CORPORATE SOCIAL RESPONSIBILITY Guided and driven by the mandate of the National Home Mortgage Finance Corporation (NHMFC), the Board of Directors, its officers and personnel are committed to constantly strive to promote good governance, inclusive economic opportunities, environmental responsibility, positive social impact and sustainability. NHMFC commits to the continual improvement of the Corporate Social Responsibility (CSR) policies and programs through strengthening of the secondary mortgage market, providing quality public service, maintaining highest standards of compliance and ethics, and creating positive impact in the protection and preservation of the environment.

A. ECONOMIC PERFORMANCE In 2019, NHMFC made significant progress and was another stellar year for the corporation. Its economic activities stimulated by developing the secondary mortgage market, addressing the unmet development needs of millions of Filipinos and pursuing sustained growth and development to the community. The corporation continues its strong financial performance and increases the pool of economic resources that flows in the local and national economy. For this year, the economic value generated revenue amounted to Php 1.24 Billion and distributed worth of Php 1.05 Billion for operating costs, employees’ wages and benefits, payments to suppliers, dividends, taxes and donations to the community they serve.

Direct Economic Value Generated (Revenue) Php 1,237,582,170.45

Direct Economic Value Distributed

a. Operating Costs b. Employee Wages and Benefits c. Payments to Suppliers, other operating costs d. Dividends and Interest Payments e. Taxes f. Investments to Community

Php 1,048,619,864.70 332,760,690.22 240,313,720.70 4,870,132.50 352,701,306.93 117,774,514.35 199,500.00

As NHMFC continues to grow and pursue its vision, the following programs and services underpin its strong contribution to the economic development: 1. Securitization and Development of the Secondary Market Consistent with the mandate of developing the secondary market, BALAI Bonds 1 was issued last

December 9, 2019 with an issue size of Php 270.25 Million backed by low-cost and socialized

housing receivables. BALAI Bonds 1 also marks the start of a series of BALAI Bonds issues,

focused on low-cost and socialized housing receivables.

2. Purchase of quality mortgages and other housing receivables under HLRPP

Through the Housing Loan Receivables Purchase Program (HLRPP), NHMFC purchased a

total of Php 2.186 Billion worth of housing receivables or 79.4% of its 2019 Performance

Scorecard. NHMFC was able to meet 96% of its target under the Philippine Development

Plan (PDP) by purchasing Php 1.596 Billion worth of socialized housing receivables from

various private developers and Home Development Mutual Fund (HDMF), one of the key

shelter agencies of the government. This translates to 4,320 low-income families assisted

by NHMFC through the HLRPP.

3. Profitability and Financial Sustainability

NHMFC’s net income before NG subsidy increased from Php 405.120 Million to Php 480.240

Million or 18.54% increase for the period ended December 31, 2019, primarily due to the

increase in income from services, as well as, gains from the sale of acquired assets, non-

performing loans (NPL) and temporary investments.

Last year, the Corporation managed to reduce its NPL ratio from 68.81% as of December 31,

2018 to 58.58% as of December 2019 or equivalent to 10.23% improvement by introducing

various collection schemes such as “Republic Act No. 9507 : Huling Hirit” and “Six to Twelve

Months Updating Plan (STUMP)”.

4. Dividends and Taxes Remittance

NHMFC remitted to the national government its highest ever dividends totaling Php 264 million comprising dividends for CY 2019 net earnings and back dividends for prior years. This is a 49% increase from last year’s ₱177 million for CY2018. A total of Php 937 Million has been remitted by NHMFC since 2012 and expects the remaining prior years’ dividends to be paid out next year. The corporation’s robust financial performance for CY 2019 proves to be unparalleled as it has set to pay its highest corporate income tax amounting to Php 83.4 million. This amount overshadowed the previous year’s remittance by 119% or equivalent to Php45.38 million. For Percentage Tax, NHMFC remitted Php 34.3 Million levied from its gross sales/receipts which is 160% or equivalent to Php21.13 million higher than its 2018 remittance.

B. SOCIAL RESPONSIBILITY

NHMFC established mechanisms, programs, and policies that served the interest of NHMFC’s

recognized stakeholders. The corporation shall endeavor to enhance its capability, efficiency and

effectiveness to ensure the rights, roles and protection of its stakeholders. For its customers and

employees, the corporation provides equal access and quality of products and services,

responsible business practices, privacy and data security.

As NHMFC continues to serve its stakeholders, the following policies and programs were

developed and implemented:

1. Customers/Stakeholders

To address the customer’s welfare and in compliance with the Manual of Corporate

Governance, NHMFC in partnership with public and private institutions (banks,

collection/bayad centers and remittance partners, etc.) and thru innovative and improved

systems/processes (including securing ISO certification), the corporation shall continue to

enhance the delivery of customer service and seek more efficient and convenient ways to

allow its buyers/borrowers to easily/conveniently transact with it (for amortization

payments which should be promptly and accurately posted, and for buyer information and

accounts updates, etc.); enable them to raise and resolve issues/problems encountered, be

regularly informed of corporate policies and programs, as well as, give feedback/suggestions

(aside from electronic mail and social media feedback means) to the corporation.

1a. Customer Satisfaction

NHMFC continues to provide excellent service to its stakeholders as its customer satisfaction

rating went up to 95% from 93% or 2% satisfaction increase of borrowers and developers,

which is a reflection of the outstanding service and facilities NHMFC commits to provide to

its valued clients. The survey was conducted by Market Relevance in compliance with GCG's

Standardized Satisfaction Survey Methodology.

1b. Ease of Doing Business and Efficient Government Service Delivery

In compliance with the Anti Red Tape Authority (ARTA) Memorandum Circular No. 2019-

001-A, the Corporation submitted its revised Citizen’s Charter for External Services on

December 4, 2019. The Corporation also issued Office Order No. 2555-A on August 26, 2019

creating the Anti Red Tape Unit (ARTU), which will ensure the Corporation’s compliance to

the requirements of ARTA and Republic Act 11032 or the Ease of Doing Business and

Efficient Government Service Delivery Act of 2018.

1c. International Standard for Quality Management System

On August 8, 2019, TÜV-SÜD PSB Philippines, a third-party ISO certifying body, recertified

NHMFC for ISO 9001:2015 for its Securitization of Housing Loan Portfolios and Borrower’s

Services as proof of the Corporation’s continuous improvement of its services and

consistent compliance with the requirements of its Quality Management System.

1d. Partnership with Japan Housing Finance Agency

With the common desire to strengthen cooperative relations in the fields of housing finance

and market support, the NHMFC signed a Memorandum of Cooperation (MOC) on March 1,

2019 with the Japan Housing Finance Agency (JHF).

The said MOC aims to explore the solutions to problems of mutual concern and exchange of

information on policies, research and programs between the two housing agencies,

especially the JHF green bond program. Green Bonds are issued to raise funds for green

projects such as business to improve the environment by utilizing renewable energy and or

enhancing energy efficiency.

One of the NHMFC’s projects in the pipeline is the BALAI BERDE Bonds, the fifth series of the

corporation’s bonds issuance. It will target those with existing loans with NHMFC

(retrofitting of housing units), those who buy NHMFC acquired assets (retrofitting of housing

units prior to sale), and originators of housing loans that will be sold to NHMFC (100 percent

loan to value ratio for new loans, provided that units are structured in adherence to climate

change).

1e. Partnership with Cagamas National Mortgage Corporation of Malaysia

On April 15, 2019, NHMFC and Cagamas National Mortgage Corporation of Malaysia sealed

a Memorandum of Cooperation (MOC) to jointly explore housing financing methods in

promoting homeownership.

The said MOC aims to enhance the strategic cooperation between Malaysia and Philippines

for research, knowledge sharing, developing the secondary mortgage finance market,

enhance the stability of housing and mortgage markets, mortgage backed securities,

leverage private capital to the housing market, and collaboration for the structuring and

issuance of Shariah compliant pool of assets.

With the NHMFC’s impending issuance of Sukuk Bonds, this partnership intends to create

the Shari’ah Council, structuring the assets for the Sukuk issuance, and its assistance in

terms of marketing the sukuk issuance and later, in strengthening the NHMFC workforce

through knowledge sharing, trainings, and marketing partnership.

1f. Digital Financial Services

With the growing demand in adapting to rapid change brought by the rise of e-commerce

businesses for faster, secured and more convenient method of transactions, NHMFC has

partnered with PayMaya to allow its housing loan borrowers to conveniently pay their loan

amortizations anytime and anywhere. On October 28, 2019, NHMFC held its kick-off

ceremony on “Why Pay Cash, Paymaya” online facility program.

Contactless transactions with clients have been promoted through this online payment

facility. NHMFC borrowers will no longer have to leave the convenience of their homes to

travel to pay their monthly amortization. They can pay their housing loans 24/7 even on

weekends and holidays, wherever they are by just going to the NHMFC website.

Paymaya, as an additional payment facility, enables clients to pay for their housing loans at

the NHMFC website using any Visa, Mastercard or JCB credit, debit, and prepaid cards for an

efficient and cashless payment. For payment through mobile phones, borrowers will have to

download the PayMaya app, sign-up for an account, add cash amount and register their

mobile numbers.

1g. Online Access Kiosks

Aims to provide borrowers with convenient, easier and faster transactions through the use

of modern facilities, NHMFC launched the My NHMFC On-line Access (My NOA) kiosks on

December 7, 2019. This is an ATM-like machine that serves to provide NHMFC borrowers

with secured, paperless and end-to-end electronic transactions concerning their accounts.

Borrowers may check their balance, payments made and updates on their loans through this

self-service booth.

1h. BALAI Rewards and Incentives Program App

Aims to provide repayment incentives for the regular/prompt paying accounts, the NHMFC

Board of Directors approved on 17 April 2019 the Borrower’s Incentive and Rewards

Program (BALAI Card) and on 24 October 2019, it was renamed to BALAI Rewards.

This program benefits all active and updated accounts (which currently has a total of

approximately 20,000 accounts), converted or rehabilitated non-performing loans, and new

take-outs of the corporation. It seeks to motivate qualified accounts to keep their housing

loan active and in current status, and more importantly, to inspire delinquent borrowers in

updating their accounts to be able to enjoy the benefits of the program, that also includes

entitlement to electronic raffle draws.

1i. Care Collect-Care Connect

The Collection and Accounts Management Group (CAMG) started its massive on-site

counselling and field visit to accommodate the very demanding schedule of housing loan

borrowers. This program accommodates borrowers in the comfort of their homes.

This program was conceptualized to increase collection and reduce the number of non-

performing loans and intends to speed up the meticulous review of the current housing loan

portfolio.

1j. Housing Fair

Housing is every man’s heritage, and providing adequate and affordable housing units to

every Filipinos remains a top priority of NHMFC. For 2019, NHMFC held two (2) Housing Fair

events to cater to a larger number of homebuyers.

The first event was held on May 27-31, 2019 at the NHMFC Head Office while the opening of

sealed bids was held on June 28, 2019. Out of 402 assets for disposal located in the National

Capital Region, Laguna, Rizal, Bulacan, Bataan, Quezon Province, Pampanga, Tarlac and in

Mindanao area, the corporation received 208 bid offers.

On October 7-11, 2019, NHMFC held its second Housing Fair at NHMFC Davao Regional

Office. Out of 363 acquired assets for disposal, 105 bids were received from prospective

buyers aspiring to acquire a new home.

The opening of bids was spearheaded by the Acquired Assets Bids and Awards Committee

(AABAC) members and representatives from Internal Audit and Commission on Audit (COA).

The sale of properties is on “as is where is” payable thru cash or installment basis.

1k. Stakeholders Forum

With the theme “Everybody deserves a home and it should never take too long”, NHMFC

held three (3) Regional Stakeholders Forum throughout the country, in Luzon on March 28,

2019, in Visayas on June 27, 2019 and in Mindanao on October 3, 2019. This program

encourages participation of industry partners in the government’s various housing programs

to reduce the gap in affordable housing. The forum also provided stakeholders the

opportunity to present their different products that improve housing facilities while going

pro-environment.

2. Employees

NHMFC demonstrates the values of its employees and believes that every employee plays a

significant role in achieving its shared vision. For 2019, the corporation was able to provide

opportunities and employment for newly hired employees, develop and promote the most

qualified employees and adhere to policies and standards not to discriminate based on

other people's religion, sexual orientation, marital status, gender and disability.

The employees were also provided with a healthy and productive work environment, and

developed the diversity and agility of the workforce, and their competencies as potential

future leaders of the organization.

2a. Training and Development

NHMFC is committed to ensure that all officers and employees have access to learning and

training opportunities which enables them to be competent in carrying out their roles within

NHMFC and to develop their talents in any ways that fit within the organization's

development to meet its strategic objectives. For 2019, 95% of its employees improved and

met the required competencies.

The major aim of NHMFC is to provide an environment where continuous development can

take place and where employees are supported, and enabled to meet the changing

demands and priorities of the corporation and to consider their individual development.

2b. Regional Reorientation Program

A re-orientation program for NHMFC regional officers and employees was held at Stonehill

Suites in Bacolod City on December 9 to 11, 2019. The discussions were facilitated by the

officers and employees from the NHMFC head office, led by Corporate Support Services

Group Vice President Lourdes C. Bacani, Collection and Accounts Management Group Vice

President Ma. Victoria Alpajaro, Fund and Asset Management Group OIC-VP Romeo Roldan

and Internal Audit Manager Editha Sta. Ines.

To prevent inconsistencies among procedures, various topics were discussed vis-à-vis

different collection programs such as Penalty Condonation Program, Six to Twelve Months

Updating Plan (STUMP) and Buyer Initiated Disposal of Assets (BIDA). Representatives from

the Human Resource, Legal, Budget and Corporate Planning Divisions were also present to

discuss and clarify matters pertaining to their respective areas of concern.

The three-day event was also an effective venue for the Visayas and Mindanao staff to

personally raise their issues, concerns and recommendations for improvement of services. It

also provides an opportunity for the regional staff to socialize with other employees from

the different regions.

2c. Teambuilding

NHMFC encourages teamwork in building a brighter future and working towards a shared

goal. On July 5-6, 2019, NHMFC held its Corporate Team Building at Camp Balai Isabel,

Talisay Batangas and was attended by 250 employees, all geared up in building a stronger

NHMFC with the theme “Together, we are stronger”. Series of fun and games showcased

each team’s skills in communication, planning, problem solving, conflict resolution, and

teamwork.

2d. Corporate Planning

Stirred with the common desire of building a better NHMFC, a three-day Strategic Planning

Session was held on July 25-27, 2019 at Camp John Hay Trade and Cultural Center in Baguio

City. This was designed to keep track of NHMFC’s CY 2019 performance commitments vis-à-

vis its accomplishment and to review the corporation’s Strategic Objectives for CY 2020-

2022.

2e. Health and Wellness

Pursuant to CSC Memorandum Circular No. 33, s. 1997 in recognizing the need to

institutionalize viable programs to improve working conditions in the government, the

NHMFC Wellness Program was created to provide employees activities, programs and

resources to help improve their health, morale and productivity. It aims to comply with CSC

Resolution No. 974684 to ensure that employees are provided with a healthy work life

balance and adequate programs for their health, safety and welfare needs.

Aimed to promote health awareness, sportsmanship and camaraderie, NHMFC in

coordination with the Home Mortgage Employees Association, Inc. (HOMEAI, held a series

of basketball games from May to June 2019 entitled “NHMFC back in shape basketball

tournament” for its regular and contractual employees and other service providers.

NHMFC also won the 1st Runner Up-Group 2 Category in the Chamber of Real Estate and

Builders’ Association, Inc. (CREBA) 2019 Invitational Tenpin Bowling Tournament whiich run

from July 8 to September 16, 2019.

On September 16-20, 2019, HOMEAI celebrated its 33rd Anniversary of Unionism inspired by

NHMFC’s slogan that “Together, We are stronger”. With support from management, among

the activities during the celebration that promote health and wellness programs for

employees were eye check-up, distribution of products and medicines, herbalife booth,

zumba, massage, and spiritual enlightenment.

In an effort to further improve camaraderie among employees and to promote work-life

balance, also included in the program are sports activities such chess, darts, bowling and

basketball tournaments.

2f. CNA Registration Certificate

Civil Service Commission Director Imelda Banzon awarded the Certificate of Registration of

the Collective Negotiation Agreement (CNA) entered into by and between the Home

Mortgage Employees Association Inc. (HOMEAI) and NHMFC Management on December 17,

2019.

The CNA recognizes and guarantees the right of government workers to form employee’s

associations and to engage in collective negotiation and peaceful concerted activities as

Constitutional provisions. The registration of the CNA detaches the negative perception on

unionism in the government sector.

CSC promotes responsive management and responsible public sector unions as key partners

for effective governance.

2g. PRIME-HRM Recognition

The Civil Service Commission (CSC) conferred the Certificate of Recognition to NHMFC for

obtaining Maturity Level 2 of the Enhanced Program to Institutionalize Meritocracy and

Excellence in Human Resource Management (PRIME-HRM) for two core areas of Human

Resource (HR) Systems - the Recruitment, Selection and Placement (RSP) and Performance

Management (PM). This was a result of the NHMFC’s determination and invaluable efforts

to promote people excellence in the corporation for efficient and effective public service

delivery.

Maturity Level 2 indicates a process-defined HR system where a set of defined and

documented standard operating procedures is established (subject to improvement over

time), goal-oriented decision-making, and with (some) automated systems in place.

Recognition under PRIME-HRM is given to agencies with best practices in human resource

management. It aims to transform the agency’s HR system, competencies, and practices to a

level of excellence that fosters good governance.

NHMFC is also currently working on the requirements of Learning and Development (L&D)

and Rewards and Recognition (R&R) for the completion of the four core areas of HR

systems, and targets the PRIME-HRM Bronze Award for the year 2020.

2h. PRAISE Awardees

The National Home Mortgage Finance Corporation Program on Awards and Incentives for

Service Excellence (PRAISE) Committee recognized on December 20, 2019 during NHMFC’s

42nd Anniversary celebration, different groups and individuals for their creativity,

innovativeness, efficiency, productivity, courage, integrity and selflessness as public servants

that contributed to the improvement of government services.

The Committee acknowedged these groups and individuals who showed and demonstrated

extraordinary acts in achieving corporate targets and for demonstrating high quality of

public service to the people.

2i. Cervical Cancer Awareness Month

NHMFC supports its employees’ campaign for activities and symposiums that promote

awareness and preventive measures against dreaded diseases. In May 2019, in celebration

of the Women’s Month, Ms. Evangeline Faustino of NHMFC’s Remittance and Verification

Division, shared her testimony in winning her battle against cervical cancer at a symposium

held at the Manila Medical Center.

2j. Family Week Celebration

In line with the National Committee on the Filipino Family (NCFF) mandate and Civil Service

Commission Announcement No. 53, s. 2019, NHMFC enjoined all its Officers and Employees

to observe the Family Week Celebration with the theme “ Tungo sa Maginhawa, Matatag at

Panatag na Pamilyang Pilipino” on September 23-28, 2019.

In support of the “Kainang Pamilya, Mahalaga Day” on September 23, 2019, the corporation

dismissed their employees at 2:00pm from work to encourage them to spend mealtime with

their families and to strengthen their relationship through a meaningful celebration and

promotion of Filipino values.

C. ENVIRONMENTAL RESPONSIBILITY

NHMFC recognizes the need to institutionalize the best practices in the delivery of quality

services as it similarly recognizes the value of a safer and healthier work environment. The

corporation is also committed to align its business operation in achieving sustainable

development while promoting an environment-friendly approach and minimizing the negative

impacts to the environment.

1. Effective and Efficient IT-Supported Systems and Procedures

To further promote good governance through eGovernance mechanisms, to provide IT-

enabled customer focused services, and paperless transactions, NHMFC successfully

deployed 100% of the proposed systems for development for 2019 under its Information

Systems Strategic Plan (ISSP) 2018-2020, which was endorsed by the Department of

Information and Communications Technology (DICT) to the Department of Budget and

Management (DBM) on September 26, 2019.

2. Job Request Management Information System (JRIMS)

To provide an automated, electronic workflow system for a paperless transaction, NHMFC

developed an effective monitoring system for handling, monitoring, and reporting

computer-related job requests from NHMFC employees. The new system, named as Job

Request Management Information System (JRMIS), is designed to improve the manual

method of job requests, such as I.T. support, from employees. It automates the transaction

from acceptance, processing, monitoring, and report generation. This paperless system of

managing in-house transactions ensures efficient service, effective monitoring, and provides

accurate and timely information to both the end-user and I.T. personnel.

3. Tree Planting

NHMFC supports activities that promote protection of environment. Thru the Home

Mortgage Multi-Purpose Cooperative (HMMPC), the corporation took part in the tree

planting drive organized by the Makati Cooperative Development Office and the

Cooperative Development Authority held on July 5, 2019 at the La Mesa Nature Reserve,

Quezon City.

Mr. Rommel Rabaca and Mr. Hurley Ceballos, as NHMFC representatives, made the most of

their opportunity to give back to mother earth. They took part in breaking the ground,

scattered seedlings, and mingled with the other participants from various cooperatives.

4. 5S Concept

NHMFC recognizes the need to institutionalize the best practices in the delivery of quality

service as it similarly recognizes the value of a safer and healthier work environment. In line

with this objective, the NHMFC officers and employees are committed to continually

practice and adopt the 5S Concept.

5. No Smoking Policy

The corporation has strictly and continually complied with the “No Smoking Policy” within

its premises. This is compliant with the Civil Service Commission (CSC) M.C. No. 17, s. 2009

on “Smoking Prohibition based on 100% Smoke-Free Environment Policy” covering all areas

of government premises, buildings, and grounds.

D. SUSTAINABLE DEVELOPMENT GOALS

NHMFC recognizes its role as a responsive public servant to the community and to contribute to

the United Nations Sustainable Development Goals (SDGs), to end poverty, protect the planet

and ensure that all people enjoy peace and prosperity.

1. Donations to schools

Aiming to bridge the digital divide and as a policy of NHMFC, the corporation regularly

donates old but working office equipment and furniture to schools or universities to help aid

students and teachers in their learning and teaching activities, especially that in today’s

education system, computer technology skill is one of the components of the K-12 Basic

Education Curriculum. On July 9, 2019, NHMFC donated twelve (12) units of desktop

computers and six (6) printers to Talon Elementary School and Taliba Elementary School,

both public institutions located in the remote areas of San Luis, Batangas.

2. Caring for Dumagat Tribes Spreading goodwill and heartfelt wishes to the indigenous community during the Christmas season, NHMFC in partnership with the University of Makati’s (UMak) Center for Extension Services & Nation Building held an outreach program on December 4, 2019 at Sta. Ines, Tanay, Rizal, with the theme “Community: A Celebration of Blessings.” A total of 350 children and their families benefited from the project. Meals and refreshments were served and the children received goods, toys, hygiene kits, and educational materials.

3. Outreach program for Kibungan residents

NHMFC, in partnership with Home Mortgage Employees Association, Inc. (HOMEAI), held its

traditional Outreach Program on December 12-15, 2019 to at least 300 students and senior

citizens residing in Kibungan, Benguet.

A total of 150 students, mostly from Napsong Bo. Elementary School, Lubo Elementary

School, Kibungan Central Elementary School, and 3 Day Care Centers, received various

school supplies. On the other hand, 150 senior citizens from this town likewise received

noche buena baskets.

4. BALAI Kalinga Outreach Program

NHMFC, together with the Department of Human Settlements and Urban Development

(DHSUD) and the other Key Shelter Agencies (KSAs), partnered with Alagang Kapatid

Foundation in conducting the 2019 KSA’s BALAI Kalinga Outreach Program on December 18

and 19, 2019 to the residents of Mindoro and Cagayan who were affected by the calamities

that struck the provinces.

5. President’s Summer Youth Program

In line with the Revised Government Internship Program (GIP) Kabataan 2000, under

Executive Order No. 139, NHMFC provided Summer Youth Work Program to twenty (20)

students and newly graduates from different schools. This program advocates the youth to

be more involved in community development, and contribute to the pump priming program

of the government.