More OFWs settle past-due housing loans

April 22, 2006
Updated 04:46pm (Mla time)
Veronica Uy
INQ7.net

THE rise in the number of overseas Filipino workers is allowing more families to settle their past-due housing loans, a real-estate asset management company told INQ7.net.

Federico Cadiz, president of Bahay Financial Services, noted the trend in his company’s management of the 52,000 past-due residential loans it bought from the National Home Mortgage Finance Corporation.

Cadiz said that since many Filipino families have at least one OFW among their members, many are settling previously unpaid housing loans. He said increased income capacity makes for “good refinancing capacity.”

“We have children working abroad paying off the original borrower’s loan after the original borrower has retired. Having an OFW in the family makes it easier to pay off the loan,” he said.

Cadiz said the 52,000 residential loans in its portfolio is equivalent to 55 billion pesos in total debt, but pointed out that only 13 billion pesos of which is the principal. The rest, he said, represents interests and penalties.

To the families with long-due or long-delayed housing loans, this means they couldn’t begin to settle their mortgages because the interests and the penalties cost more than the current value of their homes.

BFS, which is partly owned by Asian Development Bank and the International Financing Corporation, customizes the loan repayment scheme that is best suited to the family.

Cadiz said that one option, which is the most popular among OFWs, is full settlement. The other two are refinancing that “very relaxed so that they don’t fall past due again,” and dacion, or payment with the property. He said very few take the third option.

He said two OFW families who have availed of the BFS housing loan resolution program are those of seafarers Romeo Paredes and Efren Fellizar.

Paredes’s wife, Theresa, received their home’s Transfer Certificate of Title in behalf of her husband. After 15 years of intermittent payments on their house in Imus, Cavite, she said she is very happy that the house is now theirs.

Fellizar and his wife Gigi experienced the same difficulty with their housing loan payments. After thorough discussions with a BFS account specialist, the couple fully settled their loan without having to go through a lengthy legal process.

Cadiz said the BFS system ensures that the entire process is fast because “time is valuable,” especially to OFWs who might be here only for short vacation periods. If all the required documents related to capacity, like income tax returns, are submitted, the process could take only an hour.

Remittance studies indicate a shift in spending patterns among OFWs, from day-to-day expenses to investing, particularly in real estate. One of 10 Filipinos work abroad and those eight million or so Filipinos have remitted a record 10.7 billion dollars last year.

Cadiz said BFS is tapping into that shift. He also admitted that while his company provides a way out for those who have missed their mortgage payments, its portfolio represents valuable real-estate property.

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