Remedial and Collection Management

8/14/2019 Remedial and Collection Management

1/23

23/04/2008

Collection& Remedial

Management(Echo Seminar)


2/23

23/04/2008

I. Secured Obligation

a. Foreclosure Remedy available to the mortgagee by

which he subjects the mortgaged property to the

satisfaction of the obligation to secure that for which themortgage was given.

b. Dation in Payment (Dacion En Pago) delivery and

transmission of ownership of a thing by the debtor to

the creditor as an accepted equivalent of the

performance of the obligation.


3/23

23/04/2008

General Guidelines:

1. Dacion En Pago is a mode if discharging a monetary obligation

or debt whereby a property is ceded or alienated to the creditor

in satisfaction of the debt. It shall be an amicable, voluntary, and

peaceful transfer of property by the borrower, or a third party on

behalf of the borrower, who has the right to transfer theownership of the property in favor of the Bank to settle an

obligation.

The Bank may accept dation in payment after verifying that it is

the more viable way of settling the obligation.


4/23

23/04/2008

2. Proponents of approved Dation in Payment shall ensure that

the property offered is surrendered/ vacated promptly and

turned-over to them after appropriate verification that the

state/content of the property corresponds to the approved dation

proposal, and execution by the owner of the required legal

documents/forms. Booking, covering documents and

possession shall be promptly turned over after title to the

property has been transferred to the Bank.


5/23

23/04/2008

3. The following shall be considered in entering a dation

arrangement:

a. The right to sell or alienate the borrower or third party should

have the free disposal of the property offered for dation.

b. Clean titles and documents as a way of settling an obligation,

the property should have a clean title and supported with

complete and updated payments of taxes, homeownersassociation of condominium dues, and other fees or charges

imposed the property.

c. Marketable, correct and reasonable value the price of the

property shall be set at a marketable/disposable value upon

appraisal and ocular inspection to ascertain existence andpossession status of the property. The price shall in no case be

greater than 60% of the internal appraised value which is the

maximum loanable value in granting loans.


6/23

23/04/2008

d. Actual physical possession of property the keys shall besurrendered to the Bank on the same day the client vacates the

property. This shall be done upon conducting a final inspection/

verification of the property against the Inventory List attached to

the Inspection and Appraisal Report ensuring that there were no

alterations to the original contents of the property. On the day

following the final appraisal, the Voluntary Surrender and the

Debt Settlement by Way of Dacion En Pago shall be signed by

the client and the Banks authorized signatory to conclude the

dation agreement.

e. Transfer of booking This shall be made only after the title to

the property is consolidated in the name of the Bank. While theconsolidation of title is ongoing, the booking of expense shall be

under the marketing unit/branch.


7/23

23/04/2008

Kinds of Foreclosure:

1. Judicial ForeclosureNature and Purpose: The remedy used for the satisfaction of any

monetary obligation, which a person owes to another, by

proceeding against a property used to secure said obligation. Its

purpose is to cut off the rights of the owner of the property

mortgaged used to secure the obligation and all rights acquiredsubsequent to said right.

2. Extra-judicial foreclosure

Nature and Purpose: It is intended merely to regulate the extra-

judicial sale of the property mortgaged if and when the mortgagee

is given a special power of express authority to do so in the deeditself or in a document annexed thereto


8/23

23/04/2008

Notarial Foreclosure

1. Submission of Petition for Foreclosure with supporting documentsto a duly commissioned notary public in the city or municipalitywhere the property is located.

2. Filing of the Petition for Foreclosure with the Office of the Clerk ofCourt of the Regional Trial Court of the city or municipality where

the property is located.3. Issuance of Notices of Auction Sale by the Notary Public

conducting the auction sale, stating the date, place, date and timeof the auction sale, name/s of the borrowers, location anddescription of the mortgaged property and the amount of the totaloutstanding obligation.

4. Posting of notices of auction sale by the notary public in at leastthree public places in the city or municipality where the property islocated, for a period of not less than twenty (20) days prior to thedate of the auction.


9/23

23/04/2008

5. Publication of notices of auction sale once a week for at least three (3)consecutive weeks in a newspaper of general circulation in the city ormunicipality where the property is located.

6. Sale shall be made at a public auction under the direction of the notarypublic of the city or municipality.

7. During auction sale, the Bank shall submit its bid. The bid price shallbe the appraised value of the property or the total banks claim

whichever is lower. The Banks claim shall be composed of:a. Principal amount of the loan

b. Accrued Interest Receivable (booked)

c. Past Due Interest

d. Penalty chargese. Attorney' s fees

f. Other incidental fees and expenses


10/23

23/04/2008

8. After the auction sale, the notary public conducting the sale shall

issue a Certificate of Sale in stating the:a. Date, place and time of the auction

b. Name of the mortgagor-debtor

c. Total amount of the obligation as of date of the auction

d. Highest biddere. Bid price

f. Description of foreclosed property

9. The Certificate of Sale issued by the notary public shall be filed withthe Office of the Clerk of Court of the RTC in the city or municipalitywhere the property is located, for the signature and approval of theExecutive Judge.


11/23

23/04/2008

10. Once signed, the Certificate of Sale will then be registered with theRegister of Deeds. The date of annotation of the same on the title to thesubject property shall be operative act for the running of the oneredemption period accorded by law to the mortgagor within which toredeem the property.

11. Upon receipt of IOL and copies of Notice of Sale, Certificate of Sale andother foreclosure documents from Legal Retainer informing the lendingunit of the foreclosure, booking of account shall be reclassified toROPA. Value of ROPA is the recorded balance of the loan or thebid/purchase price, whichever is lower. The difference between loanbalance and bid/purchase price is booked to Miscellaneous Income/Loss account.


12/23

23/04/2008

12. Probable deficiency claims (outstanding debt is more than the bidprice of the mortgaged property) against the borrower/ debtor arisingfrom the foreclosure of mortgaged properties shall be temporarilylodged under the contingent account Deficiency Claims Receivableuntil the Bank has secured a judgment in its favor.

When judgment has been rendered in favor of the bank against thedebtor, the deficiency claims shall be judged under the real accountDeficiency Judgment Receivable.

13. In the event that the borrower fails to redeem the property within the

redemption period (Individual accounts 1 year from annotation;Juridical entities whichever is earlier of annotation date or 3 monthsfrom foreclosure), title to ROPA shall be consolidated in favor of theBank.


13/23

23/04/2008

II. Clean Obligation Mode of Collection

a. Sum of Money A contract whereby a personobliges to pay the other person a sum certain inmoney in a definite period of time.

b. Suretyship A contract whereby a person(surety) binds himself solidarily with the principaldebtor.

c. Guaranty A contract whereby a person(guarantor) binds himself to the creditor to fulfillthe obligation of the principal debtor in case thelatter fail to do so.


14/23

23/04/2008

Comparison between suretyship and guarantee:

Guarantee Suretyship1. Liability depends upon an

independent agreement to

pay the obligation if primarydebtor fails to do so

2. Collateral undertaking

3. Guarantor is secondarily

liable

4. Guarantor binds himself topay if the principal CANNOT

PAY

1. Surety assumes liability as

regular party to the

undertaking2. Surety is an original promisor

3. Surety is primarily liable

4. Surety undertakes to pay if

the principal DOES NOT PAY


15/23

23/04/2008

ROPA Management

Amount of Redemption (GBL 2000)

The bid price shall be the amount due under the mortgage deed, interest,

costs and expenses.

The bid price is reduced by the income received from the property.


16/23

23/04/2008

ROPA Management

Writ of Possession (Sec. 47, GBL)

Generally understood to be an order whereby the sheriff is commanded to

place a person in possession of a real or personal property, such aswhen a property is extra-judicially foreclosed.


17/23

23/04/2008

ROPA Management

Writ of Possession (Sec. 47, GBL)

When Necessary: Where no third person not a party thereto intervenes, and

debtor continues in possession of real property mortgaged, writ ofpossession is necessary to put an end to litigation.

Effect of Writ: Places purchaser in possession of property he has purchased

at public auction sale, and which has become his by virtue of final decree

confirming sale.


18/23

23/04/2008

ROPA Management

Writ of Possession (Sec. 7, Act 3135)

Issuance of WOP for Extrajudicial Foreclosure Sales During Redemption

Period: In any sale made under the provisions of this Act, the purchaser

may petition the Regional Trial Court of the province or place where the

property or any part thereof is situated, to give him possession thereofduring the redemption period, furnishing bond in an amount equivalent to

the use of the property for a period of twelve months, to indemnify the

debtor in case it be shown that the sale was made without violating the

mortgage or without complying with the requirements of this act.

Requirements for issuance of writ, pending redemption: a. filing of motion by

purchaser in foreclosure sale; b. approval of bond


19/23

23/04/2008

ROPA Management


Issuance of Writ of Possession after Expiration of Redemption Period:

Buyer in a foreclosure sale becomes absolute owner of the property

purchased if not redeemed during period of one year registration of sale.Possession becomes absolute right of purchaser.

As owner, he is entitled to possession of property and can demand it

anytime following consolidation of ownership in his name, and issuance

to him of new title.

Bond required in Sec. 7, Act 3135, no longer necessary. Mere filing of ex

parte motion for issuance of writ of possession would suffice.


20/23

23/04/2008

ROPA Management


Question on Cancellation of Writ or Validity and Regularity of Public Sale

The debtor may, in the proceedings in which possession was requested,

but not later than thirty days after the purchaser was given possession,

petition that the sale be set aside and the writ of possession cancelled,

specifying the damages suffered by him, because the mortgage was not

violated or the sale was not made in accordance with the provisions

hereof.


21/23

23/04/2008

ROPA Management

Ejectment

Summary proceedings intended to provide an expeditious means of

protecting actual possession or right to possession of property.

Who may initiate proceedings:

Forcible entry a person deprived force, intimidation, threat, strategy or

stealth

Unlawful detainer lessor, vendor, vendee or other person against whom

possession of any land or building is unlawfully withheld; legalrepresentatives or assigns of any such lessor, vendor, vendee or other

person against whom possession of any land or building is unlawfully

withheld


22/23

23/04/2008

ROPA Management

Ejectment

Against whom action may be maintained:

Against one is possession at the commencement of the action.

Tenant with right of possession may bring action another tenant.

Vendor may bring action for ejectment against vendee upon failure to

pay installments.

Forcible entry


23/23

23/04/2008

Remedial and Collection Management

Documents

Transcript of Remedial and Collection Management