Re: C 5 Scandal is peanuts, compared to this. Compliments of Mel Amado

April 23, 2010

Subject: Re: C 5 Scandal is peanuts, compared to this. Compliments of Mel Amado

Not only government but bondholders of C&P homes also suffered when company when under and repaid creditors with inflated dacion en pago properties. I know investors that took the hit.


The Taksin of the Philippines

Subject: SHOCKING REVELATIONS from Former DPWH Reg. Dir. Lala & Former HUDCC

The C5 Scandal is small fry compared to the revelations of Mr. Antonio Hidalgo, former Secretary General of the Housing & UrbanDevelopment Coordinating Council from 1992 to 1998.

Subject: Villlar and low-cost housing

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 theParanaque road projects are pretty clear. I don’t need to commentfurther 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 ove rmore than a decade under the Unified Home Lending Scheme (UHLP) of thesocialized housing law (E.O. 90) that he and his CREBA minions draftedand 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,G SIS, Pag-Ibig) were stuck with billions in bad home mortgages coveringVillar’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 or2004), 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 onlyhimself 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, andPag-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 ofthe 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 blankmortgage 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 aPhilippine economic crisis. It required the coordinated intervention ofHUDCC, 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 lookat the recent US financial crisis to see how bad home mortgages candrive 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 onVillar’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 thePresident’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

From: Jose Salvador Y Mirasol [mailto:Salvador. Mirasol@]
Sent: Saturday, March 06, 2010 2:57 PM
Antonio Hidalgo was the Secretary-General of the Housing & Urban Development
Coordinating Council from 1992 to 1998.


Villar used the NHMFC scheme described by Tony Hidalgo above to buildup the assets of C&P Homes, in view of an IPO launched in the mid-1990s. With the IPO came more pressure to window-dress the books of C&P Homes to show profitability. This pressure he addressed by irresponsibly building more substandard homes, massively selling to borrowers with no paying ability, and then, using his office as Congressman, force NHMFC to acquire these subprime loans, getting the lion’s share of the allocation in the process. NHMFC was left with more than 300,000 of these non-performing loans with a face value ofmore than P40 billion. Until today, NHMFC is hardly able to collect on these loans. One of the usual complaints (and excuse for non-payment) of defaulting borrowers is that the C&P houses were all underdesigned and substandard.

Following the 1997 Asian financial crisis, after prices of real estate plummeted, Villar found himself defaulting on the bonds issued by his C&P Homes. Several good faith investors and banks suffered huge reductions in their credits as a result.

To pay off C&P’s defaulted loans from banks, Villar forced these banks to accept lands as settlement payment for the loans. Using his influenced as Congressman, Speaker of the House and later as Senator,he forced his creditor banks to accept lands whose only access topublic roads was through his own property. This meant that these banks had to pay him for the right of way.

Villar’s C&P loans and forced land payments contributed to the highlevel of non-performing loans and repossessed properties of banks, the reason why the SPAV Act had to be passed in 2003. Already a Senator at this time, Villar tried to insert a provision in the SPAV bill that would grant the defaulted borrowers (like himself) the right to match the discounted price at which the banks may sell their non-performing loans and repossessed properties to third party good faith buyers. In effect, he wanted to give a non-paying borrower like himself the right to require his lender to accept a fraction of the principal loan as full payment of the loan. If not for the strong opposition from the banks, this Villar insertion (not to be confused with the C-5insertion) would have become part of the law.


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