Housing credit continues to rise, prompting the Philippine banking industry and the Land Registration Authority (LRA) to create a system streamlining loans and mortgages documentation to protect both borrowers and financial institutions.
The final version of the uniform loan and mortgage agreement (ULAMA) is coming up this week, Chamber of Thrift Banks (CTB) president Rommel Latinazo told reporters in a briefing in Makati City.
The agreement was developed in collaboration with banking groups, including the Bankers' Association of the Philippines, CTB, and Rural Bankers Association of the Philippines, together with Bangko Sentral ng Pilipinas (BSP) and the LRA.
"The purpose... is we want to streamline the documentation, taking into account the interests of all the parties concerned in real estate mortgage transactions – the financial institution, the borrower, and the government," Latinazo said.
"We want to make sure that the documents we develop are acceptable to the agencies involved," he added.Eliminate controversies
Latest BSP data show consumer loans rose 20.94 percent P849.6 billion as of end-September 2014, from P702.6 billion a year earlier, mainly driven by an increase in residential real estate lending.
In October, the BSP announced more relaxed rules on bank lending, noting that the ability of the borrower to pay, and not collateral, should be the basis for loan approvals.
The central bank also intends to cap the value of real estate mortgage as collateral at 60 percent for securing loans.
While there are no foreseen risks in bank lending, BSP Deputy Governor Diwa Guinigundo had said the central bank sees the need for circumspect in monitoring personal credit amid brisk activity in a growing economy.
Latinazo said real estate loan transactions, especially pertaining to housing, are indeed increasing and the ULAMA aims to protect borrowers and also the financial institutions.
"Having a uniform agreement should eliminate most, if not all, controversies or legal questions arising from home mortgage transactions," he said. – VS, GMA NewsBy DANESSA O. RIVERA, GMA News