RESOLUTION NO. R-645, APPROVING THE ADOPTION OF AN OFFICIAL POLICY GOVERNING THE INTERIM FINANCING SCHEMES AND OTHER ANALOGOUS DEFERRED TAKE-OUT PRACTICES BY DEVELOPERS

Quoted hereunder is the full text of the subject resolution passed
by the Board of Commissioners in its 273rd Regular Meeting on 12 May
1999:

“WHEREAS, verified official reports of interim financing or its
analogous deferred loan take-out schemes by real estate developers or
brokers have come to the attention of this Board, thus, generating grave
concerns for its possible uncontrolled proliferation;

WHEREAS, the scheme attracts real estate buyers of subdivision
lots or condominium units to tender a prepayment of their expected or
future bank loan or financing amortizations in favor of the developer in
amounts approximately equivalent to the loan repayment installments and
prior to the actual release by banks or other government financing
institutions of the loan proceeds;

WHEREAS, the scheme allows the real estate developer to retain and
appropriate as business income the interest components of every buyer’s
monthly amortizations, and remits the balance or the principal
components thereof to the Banks or GFIs for the reported reduction or
shortening by Banks or GFIs of the expected or yet undetermined period
of the loan settlement;

WHEREAS, private or government-owned or controlled banking
entities are not made parties to these financing schemes to ensure
faithful compliance therewith and to protect the interest of the buying
public;

WHEREAS, the financing schemes have resulted in numerous suits or
disputes among its parties who accuses each other of non-payment,
non-submission of proper documentary requisites for loan processing,
non-procurement of government permits or licenses, or deliberate acts of
delay and other malicious designs to foreclose the facilitation of loan
applications, thereby, creating an undue atmosphere of suspicion and
hostility among buyers and developers, and eventually eroding public
trust in the effectiveness of HLURB to protect and enforce public policy
and the interest of the public as a whole.

NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to
discourage and forbid the practice of interim loan financing or deferred
loan take-out scheme as a form of developer-loan origination or as an
alternative to government-approved bank-loan origination to dispel and
thwart any further causes of misunderstanding and controversy in the
real estate industry.

APPROVED, 12 May 1999, Quezon City, Metro Manila.”

For your guidance and information.

Adopted: 12 May 1999

(SGD.) ROMULO Q. FABUL
Commissioner and Chief Executive Officer