The Housing and Urban Coordinating Council, the Philippine government body that oversees the country's two state housing agencies, has announced plans to improve the agencies' performance, in a move which could have the side-effect of allowing a resumption of the country's nascent mortgage-backed securities market.
The government body is encouraging the two agencies - the National Home Mortgage Finance Corp. and the Home Development Mutual Fund (known as Pag-Ibig) - to outsource their collections and accounting operations to the private sector.
Both agencies' collections have been poor, with Pag-Ibig collecting only half of what it was owed last year.
Pag-Ibig's president, Ramon Palma Gil, said that the agency has been in the MBS market before, but acknowledged that a deal it worked on with Citibank in 1998 was not a great success as investors were wary of the low collections and inefficient record keeping.
However, he has been talking to Citibank again - along with other local and international banks - in order to establish whether it will be possible to try again.
To that end, he is planning moves to improve the yield on Pag-Ibig's portfolio, which currently totals P54 billion ($1.3 billion), by increasing the maximum amount it can lend to P2 million from P500,000.