Co-Maker Policy

Version Date: September 29, 2019

Article I

DECLARATION OF POLICY

This policy paper provides guidelines governing the co-maker system of the Cooperative. The policy is aimed at securing members’ investments in the Cooperative.

Article II

CO-MAKER SYSTEM

A co-maker is a person who, by contract, promises to pay another person’s (principal borrower) loan if that person fails to do so. – Bangko Sentral ng Pilipinas

Although a co-maker may not have benefitted from the loan proceeds, he/she is equally responsible to ensure the loan made by the principal borrower gets paid, including interests and other charges.

The co-maker system is mandatory for all borrowers whose paid-up capital is less than the total amount of outstanding principal loan balance plus the new loan application. For borrowers with no credit risk involved (i.e. paid-up capital is enough to cover all outstanding loans plus any new loan application), no co-makers will be required.

Article III

CO-MAKER REQUIREMENTS

Below are requirements to be a co-maker:

1. Must be a regular member of HPP Employees Multipurpose Cooperative
2. Must be a member in good standing
3. Must have paid-up share capital of at least P1,000.00
4. Must sign in the Loan Application Form
5. A co-maker can guarantee a maximum of three (3) outstanding loans provided that they are from three (3) different principal borrowers. 

Article IV

RESIGNATION PROCEDURES

Section 1. Termination of Membership. Membership in the cooperative may be terminated voluntarily or involuntarily. A member who wishes to voluntarily terminate his/her membership is required to give a 30-day written notice to the board of directors using but submitting the Termination/Associate Membership Form which can be found in the Members Area of the website (login required). 

Section 2. Requirements for Resigning Co-Makers. If a resigning member happens to be a co-maker of a loan, the principal borrower of the loan must secure a replacement co-maker using Co-Maker Replacement Form within 30 days of the original co-maker’s resignation date. Failure to get a replacement co-maker will mean suspension of new loan availments for the member-borrower and the non-release of share capital for the resigning co-maker.

Section 3. Procedure for Settlement of Outstanding Loans. The following order will be followed for settlement of a resigning member’s outstanding loans:

1. Automatic deductions from Payroll Account
2. Direct payment to the coop office
3. Deposit to HPPEMC bank account
4. Issuance of post-dated checks
5. Salary deductions from co-makers
6. Other modes of payment as agreed by both parties

Section 4. Collection Procedures. A resigned employee will be given 60 days to settle his/her obligations with the cooperative without pre-termination charges. Otherwise, the co-makers will assume the resigned employee’s outstanding loans.

1. Collection Notice – A statement of account with demand of payment will be sent to the resigned employee’s last known address, email, or directly handed over to him/her. Copies of which will be sent to his/her co-makers.
2. Reminder Notice – A 2^nd notice will be sent to the resigned employee after 15 days from Collection Notice. Copies of which will be sent to his/her co-makers.
3. Final Demand Letter – A 3^rd and final notice will be sent to the borrower after 30 days from 2^nd notice. Copies of which will be sent to his/her co-makers.
4. Co-Maker Loan Obligation Notice - After 60 days from date of 1^st Collection Notice and no response from resigned borrower, the coop will start the collection procedure from the co-makers. A Loan Obligation Notice will be given to the co-makers. A co-maker will be given a maximum of one (1) year or until the original end date of the loan (whichever is longer) to pay the loan principal and interests.

Note: The Cooperative is mandated by RA 9510 to report members’ credit data and behaviors to the Credit Information Corporation or to any other credit information bureaus. A member who is unable to settle his/her obligations to the cooperative may have a negative credit rating which might affect his/her transactions with banks and other financial institutions.