Most real estate purchases and investments are made with the use of borrowed money; that is by mortgage loans.
In an ideal world, these mortgages are paid on time and are eventually fully paid including all the interest incurred by borrowing the money. But unforeseen circumstances do sometimes happen, which lead to loan defaults and, worst of all, mortgages being foreclosed.
Foreclosures are often painful on the part of the borrower and a hassle on the part of the lender. This is the reason why lenders are very strict in evaluating loan applications. It is not uncommon for lenders to ask for very detailed personal and financial information from their clients.
Why Loan Defaults Happen?
Given the fact that Housing Loan Default is something to be avoided, there are some reasons why they happen. Here are some common ones:
- Personal and Financial Problems — the loss of a job, emergencies, calamities, or being assigned to another city.
- Physical Flaws Of the Property — weak structure, dilapidated roads, flood-prone area, etc.
- Legal Problems — land title disputes, marital problems
Loan Default Leads To Foreclosure
For regular Pag-IBIG Housing Loans, loan default happens when the borrower or any of his co-borrowers…
- fails to pay three consecutive monthly amortizations
- fails to pay monthly membership contributions
- fails to comply other obligations of the loan
In the case of Pag-IBIG Rent-to-Own units, a default happens if you fail to pay three consecutive monthly rentals.
If the borrower defaults on a loan, the outstanding loan, accrued interest, penalties, fees and other charges become immediately due and demandable. Aside from that, Pag-IBIG also imposes that the “unpaid monthly payments shall continue to be charged with a penalty equivalent to 1/20 of 1% of the amount due for every day of delay.”
What To Do If Foreclosure Is Underway?
A foreclosure is a very stressful situation. Once you are at a point near that, knowing the options to take can greatly help.
If you find yourself unable to continue to make the scheduled payments on a mortgage loan, consider the following alternatives before it’s too late:
1. Sell the property and repay the loan. If you are lucky to have a friend or relative who has ready cash to pay for the property, this is the way to go.
2. Have someone assume the loan. Announcing to the whole world that you are in financial distress may help after all. Who knows, someone down there might be a good candidate and he could be interested in assuming your loan.
3. Restructure the loan. Discuss this with the lender; the Pag-IBIG Fund, in this context. A Loan Restructure might help reduce the payments temporarily.
4. Just let it be. That is, just allow the lender to continue with the foreclosure. Some properties really deserved to be foreclosed, most especially those that are really giving you a lot of headache instead of a roof over your head.
Prevent Foreclosure By Avoiding Loan Defaults
As a member of Pag-IBIG Fund, loan defaults and foreclosures are things to be avoided like a dreaded virus. Remember that once you have faced a foreclosure in your Pag-IBIG Housing Loan, you may be denied housing loans in the future.
One of the ways of preventing loan default is by first being honest with your finances. Before deciding to use a housing loan, consider your monthly expenses, you may have to do away some if your house is on top of your priority list. This requires a lot of discipline.
It is also very important that you know how to buy the right property that fits your needs. Don’t even consider buying in depressed areas and unsecure or unsafe neighborhood.
Note From The Website Administrator :
This website is not just about giving you inside information on Pag-IBIG Financing. We also intended to help everyone who is facing a foreclosure. If you know someone who has a property financed by Pag-IBIG and is on the verge of a foreclosure, please refer him / her to this website. The property can be listed here FREE of charge for every web visitor to see.
Again, that’s a FREE listing offered to distressed Pag-IBIG Members.
To avail of the FREE service, please send the details or leave us a message using the contact form provided on this website.
This article on Pag-IBIG Housing Loan Default and Foreclosure is written by Carlos Velasco.