Mortgage Servicing Provider BFS Builds Future for the Country’s Next Homeowners
The South China Morning Post
Real estate is booming in the Philippines, where strong macroeconomic fundamentals, sustained robust growth and a rosy economic forecast are inspiring home ownership confidence among the country’s young, expanding middle-class population.
With steady demand fuelling the growth of local real estate loans, which amounted to more than US$26 billion in the first quarter of 2016, pioneering multinational mortgage servicing specialist Bahay Financial Services (BFS) sees itself playing a crucial role in shaping the country’s socio-economic trajectory.
As the Philippines’ first and only independent mortgage servicer, BFS promotes liquidity in capital markets by helping corporate and government clients effectively manage loan accounts. Through a comprehensive platform of mortgage services – and an aptitude for resolving non-performing loan portfolios – the company provides even-handed solutions to mitigate debtor and creditor issues.
“A home is the most important investment, and it can only be affordably financed by monthly amortisations. But that’s not going to happen without the infrastructure that assures liquidity – and that’s our business model,” says Federico Cadiz, president. “We manage accounts from cradle to grave, focusing on customised mortgage servicing, because it gives us more power to create value and improve lives.”
Covering the entire mortgage servicing life cycle, the BFS platform combines comprehensive competencies in mortgage finance origination and credit underwriting, loan servicing, remedial management, default management, property management, sales and secondary market development.
The company’s locally customised operations, protocols and workforce have given way to a mortgaging services culture catered to Filipino needs, but consistent with international standards. Some of its keys to success include a management team of seasoned portfolio managers, best-in-class policies, controls, procedures, protocols and strategic partnerships with like-minded entities.
“One of our assets and advantages is that we built our own credit database, because unlike the United States, the Philippines does not have an extensive and well-established centralised credit information database,” Cadiz says. “Managing accounts is a highly information-sensitive, process-oriented, information technology-intensive exercise that requires an entire infrastructure. We have good collateral and credit information, historical data across a huge cross section of the market and good stakeholder relationships. Our servicing independence is also what adds value in terms of governance, risk management and objectivity.”
As part of its vision to contribute to the country’s economic stability and development, BFS has also helped more than 130,000 Filipinos preserve the legal ownership of their homes. After acquiring a housing loan portfolio of more than 52,000 accounts from theNational Home Mortgage Finance Corp more than a decade ago, the company’s loan resolution programmes helped delinquent borrowers settle long-overdue payment obligations – resolving more than 60 per cent of the accounts worth US$221 million in collections.
“Our role in the inclusive and integrated housing development of this country is providing financial discipline, greater private sector participation and new liquidity to pension funds for future generations,” Cadiz says. “We believe that the best way to do that is to privatise a portfolio or privatise management. This could start with the government allowing housing to be much more integrated with better access to capital markets.”
BFS was established in 2005 by The Fund – a globally-managed institutional investment fund managing more than US$62 billion in assets worldwide. As The Fund’s asset management arm in the Philippines, BFS seeks to expand its portfolio and scale up to include operations outside the country.
The company welcomes complementary ventures with partners who share the same independent mortgage servicing agenda and are able to pool portfolios together for servicing.
“Mortgages are one of the more important components of the capital markets, and we want to be part of its natural development,” Cadiz says. “With urbanisation and rapid population growth in Asia, the mortgage market is going to explode.”