The $15 million dollar Housing Development Loan Program (HDLP) is ready to roll out after the signing of Subsidiary Agreements on Wednesday August 28, 2019.

Finance Minister Elbuchel Sadang , Palau National Development Bank (NDBP) Chairperson Eberdil Rechebei and Palau Housing Authority (PHA) Managing Director Frida Delmau signed off on the Subsidiary Agreements that establish administrative procedures for movement of funds from the $15 million dollar loan for housing development projects.

Minister BaklaiTemengil Chilton who serves as chairperson of National Housing Commission reported that the National Housing Policy and its Rules & Regulations have been completed.  These were the provisions that had to be met before Housing Development Loan Program (HDLP) could begin.

As of the signing, total of 16 applicants have been pre-approved for such housing loan project.

Palau National Development Bank (NDBP), prior to the signing of the Subsidiary Agreements, had started a reviewof 68 applications andout of that pre-qualified 11 applicants that meet both the bank’s and the National Housing Commission’s guidelines.  Karla West of NDBP said the combined loan amount for the 11 pre-qualified applicants is $950,000.

NDBP can issue loans up to $100,000 per applicant from the HDLP, at 1%, 3% or 6% interest depending on the applicant status.  It can also consolidate loans at 6% interest.

PHA Managing Director Delmau reported that PHA too started review of 30 applicants earlier and its Board had just approved 5 applicants for this loan.  “We have not requested for funds drawdown yet.  We want to complete the permitting process before we request fund draw down,” added Delmau.

The total amount reported for the 5 approved applicantsfrom PHA is $217,000, averaging around $43,000 per loan.  PHA can issue up to $60,000 per applicant.

PHA is also authorized to restructure loansit issued to first time homeowners or displaced persons that were financed by the funds from 2016 $5 million loan agreement with Mega Int’l Commercial Bank.

The $15 million dollar loan approved by Mega International Commercial Bank of the Republic of China-Taiwan was requested by Palau government to address Palau’s growing housing crisis.  The loan was approved for a term of 20 years at a rate of 1% above the prime.

Under RPPL 10-36, signed into law in June of this year, national government will be responsible for the facilitation fees and interests payments of this $15 million dollar loan.  Law mandates both PHA and NDBP to return the principle of the loan once National Housing Commission has determined that Palau “housing crisis has been satisfied.”

RPPL 10-36 created a Palau National Housing Commission with a mandate to develop a national housing policy to address Palau’s growing housing crisis, prioritizing first time homeowners and displaced persons.  The law gives NHC the full authority over housing programs as well as full access to the entire $15 million loan agreement from Mega International Commercial Bank.

National Housing Commission reviews and approves draw down of money from the $15 million loan agreement to entities such as Palau Housing Authority or Palau National Development Bank or other approved entities.

Furthermore, the law set interests rates to be charged by PHA and NDBP.  Interest rates are set at 1%, 3% or 6% according to eligibility guidelines.

In addition to lower interest rates, the law also lowered the restrictions for such loans by raising the debt to income ratio to 40% and loan to value ratio of up to 97%. In other words, a person is still eligible to get a loan if his/or her existing debts represents 40% of his/her income or if a person needs to borrow up 97% of the cost of the home he/or she needs.

Both PHA and NDBP are to repay the principle amount of the loans they receive back to government once NHC deems the “housing crisis” to be over. (L.N. Reklai)