back. The 163 accounts did not reach even half of the 400 accounts that Lee, in a letter to Pag-IBIG, reported to have canceled.

Five-year guarantee

Nevertheless, Pag-IBIG said it had secured its ?financial exposure? in the pilot program for Other Working Groups or workers who are not formally employed but earn money through small businesses.

Globe Asiatique, it said, agreed to guarantee the loan in five years.

Lee said the five-year guarantee he offered was more than enough to ensure that Pag-IBIG Fund is paid by member-borrowers.

?When I was lobbying to open the Pag-IBIG membership to every working Filipino, they feared that these borrowers might default, that these were bad accounts. They were thinking that these people were squatters who would not pay. I told them that this was not the mentality of a Filipino who wanted to own a house. To satisfy their fear, I offered to guarantee [the loans for] five years,? he said.

Reselling scheme

The agency, he added, agreed because of his good record in the last 16 years. ?If you don?t pay, I will pay Pag-IBIG. But you don?t own that house anymore. I own it again, I will resell it,? he said.

Pag-IBIG also required Globe Asiatique to ?assign all its housing loan proceeds from its other projects to settle all unpaid obligations from the Xevera project.?

It was not known whether Globe Asiatique executed a deed of assignment and listed the projects it assigned to the agency.

The company has 10 projects with Pag-IBIG, Lee said. The assets of the company as of 2009 were worth P8.3 billion, with total liabilities and equity amounting to the same, according to financial statements filed by Globe Asiatique with the Securities and Exchange Commission.

On observations that Globe Asiatique has taken out many loans and thus exposed funds to a lot of risks, he said: ?That is the job of Pag-IBIG. That is why it was established in the first place.?

Reminded that the agency was not a bank, he replied: ?It?s a savings institution. It?s a provident fund and it?s a bank because they?re financing housing loans.?

Bank loans

Lee denied that Pag-IBIG was his main source of funding, saying he has borrowed from banks to support his 10 other projects since 1986.

He said he planned to make an IPO (initial public offering) to expand some projects, especially in creating ?virtual towns? complete with amenities from out of low-cost subdivisions.

The Xevera projects have more than made up for the complaints or issues because of the two schools he built there at P100 million each, Lee said. Homeowners, according to him, save P30,000 in tuition yearly.

Globe Asiatique was required by Pag-IBIG to keep a performing accounts ratio of 95 percent ?for the Xevera project and all other housing projects? over a five-year period, or from 2008 to 2012 based on a February memorandum.

The plan to conduct an ?exhaustive review? at the end of the original two-year implementation period was not included in the memorandum of understanding for the Other Working Groups program.