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MANILA - State-run National Home Mortgage Finance Corp. said residential mortgage-backed securities have steadily gained acceptance in the local market in spite of the 2008 subprime crisis in the United States.
Felixberto Bustos Jr., NHMFC president, told reporters that the investing public is more familiar now with this investment instrument, which has a lot of potential for growth.
"The big difference is that we're marketing to the retailers so there was a lot of education. We went around and we asked the CFA Society to help us because this, theoretically, could be a big portion of the market," Bustos, a past president of the Philippine chapter of the Chartered Financial Analysts, said.
"In the US, it's one fourth of the market. If you get one fourth of P3.2 trillion, that is P800 billion. Therefore, if this market develops it could go up to that level," he said.
Bustos guaranteed that the bonds sold by NHMFC and local secondary mortgage institutions are safe investments.
"We don't really utilize mortgage brokers [unlike in the United States]. They are not banks, but individuals and they earn money by looking for people who will borrow and bring them to the banks. What's the incentive for that? They just get as many loans as possible... In the end, the underlying pool of asset is not good," Bustos said.
"[In contrast], our asset pool was reviewed by at least three independent parties. Since that's the main source of repayment, you can say it's safe because 'yung ipapambayad ng interest ay manggagaling sa mga asset na na-review na ng maraming tao," said Bustos.
The subprime crisis somehow dampened demand for NHMFC's residential mortgage-backed securities called "Bahay Bonds 1," which was issued in 2009, the official said.
But this was not the case for "Bahay Bonds 2," as NHMFC had to reject orders after retail investors swamped the instrument. The agency recently raised P604 million from the sale of securities, which will allow NHMFC to purchase more housing loans and provide liquidity to lenders.
In the third quarter next year, Social Housing Finance Corp., a wholly-owned subsidiary of NHMFC, will push through with its planned retail offering of securities amounting to P2 billion.
The bonds may have a tenor of five years, depending on the underlying securities chosen by its underwriters, Bustos said.
The issuance was supposed to take place in the third quarter, but it was deferred because SHFC was still liquid.
NHMFC is tasked to develop and provide a secondary market for home mortgages granted by public and/or private home financing institutions.
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