Four decades of providing liquidity and stability

In 1977, the National Home Mortgage Finance Corporation (NHMFC) was created to develop and provide for a secondary market for home mortgages granted by public and/or private home financing institutions. That secondary market, which would enable home financing institutions to optimize the leverage of funds earmarked for housing and loan development, was one of the Philippine government’s responses at the time to the urgent need to increase the funds committed to the housing effort.

Almost 10 years after its creation, in 1986, under the Executive Order No. 90, NHMFC was given the task of operating a viable home mortgage market, purchasing the mortgages originated by both public and private institutions. The funds it used came primarily from the Social Security System (SSS), the Government Services Insurance System (GSIS), and the Home Development Mutual Fund (HDMF). But the corporation stopped operating under the order in 1995. Then, by virtue of another executive order, issued just before the turn of the millennium, NHMFC returned to developing a secondary mortgage market to finance mortgage take-out and fast-track the disposition of existing mortgages.

The succeeding years saw NHMFC take important steps to better meet the affordable housing needs of the Filipinos. In 2003, its nonperforming loans (NPLs) were auctioned off. The following year, Social Housing Finance Corporation (SHFC) was created as its subsidiary. Since 2005, SHFC has been running the Community Mortgage Program (CMP), which provides affordable financing to underprivileged citizens, that its parent company used to administer, as well as the developmental component of the Abot-Kaya Pabahay Fund (AKPF) program, which helps finance housing site development and improvement, among others.

In 2007, the transformation of NHMFC into a secondary mortgage institution began with the maiden securitization of the corporation with help of a financial advisor. Two years after, NHMFC launched the maiden securitization issue of the P2.06-billion Bahay Bonds 1 (BB1), the first-ever residential mortgage backed securities issued in the Philippines by a government agency. It was interesting to note that this happened amid the global financial crisis gripping many of the world’s economies. Still, Bahay Bonds were oversubscribed not just once but twice. They even earned NHMFC a best securitization deal award at The Asset’s Triple A Regional Awards in 2009.

Also in 2009, NHMFC’s board of directors approved the proposed guidelines on Housing Loan Receivable Purchase Program (HLRPP) that granted the president of the corporation the authority to approve all purchases under the program and allowed the purchase of housing loan receivables from originating institutions, which would later be turned into an asset pool for an eventual issuance of securities.

Following the success of Bahay Bonds, NHMFC issued Bahay Bonds 2 or BB2 in 2012, which, like BB1, earned high credit ratings from the local credit watcher Philippine Rating Services Corp. For the issuance of the BB2 Special Purpose Trust, the corporation was awarded the Innovative Listed Corporate Bond Issue of the Year by the Philippine Dealing System Holdings Corporation in 2013.

That year also saw NHMFC receive an ISO 9001:2008 certification for its accounts servicing divisions for Rizal. The certification attested to the corporation’s ability to consistently provide product that met customer, statutory and regulatory requirements. The corporation managed to secure the same certification for its Borrower Counseling System the following year.

Constantly thinking of ways to satisfy the housing needs of many Filipinos, NHMFC launched two new subprograms last year with the specific aim of expanding the target market of HLRPP. One, the Socialized Housing Loan Take-out of Receivables (SHeLTer) program was rolled out in the second quarter of 2016. This aims to ease the country’s socialized housing backlog by offering a liquidity facility to originators — nongovernment organizations, cooperatives, microfinance institutions, local government units, national government agencies, and private corporations — which are currently or still planning to conduct a housing program for their employees, constituents or members. The terms SHeLTeR offers are affordable: 4.5% for the first 10 years.

Released in the last quarter of 2016, the MAginhawang BUhay dahil sa baHAY (MABUHAY) is the first-ever reverse mortgage program in the Philippines. It seeks to address the needs of senior citizens of the country by allowing them to convert a portion of their home equity into cash that they can use at their discretion.