The Community Mortgage Program (CMP) is the flagship social housing program of the Philippine government that provides financing to organized associations of informal settlers and low-income families, enabling them to collectively purchase and own the land they occupy. Instead of a loan to one person to buy one house, the CMP is a loan given to an entire community to buy one large piece of land, which they then divide among themselves. This innovative program is administered solely by the Social Housing Finance Corporation (SHFC).
How Does the Community Mortgage Program (CMP) Work in Practice?
The CMP is a powerful, bottom-up approach to social housing that empowers communities to take the lead in solving their own housing needs. It’s a multi-step process that transforms informal settlements into legal, planned, and titled communities.
Here’s a step-by-step breakdown of the CMP journey:
- Community Organization: The first and most vital step is for the residents of an area—often informal settlers or long-term renters—to organize themselves. They must form a legitimate community association or cooperative, register it with the proper government agencies (like the DHSUD), and elect their own leaders.
- Land Negotiation: The organized community, now a legal entity, enters into negotiations with the owner of the land they are occupying. The goal is to arrive at a “willing seller-willing buyer” agreement to purchase the property. If the land they are on is not for sale or is in a danger zone, they can find a suitable relocation site and negotiate to buy that instead (this is called an “off-site” CMP).
- Loan Application: The community association applies for one single loan from the SHFC to finance the purchase of the entire property. The SHFC evaluates the application, the land’s viability, and the community’s capacity to pay.
- Acquisition and Subdivision: Once the loan is approved, the SHFC releases the funds directly to the landowner. The land title is then transferred to the name of the community association. The community then undertakes the process of creating a subdivision plan to partition the land into individual lots for each member family. The loan can also include a component for site development, like putting in drainage or pathways.
- Repayment and Titling: Each member family pays a regular monthly amortization to their association’s treasurer. The association then remits the total monthly payment to the SHFC. As the loan is being paid down and the subdivision plan is approved, individual Transfer Certificates of Title (TCTs) are gradually processed and awarded to each family, making them official, legal landowners.
Why is the CMP Important for Your Property Investment?
As a homebuyer purchasing a property in a private subdivision, you won’t be a direct participant in the CMP. However, this program’s success has a significant positive ripple effect on the wider community, which benefits your investment.
First, the CMP stabilizes and formalizes local real estate markets. It is one of the government’s most effective tools for addressing the issue of informal settlements. By converting untitled, informal land into formal, titled properties, the CMP brings these areas into the formal economy. These new homeowners now pay real property taxes, contributing to the LGU’s funds for public services. This process of formalization reduces urban blight and creates more stable and predictable property markets in the long run.
Second, it often leads to improved local infrastructure. When a community is formalized through the CMP, it is officially recognized by the local government. This empowers the new homeowners to lobby for better services, often resulting in the LGU paving roads, improving drainage, and providing better access to utilities in the area. These improvements can upgrade an entire barangay, enhancing the value and accessibility of all properties in the vicinity, including yours.
The CMP in the Philippines: A Local Perspective
The legal foundation for the Community Mortgage Program is Republic Act No. 7279, also known as the Urban Development and Housing Act of 1992 (UDHA). This landmark law institutionalized the CMP as a primary strategy for providing housing to the underprivileged and preventing the proliferation of informal settlements.
The sole government agency mandated to implement this program is the Social Housing Finance Corporation (SHFC), one of the nation’s Key Shelter Agencies (KSAs). The SHFC has developed various modalities of the CMP to cater to different situations, including projects for vertical, in-city housing.
In a province like Bulacan, where urbanization is rapid, the CMP is a crucial tool for LGUs to manage the influx of population and address the needs of low-income residents in a dignified and empowering way. It provides a peaceful, non-eviction-based solution to land tenure issues, promoting a more inclusive and organized approach to urban development.
Common Misconceptions About the CMP
- Misconception 1: “The CMP is a government dole-out that gives away free land.”
- Reality: This is the most common and incorrect myth. The CMP is a loan program, not a giveaway. The community members must pay back the mortgage to the SHFC over a period of up to 30 years. It provides access to affordable financing, not free assets.
- Misconception 2: “Any group of friends can use the CMP to buy land.”
- Reality: The program is exclusively for underprivileged and homeless citizens. Applicants must meet specific low-income criteria and typically must be residents of the area they wish to purchase. It is a socialized housing program, not a general-purpose real estate loan.
- Misconception 3: “An individual family can apply for a CMP loan.”
- Reality: The CMP is strictly for community associations or cooperatives, not for individuals. The loan is granted to the organized group as a single borrower.
Practical Tip from an Expert
As a real estate professional, I advise my clients to look at the bigger picture when choosing a location. If you are considering a property in a developing municipality in Bulacan, find out if the local LGU is actively supporting CMP projects. An LGU that has a strong partnership with the SHFC and a portfolio of successful CMP sites is often well-managed and committed to inclusive urban planning. This is a strong positive signal about the long-term governance and stability of the area where you plan to invest.
Real-World Example
The “Pag-asa sa Kinabukasan Association” is a group of 120 informal settler families living on a 1.2-hectare private property in the City of San Jose del Monte.
- The association negotiates with the landowner and agrees on a price of ₱12,000,000.
- They apply for a loan from the SHFC through the Community Mortgage Program.
- The loan is approved. The SHFC pays the landowner, and the title is transferred to the association.
- Each of the 120 families is now a co-owner of the land and is responsible for their share of the loan. Their monthly amortization to the association is around ₱1,500.
- This process gives them secure land tenure and transforms their community, all without displacement.
Related Terms
