Can I use Maceda Law, if I stopped paying my Loan?

I have been receiving private messages from different people asking about the article which was posted in this blog about Maceda Law. [Click here to read about Maceda Law]

A common practice today is for the developers to require only the equity to be paid in installments. This equity or also called “down payment”, varies from 10% to 50% (usually 20%), depending on the developer or the particular development project. The remaining balance after the equity, will be shouldered by some financing scheme.

This financing scheme may be provided by:

• Banks
• HDMF (formerly PAG-IBIG)
• “In-house Financing”, by the developer themselves
• or other financing institutions

If you opt to pay your remaining balance using bank financing, that means you’ll be taking a housing loan from the bank.

When you start paying to the bank, that means you’ve already taken out your housing loan from them. When you took a loan from your bank, you basically borrowed money and then you used that money to pay the developer in full. But this all happened in the background and the money did not get to your hands anymore. The bank gave it straight to the developer. And this is what commonly confuses people.

So now, your property has been fully paid as far as the developer/seller is concerned. In fact, as far as the law is concerned, your property has been fully paid already. But your loan from the bank is what’s outstanding. Your debt is now to the bank — the money you borrowed, to pay the developer.

So the answer to the question on whether this Maceda Law will still apply, is no, it will not apply anymore. That’s because the property is technically, already paid in full.

If after reading this post, you still believe you still deserve or want a refund, please speak to a legal counsel for guidance and assistance.