By Artemio F. Cusi III
Reporter
THE failure of the local market to capture a hefty share of the overseas Filipino workers (OFW) remittance will likely benefit the foreign financial institutions, according to an executive of a mortgage servicing company.
“We see a lot of OFW money leaking out of the system,” Federico Y. Cadiz Jr., president of the Bahay Financial Services (BFS) told reporters in a press briefing after the formal launching of the company Thursday.
“If the local market will not do it, foreign financial institutions will corner these.”
Cadiz said that between 20 and 30 percent of the funds to support the loan amortization of BFS will be sourced from OFW income.
The remaining 70 percent might also be tapped, albeit indirectly, from families and close relatives of the workers abroad.
In November 2005, Balikatan Housing Finance Inc.—a joint venture of the National Home Mortgage Finance Corp. (NHMFC) and the DB Real Estate Global Opportunities (DBGO)—engaged the services of the BFS to take care of the mortgage servicing activities for the 52,289 accounts. The principal amount of these loans reached P13 billion.
Cadiz said that of the total number of accounts, 25 percent were resolved; 60 percent are being resolved and 15 percent are under review. The company targets 10,000 accounts to be processed in a year.
“We have processed 4,000 and we shall be processing more than 5,000,” he said.
After finishing 20 percent of the portfolio, the BFS president said momentum is expected to pick up further afterwards as the company is bent in accelerating its activities in 3 to 5 years.
On a regional basis, the National Capital Region and Region IV-A or Calabarzon have the most number of accounts with 70 percent while Cebu, Cagayan de Oro and Davao have 30 percent.
Cadiz said the NHMFC’s move to outsource the asset management function with regard to its portfolio of highly delinquent accounts forms an integral part of the government’s thrust to reduce its nonperforming loan portfolio. “Outsourcing allows the government to refocus its resources on the larger mandate of promoting an active secondary market for home mortgages,” the BFS president said.
The NHMFC’s accrued loans in 2002 reached P53 billion, prompting the urgency of starting a restructuring of the United Home Lending Program portfolio, which was funded by P42.3-billion contributions from the Social Security System, Pag-Ibig, and the Government Service Insurance System.
As early as 1996, the NHMFC ceased the origination of new loans as collections plunged below 65 percent of the scheduled payments.
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