Low cost housing scam?

I received this email message about Villar and his low cost housing program in the 90s, and this message was disturbing. Villar’s boast about putting low cost homes for the poor almost destroyed our economy, according to Tony Hidalgo. He said Villar got his billions from this project, and not because he cared for the poor.

Villar was not really aiming for the “mahirap”, it was only a side line from his true aim--- getting rich. Of course, he is after all a businessman, and business is his top priority. If it could help the poor along the way, then why not help them. But Hidalgo said this did not happen in Villar’s low-cost housing project. In fact, millions of the marginalized sector did not benefit from the program.

I’m not an economics major, so I don’t know much about the details like builders, buyers, etc., but Hidalgo made a point about how Villar managed to acquire his wealth with the program. If Villar made this clever tactic before, then what’s keeping him from doing it again once he becomes President?

Villar used his position and the country’s problem, and used it for his own benefit. It only shows his insincerity for helping the poor. His commercials are actually nothing but lies, and his selfish interest would permeate his intentions to help the poor. How can we elect a selfish president?

You can read this email message by Tony Hidalgo and decide for yourself what Villar did with his low-cost housing project.

Subject: Villlar and low-cost housing Here's an addendum to the exchange between Tony Hidalgo and Tong Puno. It really is important to be enlightened about the background of Manny Villar's wealth in light of his quest for the presidency. He is hell bent in covering his tracks and gaining more wealth at the expense of the nation. Dear Tong, To believe in Manny Villar’s “cause”, whatever that may be, is certainly your prerogative, brod. But it does not allow you to distort the facts—to say that black is white or that greed is good. Winnie Monsod’s writings on Villar’s anomalies on the Paranaque road projects are pretty clear. I don’t need to comment further on them. But I will answer as briefly as I can the downright false and sometimes outrageous claims you make concerning Villar’s “heroic” role in the government’s low-cost housing program. True, Villar built many thousands of low-cost houses over more than a decade under the Unified Home Lending Scheme (UHLP) of the socialized housing law (E.O. 90) that he and his CREBA minions drafted and got Cory to sign in 1986, during her emergency government when she had legislative powers, by promising the pie in the sky of solving homelessness in the Philippines once and for all. But he did this to rake in billions in profits at the expense of the government, not out of a concern for the homeless poor. Look at the results of Villar’s thousands of houses under the UHLP from 1986 to 1997 (when we reformed the UHLP to prevent Villar from bankrupting the country). Villar became a billionaire. NHMFC, the financial coordinator of the program, was bankrupted. The funders (SSS, GSIS, Pag-Ibig) were stuck with billions in bad home mortgages covering Villar’s houses and flirted with bankruptcy for a while. Eventually, these bad mortgages had to be covered by the national government using its tax revenues (including your taxes and mine) because the funders were covered by a sovereign guarantee. Subsequently (beginning 2003 or 2004), the losses on the bad mortgages had to be written off by selling them through special purpose asset vehicles (SPAVS) at a fraction of their face value. Meanwhile, look around you. Nearly half of the residents of Metro Manila still live in squatter areas! I repeat: Villar became a billionaire while the funders and the national government suffered many billions in losses and the housing problem is still there, as intractable as ever. Consequently, I strongly disagree with your admiration of Villar’s record in low-cost housing. It was motivated by greed and, in the end, enriched only himself and his cohorts at the expense of the government and, ultimately, the taxpayers. These outcomes were inevitable because of how Villar and his buddies designed the UHLP. The roles of lenders, builders, and financing agencies were jumbled up on purpose to benefit only the developers. Billions were taken annually from the SSS, GSIS, and Pag-Ibig and given to the NHMFC to disburse. The owners of the funds lost all control over how they were lent out. But this control was not given to the NHMFC, which just allocated mortgage quotas to developers (the Villar companies had the biggest quotas) from the annual funds of the lenders and automatically released the face amount of mortgages to the lenders upon submission of the mortgage papers. No one checked the creditworthiness of the home buyers. The developers were “originators” of mortgages—meaning that they went around the malls with blank mortgage papers, waylaid passersby and enticed them to sign the papers, and then went to the NHMFC to cash in. This diabolical system without any financial controls was designed by developers like Villar to rake in the profits. It resulted in default rates of more than 70% in the mortgages and nearly caused a Philippine economic crisis. It required the coordinated intervention of HUDCC, the Dept. of Finance, SSS, GSIS, Pag-Ibig, and HIGC to prevent a financial collapse. This was a very real danger then: we need only look at the recent US financial crisis to see how bad home mortgages can drive even the world’s largest economy to its knees. Naging bilyonaryo si Villar sa low-cost housing at the expense of Filipino taxpayers. Kumita na siya, Tong. Huwag mo nang bigyan ng medalya. Finally, you imply that I am inconsistent in my position on Villar’s role in this program because you say that HUDCC had “boasted” of its production of low-cost houses thanks to Villar’s “vision.” This is not true. I was always critical of Villar’s profiteering in low-cost housing and never claimed credit for the houses his companies built. I was appointed HUDCC Secretary General by President Ramos in June, 1995. I spent a few months going through the documentation of the housing program and holding intensive discussions with the developers’ organizations, lenders, the Dept. of Finance, and the HUDCC financial agencies. Then I wrote a series of memos to President Ramos that explained the hopelessly flawed nature of the program, the extent of the financial problems it had created, and what needed to be done to prevent financial collapse. After getting the President’s instructions to proceed in 1996, I set up the inter-agency task force to reform the UHLP and we completed our work and stopped the profiteering of the developers in 1997. Your brod, Tony Hidalgo Sent: Thu, March 4, 2010 12:31:02 PM Subject: Fw: Worth passing on ... Before passing this, I googled Antonio A. Hidalgo to make sure he is a real person. I found that he is an economist and writer-publisher. My banker friends are all anti-Villar. They know whereof they speak... Am forwarding to you an email sent by Antonio HIdalgo who was the Secretary-General of the Housing & Urban Development Coordinating Council from 1992 to 1998. Here is his first personal anecdote on how the real Manny Villar conducts his business; a far cry from what his image-engineers are trying to portray. We must be dessiminating this factual events to the people who will vote this coming May. Tong, ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- ------- Whatever the merits of your abstract argument about the presumption of innocence, let me assure you and the brods that Manny Villar is far from innocent. He is as crooked and greedy as they come. Winnie Monsod has made a very good case about his crookedness in the Paranaque road projects that passed through his properties at his behest as a lawmaker, enabling him to sell some of his land to the government at much more than market prices and to reap many millions in property appreciation from the government roads. He is also guilty of making billions out of government funds for socialized housing through a questionable, unsustainable scheme that nearly destroyed our financial system in the 90's. It's a bit complicated, but I was right there, trying to stop what was essentially Villar's scheme as Secretary General of HUDCC (housing). Fortunately, we succeeded (Dept. of Finance, Pag-Ibig Fund, SSS, GSIS, HUDCC, HIGC-I was head of the multi-agency Task Force that did this) and avoided a financial disaster in the Philippines that would have preceded the similar one that recently hit the US and hurt the world economy. It started when Cory became president. Villar, through the CREBA he controlled, drafted a socialized housing law to spur low-cost housing in the country. Cory approved it with her emergency powers, not seeing through Villar's scheme. To oversimplify, the law required the SSS, GSIS, and Pag-Ibig Fund to put billions of pesos of their funds each year into a fund for mortgages for low-cost housing (defined initially as 150T max, later going up to 250T through the years). This fund would be managed by the National Home Mortgage Finance Corp. (NHMFC - an agency of HUDCC). The NHMFC then established quotas for allocating the annual common funds of SSS, Pag-Ibig, and GSIS based on the building capacities of registered developers. The largest quotas every year were for the Camelia and Palmera (C & P) company of Villar which got a very large chunk of the funds for their home mortgages. Within the annual quotas under the law, builders could submit completed mortgages and NHMFC would promptly buy them at their face amounts and pay the builder. It was the builders actively sold mortgages in the malls and everywhere else, approved the papers, and submitted them to NHMFC. NHMFC only checked to see that the amounts of mortgages submitted by the builders were within their annual quotas before paying, it did not check the credit-worthiness of the borrower or even if the papers were genuine in that the stated borrower was a real person and the house being mortgaged actually existed. The situation the law created was unique in the entire world. The pooled funds of SSS, Pag-Ibig, and GSIS were effectively put into the hands of developers, who built the houses, found buyers willing to take out mortgages, approved the mortgages, submitted them to the NHMFC, and got the money in a few months. In effect, the builder controlled the credit funds and approved the loans using funds that were not theirs but were funds of SSS, Pag-Ibig, and GSIS. This was a clear conflict of interest, for the builder would maximize his profits from easy credit and would not bear the cost of mortgage defaults. Naturally, lots of problems arose in just a few years -- fake mortgages to fictitious borrowers, nonexistent houses sold to noexistent buyers, and the more common case: real, but substandard, houses, hastily sold to buyers who clearly did not have the capacity to pay back the loan during the agreed loan period. By the time HUDCC took action to correct the anomalous situation in 1996 under my coordination, some 42 billion had been disbursed in mortgages under the Villar scheme. Only a little more than 20 percent of the loans were being repaid by borrowers, more than 70 percent of the mortgages had been defaulted or were in serious arrears. This drew the attention of the World Bank and the Dept. of Finance, for the SSS, GSIS, and Pag-Ibig Funds are retirement funds. The funds are commtted to future retirement obligations to the contributing members. If the housing mess continued, the SSS, GSIS, and Pag-Ibig would default on its retirement obligations, creating a financial crisis for the country. All of us who changed the housing program to give the control over their housing funds back to the SSS, GSIS, and Pag-Ibig, who would be more careful in screening mortgages to make sure they would be paid for they would bear the penalties of mortgage defaults -- we were all harrassed by Villar and his minions in the CREBA who slapped law suits on us and attacked us in the radio, TV, newspapers, etc. The Makati regional trial court found in our favor and threw out the CREBA-Villar law suit. For a long while, we lost in the media wars and were painted as anti-poor bureaucrats. But the furor eventually died down and the reformed housing program we fashioned has stood the test of time. Since 1997, the repayment rates of socialized and low-cost housing mortgages have high enough to make the program sustainable. The looming financial crisis was averted and we are now in better shape than the US, which did nothing to reform its own defective housing mortgage system. Of course, the share prices of C & P homes of Villar collapsed, for everyone knew that the company was profitable only for as long as it could bilk government funds. But then Villar found other rackets and the rest, as they say, is history. Tony Hidalgo Hi, This guy is for real. He is the husband of our writing teacher Ms Jing Hidalgo Pantoja, UP Creative Writing Director, Palanca hall of fame awardee. Our teacher just mentioned that this article is really arousing interest.. Antonio Hidalgo was there. So we can truly pass this on. T