The National Home Mortgage Finance Corporation (NHMFC) is a Secondary Mortgage Institution (SMI) with the primary purpose of attracting long term investments through the issuance of housing bonds or other securities in order to increase liquidity in the housing sector and to purchase residential loan/mortgage receivables originated by both public and private institutions and developers that are within government-approved standards.
What is the process in the secondary mortgage market?
When institutions grant housing loans, they initiate the original transaction in the creation of mortgages which are then purchased by NHMFC, thus forming the primary segment of the mortgage mark et. When NHMFC trades these mortgages through the issuance of securities/bonds, it is able to tap private or public investments as source of funds for a sustainable housing finance. This completes the process of the secondary mortgage market.
What is the role of NHMFC as SMI?
NHMFC’s commitment to and actual purchase of housing loan receivables assure originating institutions of the immediate recovery of their liquidity as it consequently assumes the long- term risk of home lending and other modes of home financing. Being thus relieved of risk and assured of liquidity, originating institutions are effectively reinforced and enabled to lend to more home borrowers. With NHMFC’s trading of the asset- backed and government guaranteed housing bonds or other forms of securities, funds are generated which are again flowed back into home financing. This recycling process overcomes fund volume limitations and comes full circle to the advantage of borrowers in the form of more affordable home loans with lower interest rates and longer repayment periods.
What is Housing Loan Receivables Purchase Program (HLRPP)?
HLRPP is the new housing finance program of NHMFC which aims to purchase valid loan/mortgage receivables from the originating institutions. The originating institution shall ensure that all requirements pertaining to the loan/mortgage receivables are in order, for them to be able to sell the loan receivables to NHMFC. Backed up by these loan/mortgage receivables, security papers are issued for sale in the capital market through securitization.
To know more about the program, please click on this link for a copy of their brochure: Brochure for Securitization final 09.09.13
For a copy of their presentation, please click this link:HLRPP Presentation to RBAP Jan. 17, 2014
Downloadable forms are available on their official website which can be accessed at: http://www.nhmfc.gov.ph
