SOUTHERN LEYTE EMPLOYEES

MULTI-PURPOSE COOPERATIVE (SLEMCOOP)

SLEMCOOP Building, along the National Highway, Asuncion, Maasin City, Southern Leyte
Tel. Nos: (053) 381-2362; (053) 570-9622; Telefax : (053) 381-2362
Email address: slemcoop@yahoo.com

Area of Operation : Lending

Policy Title : Policy on Collateral Requirement for all Salary-based Loans
Policy Number : 01-2016OCT

Policy Statement:
It is a policy of SLEMCOOP to require collateral on all Salary Loan with Payroll Deduction MOA including Salary
Loan guaranteed with ATM as herein provided.

Rationale:
Though loans are generally approved based on good character and sufficient capacity to pay of the applicant
borrower, there still imminent risk especially on longer termed loans due to various factors such as: natural calamities,
employment status, age, health, and changes in borrower’s economic condition. Hence to mitigate credit risks,
SLEMCOOP shall require collateral on all Salary Loan with Payroll Deduction MOA including Salary Loan guaranteed with
ATM and over-the-counter payment.

Primary Objective:
1) To further secure coop’s investments on members’ loans in the employed sector;

Secondary Objective/s:
1) To establish clear guidelines on requiring collateral from member-borrowers and would be borrowers
availing salary loan with or without MOA of payroll deduction and via ATM; and,
2) To sanction implementers failing the implementation of this policy.

APPLICABILITY:
Collateral shall be required from all salary-based-borrowers with net unsecured loan amount after deducting
the paid-up capital plus hold-out deposit, allowable clean loan limit, and allowable reduction due to good credit
performance. However, for borrowers with existing salary-based loans upon approval and effectivity of this policy, they
shall be required upon renewal of loan or upon restructuring in case of delinquent borrower.

UNSECURED AMOUNT OF LOAN that requires COLLATERAL:

Unsecured Amount of Loan = Loan Amount Requested minus (Share Capital + CBU Retention from Loan Applied
+ Other Savings that are pledged as hold-out) minus (Clean Loan Limit) minus
(Allowable Reduction due to Good Credit Performance*)

CLEAN LOAN LIMIT

Clean Loan Limit is mostly applicable to new members availing first time loan at SLEMCOOP and is applicable
also to existing members who are classified as Silver [who mostly were not able to establish a perfect on-time
repayment performance]. Depending on the Character, Capacity to Pay, and Credit Background of the borrowing-
member, the Coop shall only allow a clean loan limit of up to PhP100,000 as maximum. PhP50,000 can be maximum
Clean Loan Limit for new members availing salary loan to be paid over-the-counter and not covered with payroll
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deduction MOA and PhP100,000 maximum Clean Loan Limit for salary loan guaranteed with Salary ATM or Salary
Allotment ATM.

ALLOWABLE REDUCTION due to GOOD CREDIT PERFORMANCE*

Allowable Reduction due to Good Credit Performance* is the amount not exceeding or up to PhP200,000
determined by the Loan Officer and the Branch Manager as a consideration of the member-borrower’s exemplary
repayment performance (meaning perfect on-time repayment) at least in the last twelve (12) months as deductible to
the Unsecured Loan Amount after which the amount balance of Unsecured Loan Amount already needs a collateral
cover. Note further, this allowable reduction cannot be applied to Silver members and Salary Loan borrowers with no
payroll deduction MOA, but can be applicable to new member subject of “buy-out” using the subject’s latest credit
performance with last creditor as reference in determining his/her exemplary repayment performance.

AMOUNT THAT NEEDS COLLATERAL COVER:

Collateral shall be required on the balance of Unsecured Loan Amount after deducting the (CBU/Paid Up Capital
+ Clean Loan Limit + Allowable Reduction due to Good Credit Performance) from the Loan Amount Applied, to compute
for example:
Loan Amount, applied (Passing the Capacity Requirement) PhP 500,000.00
Minus: Paid-Up Capital + Savings Pledged/Hold-Out - 100,000.00
Equals: Unsecured Loan Amount PhP 400,000.00
Minus: Clean Loan Limit (assuming maximum) - 100,000.00
Equals: Unsecured Loan Amount Clean Loan Limit PhP 300,000.00
Minus: Allowable Reduction* (assuming maximum) - 200,000.00
Equals: Unsecured Loan Amount required with Collateral PhP 100,000.00

ACCEPTABLE COLLATERAL:
1. Real Estate collateral generally consists of land and buildings and other immovable improvements thereon
with insurance coverage for destructible land improvements like buildings. Requirements: Evidence of
ownership such as land title and tax declaration, updated real property tax, sketches or approved
subdivision plan.
2. Chattel collateral (for SLEMCOOP’s purpose) shall include motorized vehicles only such as but not limited to
motorcycles, cars, & trucks and shall be covered with comprehensive insurance. Requirements: Evidence of
ownership like the CR/OR (Certificate of Registration with current year’s Official Receipt), and insurance
coverage.

SPECIFIC GUIDELINES:
1. Collateral shall be required on the Unsecured Amount of Loan that is net of Paid-Up Capital/CBU and Hold-
Out, the allowable Clean Loan Limit, and the Allowable Reduction due to Good Credit Performance.
2. Appraisal of collateral that will be used to secure a loan of at least One Million Pesos (PhP1.0Mn) shall be
prepared by a professional and duly licensed property appraiser.
3. Appraisal of collateral that will be used to secure a loan below One Million Pesos may be prepared by a
trained coop staff duly reviewed and approved by at least the Branch Manager of SLEMCOOP branch at
which the loan is applied and processed.
4. Both Chattel and Real Mortgages must already be signed by the signatories with the duly prepared appraisal
report upon presentation to the appropriate approving authority for approval of the loan application.

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 5. Notarization of the mortgages shall follow after the loan application is approved, then the registration of
mortgages with the appropriate registering agency either the Land Transportation Office or Register of
Deeds prior to loan release.
6. Cost of notarization and registration of deeds shall be borne by the loan applicant.
7. These collateral requirement guidelines must be included in the PMES during the loan orientation.

LOAN VALUE:
It is the proportion of money a borrower intends to borrow to the value of the property offered as collateral. For
SLEMCOOP’s purpose, Loan Value is the amount determined by multiplying the acceptable loan value ratio of a type of
collateral property and the property’s appraised fair market value.

Fair Market Value – is the probable price at which a willing buyer will buy from a willing seller when (1) both are
unrelated, (2) know the relevant facts, (3) neither is under any compulsion to buy or sell, and (4) all rights and benefit
inherent in (or attributable to) the item must have been included in the transfer.

Loan Value Table

Type of Collateral Loan Value
1 Real Estate
Agricultural Land (Titled) Up to 60% of its appraised fair market value
Residential/Commercial Land (Titled) Up to 70% of its appraised fair market value
2 Chattel: Motorcycle/Cars/Trucks Up to 50% of its appraised fair market value
Loan Value of collateral must be sufficient to cover the Unsecured Amount of Loan.

Basic Guidelines on Chattel Appraisal:

1) Motorcycles shall have estimated useful life of five (5) years from date of manufacture or original
acquisition.
2) Cars/Trucks shall have estimated useful life of ten (10) years from date of manufacture or original
acquisition.
3) Appraised Value shall be determined by averaging the accounting Net Book Value (net of depreciation) and
the fair market value of the property of the same year model as may be found at carmudi.ph or olx.ph as
among the references. For example:

4) Chattels are acceptable after diligent ocular inspection and probed to be of good operating and/or running
condition.

OTHER SECURITY ACCEPTIBLE:

An ATM Card of SSS/GSIS Pensioners with automatic debit agreement with SSS/GSIS and the Depository Bank is
acceptable to secure a loan depending on the capacity of the borrower as can be guaranteed by the established monthly
pension amount of up to PhP200,000 with or without hard collateral for pensioners whose loan applied can still be
covered 100% by CLPP.
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EXCEPTIONS:
Collaterals are not required on loans against an employee’s benefits such as: mid/year end loans, ad-bon, and
similar benefits but required a Deed of Assignment of his/her benefits pledged to pay the loan when due.

RESPOSIBLE PERSONS:
General Manager; Branch Managers; Satellite Heads; Loan Officers; and, Account Officers.

SANCTION:
A violation of releasing a loan without collateral as herein required shall be sanctioned administratively, as
follows:
1st Offense : 3 days suspension without pay with written reprimand/counseling
2nd Offense : 15 days suspension without pay with written reprimand/counseling
rd
3 Offense : Termination

APPROVAL & EFFECTIVITY:

Approved by the Board of Directors on September 17, 2016 per BOD Resolution No. 069 s.2016 to take effect
on January 01, 2017 to members with existing loan but is ready for implementation to new members.

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