Regulations on Loans of the National Institute of Professional Improvement

For purposes of this Regulation, the following shall be understood as:

• 1)

  ACQUISITION: The action by which a participant acquires a new or existing dwelling for residential use.

• 2)

  HOUSING EXPANSION: Material works executed with the purpose of expanding or extending the area of existing construction, adding new habitable spaces to the dwelling, in order to improve the residential environment and comfort of the participant and their family unit.

• 3)

  APARTMENT: An urban or suburban building that meets the characteristics of a dwelling with all basic services and installations necessary to be habitable.

• 4)

  CONTRIBUTIONS: Amount of money that the employer must periodically contribute to the Institute and those made by the voluntary participant to cover the corresponding employer's proportion.

• 5)

  COMMON AREA: Things and assets for general or restricted use, regardless of whether they are constructed or not, and according to their designation for use and benefit of all Units or only some of them. It is composed of free common area and constructed common area.

• 6)

  CONSTRUCTED COMMON AREA: Corresponds to constructions that remain in co-ownership, are indivisible areas and of general and common use.

• 7)

  FREE COMMON AREA: It is the part of land that becomes property of all condominiums and is intended for general use and does not permit any construction.

• 8)

  ASSEMBLY OF PARTICIPANTS AND CONTRIBUTORS: It is the body for planning, direction and administration of the Institute.

• 9)

  JOINT GUARANTOR: Personal guarantee of any natural person with demonstrated payment capacity, who endorses and responds jointly for the credit of the borrower.

• 10)

  APPRAISAL: Opinion issued by an appraiser registered with the Commission, which consists of valuing an asset in order to determine its current market price (realization value), analyzing in detail the legal, physical and economic conditions that are inherent to it and external conditions that may influence the sale price.

• 11)

  DOMESTIC CALAMITY: Any family event, socioeconomic situation or demonstrable medical condition, whose severity affects the normal development of the participant's activities.

• 12)

  PAYMENT CAPACITY: The financial capacity of the participant measured through their net cash flows that have their short and long-term financial obligations.

• 13)

  CIC: Credit Information Center.

• 14)

  CO-DEBTOR: Person who shares the debt with the principal debtor under equal conditions.

• 15)

  CONDOMINIUM: It is a form of ownership of real property constituted voluntarily by its owner or owners, susceptible to independent use by different owners and subject to special regulations whose operation implies the existence of private or exclusive assets with independent real estate registration and assets for collective common use of an indivisible nature.

• 16)

  HORIZONTAL CONDOMINIUM: The modality where each owner is the exclusive owner of their own land and the building constructed on it and co-owner of common areas.

• 17)

  MIXED CONDOMINIUM: Those where vertical and horizontal condominiums can be presented in the same unit.

• 18)

  VERTICAL CONDOMINIUM: Modality whereby each owner is the exclusive owner of the part of the building that corresponds to them, which may be composed of several floors and with common owners of all the land and buildings or facilities of general use.

• 19)

  RURAL CONSTRUCTIONS: Comprises construction works, such as dwellings, warehouses, sheds, corrals, tanks, irrigation systems and similar constructions, carried out in rural areas.

• 20)

  URBAN CONSTRUCTIONS: Are construction works, such as: buildings, dwellings, warehouses, apartments and similar constructions, carried out in urban centers, the latter meeting the characteristics described in the term of urban properties.

• 21)

  CREDIT COMMITTEE: Decision-making body with the authority to approve or deny loan applications submitted for its consideration and review, in accordance with the parameters established in this Regulation, approved Policies and Procedures and budget availability.

• 22)

  PURCHASE: Circumstance of being able to obtain by the participant a dwelling or land, condominium for residential use whether new or used, developed by other institutions and private individuals, natural or legal persons.

• 23)

  COMMISSION: The National Commission of Banks and Insurance (CNBS).

• 24)

  LOAN CONTRACT: document that contains the rights and obligations corresponding to Financial Users and INJUPEMP related to contracting a product or service.

• 25)

  CONTRIBUTIONS: Amount of money that the participant periodically deposits with the Institute and that is deducted from his salary subject to contribution. This includes amounts of money that by way of exception are deposited by the participant who has voluntarily joined the Institute.

• 26)

  SPOUSE: Man or woman who are part of a marriage legally recognized by the State of Honduras.

• 27)

  LEVEL PAYMENT: Fixed and periodic amount of principal and interest, whose amortization reduces the principal balance, according to the established payment plan.

• 28)

  PORTFOLIO AND COLLECTION DEPARTMENT: Administrative area of the Institute responsible for control, monitoring and recovery of the credit portfolio.

• 29)

  LOANS DEPARTMENT: Administrative Area of the Institute, in charge of managing the placement of financial resources allocated for the credit item.

• 30)

  DIRECTORY OF SPECIALISTS OR WHOEVER ASSUMES ITS FUNCTIONS: Superior body for planning, direction and administration of the Institute.

• 31)

  THE INSTITUTE OR INJUPEMP: The National Institute of Pensions and Retirement Benefits of Employees and Officials of the Executive Power (INJUPEMP).

• 32)

  GUARANTEE: Guarantee that backs the credit granted and constitutes one of the secondary sources of payment, in case the borrower does not comply with the payment plan.

• 33)

  MORTGAGE: Right constituted over the real property or real rights of the debtor or a third party for the benefit of the Institute, to ensure compliance of an obligation on them.

• 34)

  INSURANCE INSTITUTION: National or foreign legal person domiciled in the country, authorized by the National Commission of Banks and Insurance that is engaged in the habitual and systematic business of marketing insurance or bonds.

• 35)

  FINANCIAL INCLUSION AND DEBT CONSOLIDATION LAW: Law that provides a real solution to the problem generated by the high indebtedness of the Honduran population under Legislative Decree No. 34-2017 containing the "Law of Financial Inclusion and Debt Consolidation".

• 36)

  DEBT RELIEF LAW FOR WORKERS: Law that aims to facilitate workers who present conditions of high indebtedness with regulated or unregulated financial entities and commercial houses, professional associations, to opt for a mechanism of financial inclusion, access to credit and financial relief of debt consolidation, through the supervised financial and cooperative system and pension institutions and through payroll deduction, as long as financing conditions are applied that improve the economic availability of the worker in relation to their income, under Legislative Decree No. 118-2019 containing the "Debt Relief Law for Workers".

• 37)

  CONDOMINIUM PROPERTY LAW: Law that has the purpose of regulating the Condominium Regime on real property by Unit, susceptible to independent use, attributing to the Owner of each one of them, in addition to exclusive and singular ownership of the same, a joint and inseparable co-ownership right over common assets.

• 38)

  PARTICIPANT: Shall be understood as participant, Active Participants, Voluntary, in Suspension and those pensioned for Old Age and Disability of the Institute.

• 39)

  ACTIVE PARTICIPANT: Any person who is working in the public sector and contributes to the Institute, in accordance with the Law.

• 40)

  INACTIVE PARTICIPANT: Any person who ceases to work in an incorporated Institution and who has been granted the benefit of separation.

• 41)

  VOLUNTARY PARTICIPANT: Any person who after ceasing to work in an incorporated Institution, making use of the right conferred by the Law of the Institute, contributes voluntarily through an agreement with contributions and quotas, in the time and manner provided in the Law.

• 42)

  PARTICIPANT IN SUSPENSION: Any person who ceases to work in an incorporated Institution and who does not exercise their right to the benefit of separation.

• 43)

  PENSIONED PARTICIPANT: Any person who enjoys a pension for old age or disability in INJUPEMP.

• 44)

  PENSION: Income paid with monthly periodicity to the Participant or beneficiary who is entitled to it in accordance with the Law.

• 45)

  PENSIONED BY OLD AGE: any natural person in full enjoyment of the benefit of an old age pension, legally granted or awarded by the Institute.

• 46)

  PENSIONED BY DISABILITY: any natural person in full enjoyment of the benefit of a disability pension, legally granted or awarded by the Institute.

• 47)

  AMORTIZATION PLAN: Program of periodic payments of principal and interest, made by the participant borrower to progressively reduce the outstanding balance of a loan, until its total cancellation.

• 48)

  JOINT LOAN: Loans that can be obtained by adding personal income of a participant with the income of their spouse or a family member (mother, father, son, daughter, brother, sister). In this case they access the loan in a joint manner and will have the status of co-debtor.

• 49)

  BORROWER: Any participant without distinction of gender to whom a loan is granted in accordance with this Regulation.

• 50)

  LOAN: Amount granted to a participant in accordance with the terms and conditions established in this Regulation.

• 51)

  URBAN PROPERTIES: Those that are located in populated centers and that are intended for housing, commerce, industry or any other urban purpose; as well as, unbuilt land, provided they have the basic services general to the populated center, and those that have completed and received their urban development works, whether or not legally enabled.

• 52)

  READJUSTMENT: It is a credit that undergoes variations in the main conditions, and in no case are they due to difficulties in the debtor's payment capacity.

• 53)

  REFINANCING: It is a credit that undergoes variations in its main conditions (term, amount or rate) due to difficulties in the debtor's payment capacity. Similarly, it is considered a credit granted to pay another credit due to the debtor's payment capacity problems in the original operation.

• 54)

  ADMINISTRATIVE WITHDRAWAL: Administrative operation that consists of the application of contributions in order to credit or cancel a defaulted loan. In the case that the borrower had not executed a loan contract in which other recovery mechanisms were established, and the Institute had evidenced that it performed the collection efforts in a timely manner both to the principal debtor and to their guarantors.

• 55)

  DAMAGE INSURANCE: It is a MANDATORY insurance to be taken out by the participant to guarantee damages to the real property asset that is the subject of financing and pledged as guarantee.

• 56)

  LIFE INSURANCE BY DEBT BALANCE: It is the insurance contracted to cover the sum of outstanding balances owed by the insured, including current interest, default interest and other charges that at the time of their death or declaration of total or permanent disability, provided that such amounts have been reported to the insurance institution.

• 57)

  LOAN REQUEST: Form completed and signed by the participant to formalize their loan request, and with which the process of analysis and verification of the applicant's eligibility for the requested financing is initiated. This must be presented in the format provided by the Institute, attaching the required supporting documentation from both the participant and the guarantors, as required.

• 58)

  SALARY OR WAGE: It is the monthly income, regular monetary compensation that the public participant receives as consideration for their work.

• 59)

  CREDIT SUBJECT: Any participant who meets the requirements established in this Regulation.

• 60)

  COMMERCIAL VALUE: It is the amount of money expected to be obtained in the event that the personal or real property or other assets given as guarantee of credit are sold, considering the acquisitions/sales of similar assets, as well as the characteristics of the assets valued.

• 61)

  APPRAISER: Professional member of a college who by reason of their higher education and experience is duly qualified to carry out the appraisal of assets granted as guarantee by a debtor or credit applicant.

• 62)

  USEFUL LIFE: Estimated time of use of a building, provided that such use correctly fulfills the function for which the asset was created.

• 63)

  DWELLING: Urban, suburban or rural real property, intended for habitation of the participant and their family group, which has all basic services and installations necessary to be habitable and safe. It is understood that the application of the provisions contained in this Regulation is independent of the regulations contained in other regulations in force at the Institute, since this Regulation regulates specific matters that pertain only to loans. CHAPTER II. CREATION AND OBJECTIVE OF THE LOAN PROGRAM

The Loan Program of the NATIONAL INSTITUTE OF PENSIONS AND RETIREMENT BENEFITS OF EMPLOYEES AND OFFICIALS OF THE EXECUTIVE POWER (INJUPEMP) is created, in the exercise of the powers conferred in Article 47 of the INJUPEMP Law and as an investment operation as prescribed in the "Regulation for Investments of Public Pension Funds by Public Social Security Institutes" and the requirements established in this Regulation.

The loan program seeks the diversification of the Institute's funds, under conditions of profitability, security and liquidity, in accordance with the technical parameters and requirements of the Law of the Institute of Pensions and Retirement Benefits of Employees and Officials of the Executive Power (INJUPEMP), hereinafter the Institute's Law, Regulation for Investments of Public Pension Funds by Public Social Security Institutes and applicable current regulations, to financially support the benefits granted by the Institute.

The loan service shall be governed by this Regulation ensuring that all credit activities are carried out in an ethical and legal manner, complying with the Institute's Law and all applicable legal regulations. Additionally, the loan program shall be governed by the Resolutions of the Directory of Specialists, provided that they are explicitly authorized and do not contravene this Regulation, as well as, where applicable, by the reforms that based on Law must be made and the Laws, regulations, standards and procedures established by the State's controlling entities.

This Regulation has the following objectives:

• a)

  To establish the guidelines and eligibility criteria for the granting of loans to the Participants and Pensioners of the Institute under the best conditions of security, performance, liquidity and equity.

• b)

  To provide credit solutions to Participants and Pensioners of the Institute, under conditions more favorable than those offered by the National Financial System.

• c)

  To strengthen the financial returns of the Institute under an acceptable degree of security and liquidity for the improvement of its assets.

The maximum credit amounts to be granted, terms, interest rates and commissions shall be authorized by the Directory of Specialists as established in Article 18 numeral 19) of the Institute's Law.

The payment of monthly loan installments shall be made no later than the last day of each month, with the payment modality being the level payment or single payment. The Institute shall maintain a detailed record of payments made, applying the unearned balance criterion for the calculation of current interest and commissions. Payments shall be withheld by employers or paid through the means designated by the Institute, no later than the last day of each month. In the case of Pensioned Participants, loan payments shall be withheld by the Institute from their pensions.

The maximum amounts to be granted for each type of loan and participant status shall be defined in the respective Procedures Manuals, and shall also be published on the Institute's website.

The payment capacity of the participant shall be determined as a percentage of the different income sources that the same may have. The types of income that will be recognized are the following:

• a)

  Net monthly income.

• b)

  Amount of net monthly pension (old age or disability).

• c)

  The amount of gross income of the Participant, spouse and family members (mother, father, son, daughter and sibling) in joint loans.

• d)

  The amount of net income of the Participant, spouse and family members (mother, father, son, daughter and sibling) in joint loans. The maximum percentages for determining the maximum payment capacity of participants shall be those approved by the Directory of Specialists and shall be defined in the Personal Loans Manual and Mortgage Loans Manual, as well as in the credit conditions established in the respective manuals, seeking the best conditions of security, performance, liquidity and equity for the Institute.

Joint loans may be granted when the loan applicant is an Active, Suspended or Voluntary Participant of the Institute and their spouse, whether by marriage or by legalized common-law union according to the Family Code and family members such as mother, father, son, daughter, sibling - The payment ratio gross-net income shall be that established by the Directory of Specialists according to the provisions of Article 18 numeral 7) of the Institute's Law, but in no case may it be greater than the net income of the applicant.

The value of the total level payment to be paid by the borrower comprises the amortization of principal and interest, as established in the respective Loan Manuals, the participant undertakes to pay in the monthly loan payment the proportional value of the insurance policy or policies that correspond according to the type of Loan. In the case of loans with single payment cancellation, the charge is made through a single payment.

The Institute may establish the charging of administrative fees on the loan amount, said charges shall be determined respecting the Standards for Strengthening Transparency, Financial Culture, Market Conduct and Financial User Service in Supervised Institutions and prior to their application, shall present to the Commission its technical support, for its respective review.

In the case that the Participant meets the requirements for retirement during the amortization term of the requested loan, their payment capacity shall be calculated based on the projection of the net old age pension made by the Institute, in which case it shall not exceed sixty percent (60%) of said pension. For the amortization of mortgage loans a maximum term of thirty years (30) is established, in any case the maximum amortization term may not exceed the number of years between the age reached by the pensioner by old age and the maximum age established in the Collective Insurance Policy executed by INJUPEMP.

The Institute shall grant Personal and Mortgage Loans under the following modalities and for the purposes required by the Participants, as follows: A) Personal Loans.

• 1)

  Loans without guarantor 2) Loans with Guarantor 3) Debt Consolidation 4) Debt Relief Loan 5) Credit Now 6) Vacation Credit B) Mortgage Loans 1) Construction: On land owned by the Participant or their spouse or household companion.

• 2)

  Acquisition of land and simultaneous or deferred construction.

• 3)

  Acquisition of dwelling (includes condominiums and apartments).

• 4)

  Improvement and/or expansion of dwelling (owned by the Participant or their spouse or household companion).

• 5)

  Release of encumbrance.

• 6)

  Other Loans with Mortgage Guarantee. In the case of having a vigent mortgage loan with the purpose "other loans with mortgage guarantee" it may be readjusted or refinanced as many times as necessary. TITLE II OF THE ADMINISTRATIVE ORGANIZATION OF THE LOAN PROGRAM CHAPTER I OF THE ADMINISTRATION OF THE LOAN PROGRAM

The Loans Division is composed of the Loans Department and the Portfolio and Collection Department and is responsible for the operational administration of the Loan Program, and must implement for this purpose the methodologies, processes and systems required to make said program more efficient, transferring the necessary recommendations to the Directory of Specialists through the Credit Committee.

The Loans Division functionally depends on the Board of Specialists or whoever assumes its functions, who must maintain a close relationship with the areas of: Legal Services, Finance, Informatics, Administration and Benefits and at all times their actions must be framed within the provisions of this Regulation and the applicable regulations in the matter. CHAPTER II OF THE LOANS DEPARTMENT.

THE FUNCTIONS AND RESPONSIBILITIES OF THE LOANS DEPARTMENT ARE:

• a)

  To receive and analyze loan applications presented by Participants.

• b)

  To refer to the Credit Committee the analyses and credit recommendations issued on mortgage loan applications, regardless of amount, and special cases of personal loans received, accompanying such analysis with the respective supporting documentation.

• c)

  To process personal loan applications, approving those that meet all requirements established in this Regulation and in the respective procedure manuals, regardless of amount; if requirements are not met, indicate to applicants the missing requirements.

• d)

  To deny loan applications that do not meet the requirements established in this Regulation and in the respective procedure manuals.

• e)

  To manage the disbursements of loans approved by both the Loans Department and the Credit Committee.

• f)

  To coordinate with other areas of the Institute, such as Portfolio and Collections, Benefits, Administration, Treasury, Finance, and Legal Services, to obtain data and information from the credit process.

• g)

  Other functions and responsibilities established by the respective Loans Manuals. CHAPTER III. OF THE CREDIT COMMITTEE.

The Credit Committee is hereby created, which shall be composed of the following members: a) Head of the Loans Division, who shall serve as President. b) Head of the Legal Services Unit, who shall serve as Secretary. d) Head of the Finance Division. The principals or persons designated to substitute them shall act with voice and vote. The members who vote in contravention of legal provisions shall incur civil, criminal, and administrative liability to the Institute. If any member votes against because they disagree with the opinions, this must be recorded in the respective minutes of the session in which the matter was addressed. In case of absence or legal indisposition of the principals of the aforementioned areas, they shall be represented by their legal successors with voice and vote, who must be permanent officials and meet the suitability requirements of the position. In the event there is no legal substitute for the members, the Board of Specialists may appoint a temporary representative. The Board of Specialists shall communicate to the CNBS the appointment of persons who make up the Credit Committee and shall notify the substitution of any of its members, in the latter case, informing the reasons for such substitution within five (5) business days following the appointment or substitution.

THE CREDIT COMMITTEE SHALL HAVE THE FOLLOWING POWERS:

• a)

  To know, approve or deny applications for loans with mortgage guarantee regardless of the loan amount and in accordance with the maximum amounts allowed and special cases of personal loans not contemplated in this Regulation that are submitted to it by the Loans Department.

• b)

  To know, approve or deny applications for refinancing and loan restructuring.

• c)

  To opine on applications for the constitution of mortgages on property financed by the Institute, for which legal and technical opinions shall be required as appropriate.

• d)

  To review and submit for approval of the corresponding body, the procedure manuals derived from this Regulation and Standards issued by the Commission on this matter, prepared by the Institutional Development Technical Unit.

• e)

  To review and propose, at the request of the Loans Division, the general conditions and interest rates to be applied to the different types of loans granted by the Institute, to be known by the Investment Executive Committee and subsequently approved by the Board of Specialists.

• f)

  To establish credit guidelines under the best conditions of security, performance, liquidity, and equity, for approval through the Board of Specialists as established in Article 18 numeral 7) of the Institute Law.

• g)

  Other powers established in accordance with the Laws and Regulations of the Commission, as well as by provisions issued by the Board of Specialists.

RESPONSIBILITY OF THE CREDIT COMMITTEE: Members of the Credit Committee shall have civil, administrative, and criminal responsibility for actions they take in compliance with their duties and powers. Among their responsibilities are the following: 1. To opine on all matters related to credit operations that are submitted to their knowledge. 2. To adopt the necessary decisions in relation to the credit service provided to participants and pensioners (Old Age and Disability), maintaining the financial stability and balance of the Institute. 3. To submit quarterly reports to the Investment Executive Committee, as well as to the governing and management bodies of INJUPEMP.

Members of the Credit Committee shall refrain from reviewing credit files when they have a particular interest in the same or when participants are within the first degree up to the fourth degree of consanguinity and first to the second degree of affinity. In these cases, the interested party must communicate such circumstance to the Board of Specialists. CHAPTER IV OF THE SESSIONS AND OPINIONS OF LOAN APPLICATIONS.

OF THE CREDIT COMMITTEE SESSIONS. The Credit Committee shall meet as many times as necessary and at minimum once per month, to approve or deny credits with diligence and agility and to make decisions about the flow of lending activity, and its quorum shall be established with the attendance of all of its members and its decisions shall be made by simple majority.

OF THE CREDIT COMMITTEE MINUTES BOOK. The sessions held by the Credit Committee shall be recorded in the respective Minutes Book of the Committee. Said book shall be in charge of the Secretary who shall have control and custody of said book and of the opinions issued by it, and must provide the members of the committee a certification of each session held.

RESOLUTION OF LOAN APPLICATIONS. For each loan that is approved or denied by the Credit Committee, the respective minutes shall be issued individually or in groups. Special cases due to illness or domestic calamity of Participants and Pensioners not contemplated in this Regulation shall be transferred for knowledge and resolution to the Credit Committee; for such purposes a record must be kept of the special cases that are resolved, which shall be in charge of the Loans Division. Employees or officials who make decisions to approve personal, mortgage, or special loans without meeting the requirements established by the Law, this Regulation, and other standards that are issued, shall be responsible, civil, administrative, and criminally for losses that may be generated as a consequence of the decisions adopted. CHAPTER V OF THE PORTFOLIO AND COLLECTIONS DEPARTMENT.

The powers of the Portfolio and Collections Department are:

• a)

  To prepare and execute general guidelines on the coordination and operational management of the portfolio and collections, which shall be approved by the Board of Specialists, in accordance with what is established in Article 18 numeral 7) of the Institute Law.

• b)

  To manage the recovery of overdue credits, exercising the appropriate administrative actions.

• c)

  To design a credit behavior monitoring system that is appropriate to the needs of the Institute.

• d)

  To generate monthly statistics, conduct analyses and periodic reports of the credit portfolio.

• e)

  To present periodic reports on the behavior of the credit portfolio to the Board of Specialists.

• f)

  To transfer to the Legal Services Unit, the credit portfolio that has fulfilled the maximum term established for exercising administrative collection according to the terms defined in the Procedures Manual for Recovery of Delinquency and Administrative Collection of Personal and Mortgage Loans, to initiate the extrajudicial process. CHAPTER VI SPECIAL PROVISIONS.

The Institute may implement in the future, directly or through third parties, a service of loans, remission of account statements, updating of Participant information or other service through an electronic transmission platform, telephone access systems to data or internet, for the granting of credit to affiliates, these shall be conducted with the purpose of establishing mechanisms for improvement in the service and attention of the Participant, provided that the necessary requirements and controls for their granting are met. Likewise, the Institute may enter into agreements with other private and public institutions to validate credit information and general information of the Participant. TITLE III OF THE PERSONAL LOANS PROGRAM CHAPTER I ELIGIBILITY CRITERIA

To be eligible for financing, every participant of the Institute must meet the following conditions and requirements: Active Participants. a) Have registered personal contributions of the participant in the Institute for a period not less than six (6) months prior to submission of the application. b) Submit the required documentation in accordance with the credit guidelines that have been approved by the Board of Specialists, according to the modality of financing requested. c) Not be older than sixty-five (65) years in the case of loan applications with endorsement. d) Demonstrate payment capacity in accordance with the credit conditions of Article 9 of this Regulation. e) Be of Honduran nationality or foreign resident with permanent residency, over twenty-one (21) years of age or emancipated minor. f) To grant a Personal Loan with endorsement, the Institute shall require the endorsements it deems necessary to ensure credit recovery and these must have equal or greater payment capacity than the applicant. Suspended Participants. a) Maintain their contributions in full with the Institute. b) In case the contributions have been applied ex officio to the payment of a loan, have reimbursed such amount and the corresponding interests. c) Comply with the requirements described in subsections a), b), c), d), and e) specified for the Active Participant. Voluntary Participant. a) Maintain their contributions and contributions in full. b) Comply with requirements b), c), d), and e) specified for the Active Participant. Participants Pensioned for Old Age.

• a)

  Receive the monthly pension from the Institute or have it suspended due to paid employment in the Public Administration.

• b)

  Comply with the requirements described in subsections b) and d) specified for Active Participants.

• c)

  Not be older than eighty (80) years.

• d)

  Comply with the other requirements that this Regulation and any other provision or Credit Procedures Manuals approved by the Board of Specialists as established in Article 18 numeral 7) of the Institute Law require.

• e)

  Be covered by insurance protection or any other coverage approved by the institute as a mechanism to protect investments in loans. Participants Pensioned for Disability a) Receive the monthly pension from the Institute b) Comply with the requirements described in subsections b) and d) specified for Active Participants. c) Not be older than eighty (80) years. d) Enroll in the Protection and Credit Portfolio Insurance Program that covers the risk of default in payment of debt due to Death and/or Rehabilitation of the Disability Pensioner. e) Comply with the other requirements that this Regulation and any other provision or Credit Procedures Manuals approved by the Board of Specialists as established in Article 18 numeral 7) of the Institute Law require.

Participants who work in an entity affiliated with the Institute that is not current with the payment of its employer and individual obligations may access financing only if the entity in question has entered into a payment agreement with the Institute and is current with respect to compliance with its contractual obligations under such agreement.

Every participant who re-enters the Public Sector and has executed an agreement to reintegrate their contributions and has completed a minimum of six (6) months in continuous payment of installments of such reintegration agreement and six (6) months of effective contributions, may obtain financing for a sum equal to the proportion of values reintegrated in concept of contributions, plus the new contributions received as of the date of the application.

The following shall not be subjects of credit:

• a)

  The participant who, having withdrawn their contributions, has not reintegrated them, nor has executed a payment agreement in accordance with what is established in the previous Article.

• b)

  The Participant whose contributions have been applied in total or in part ex officio in the cancellation of previous financing and which have not been reintegrated or an agreement to pay the respective agreement with the Institute has not been executed.

• c)

  The participant whose application for old age or disability pension is in process and pending resolution by the Board of Specialists.

• d)

  The Active, Voluntary, or Suspended Participant; as well as the Pensioner for Disability or Old Age who does not have payment capacity, as established in Article 9 of this Regulation.

• e)

  The Active, Voluntary, or Suspended Participant; as well as the Pensioner for Disability or Old Age who does not meet the conditions and eligibility criteria established in Article 27 of this Regulation.

• f)

  The Active Participant, Pensioner for Old Age or Disability who presents delinquency in categories III, IV, and V according to the Credit Information Center of the Commission or Private Credit Bureaus and whose purpose is refinancing with the Institute and debt consolidation in accordance with the "LAW ON FINANCIAL INCLUSION AND DEBT CONSOLIDATION" and the "LAW ON DEBT RELIEF FOR WORKERS". Exceptions apply to cases in which the Active Participant, Pensioner for Old Age or Disability presents final settlements extended by the Financial Institution in accordance with the Institute.

• g)

  The participant who presents wage garnishment may only opt for a loan without endorsement. CHAPTER II OF THE GUARANTEES

The recovery of all loans granted shall be guaranteed by:

• a)

  The total of the contributions plus the possible returns thereof in The Institute by the active and voluntary participant.

• b)

  The total or partial benefit of the separation of the Participant.

• c)

  Fiduciary guarantee that is constituted for such purpose.

• d)

  The reserve of the Program for Protection and Assurance of the Credit Portfolio or Life Insurance, (endorsements of beneficiaries that covers death or disability of the debtor, as well as Fire Insurance and Allied Lines of the Mortgaged Guarantee of the debtor.

• e)

  In a complementary manner, by the labor benefits of the borrower participant provided that the participant has expressed written acceptance thereof.

• f)

  Other benefits that correspond to the Participant or to his beneficiaries.

In those loans that in accordance with this Regulation require Guarantors, the following may not serve as such:

• a)

  Those who are guaranteeing another loan in The Institute;

• b)

  Those who previously have been Guarantors and have not complied in The Institute;

• c)

  Those who having previously been borrowers have not complied with their obligations.

• d)

  Those who as of the date of the application serve as employees and officials of The Institute.

• e)

  Those who present arrears in category III, IV and V according to the Rules for the Evaluation and Classification of the Credit Portfolio issued by the Commission.

• f)

  Those who do not demonstrate payment capacity.

• g)

  Pensioners by Old Age and Disability.

• h)

  Those who present wage garnishment.

• i)

  The Participants with Voluntary status.

• j)

  Persons who work in the private company, Associations, Non-Governmental Organizations (NGOs) or similar entities. CHAPTER III. SPECIAL REGULATIONS

All those cases related to applications for personal loans considered as special cases due to illness or domestic hardship of the Participants and Pensioners not contemplated in this Regulation shall be referred to the knowledge and resolution of the Credit Committee.

When as a result of the official application of contributions maintained in The Institute the outstanding balance of a delinquent credit is canceled, the borrower who re-enters the system shall be obligated to reintegrate only the contributions plus interest not received that have been applied in accordance with the legal mechanism established.

Notwithstanding the provisions of the preceding Article, by way of exception, when the debtor borrower has been made an official application without having re-entered the Public Sector and wishes to pay the applied contributions, he may restore the same, as well as the interest that the Division of Actuarial Science and Statistics of The Institute determines, by making the payment of such amounts. CHAPTER IV OF ADVANCE PAYMENTS, READJUSTMENT AND REFINANCING OF THE LOAN

The payment modalities that The Institute establishes for the payment of loans shall be by deduction through payroll and payment through window service through the channels that The Institute establishes for such purpose. The borrower has the right to pay in advance the balance of the total or partial credit, without any penalty, which shall be applied first to interest and the remainder to principal until its cancellation. The interest that is applied to the advance payment shall be calculated until the day on which the total or partial payment is made.

The participant shall have the right to readjust or refinance his pending payment obligation once fifty percent (50%) of the initial term has elapsed, it being understood that the outstanding balance or remainder shall be deducted and canceled from the amount of the new loan. To reach the 50% of the initial term, in the credit analysis to readjust or refinance, extraordinary payments to principal paid through the means designated by The Institute shall not be taken into account. In the event that the participant does not comply with the preceding paragraph and requires readjustment or refinancing of his obligation with the Institute, the latter shall have the option of requesting readjustment or refinancing of the loan, according to the schedule of terms established in the respective procedure manuals. To comply with the 50% of the term of the initial credit, The Institute shall charge two percent (2%) of the value resulting from the difference between the capital balance (in the amortization plan) equivalent to 50% of the loan, and the current capital balance, which shall be deducted in the disbursement liquidation. By exception, in the case of a first consolidation operation under the "Financial Inclusion Law and Debt Consolidation" and "Debt Relief Law for Workers," any current loan of the applicant may be readjusted without meeting the requirement of 25% of the original term, provided that the payment capacity of the participant allows the approval of the consolidation operation.

The Borrower who pays in advance the entirety of the loan before the term for which it was granted has elapsed shall automatically have the right to the granting of a new loan.

It is understood that a personal loan without guarantor, with guarantor, debt consolidation, debt relief, ya credit and vacation credit, must not be denied because the borrower maintains a mortgage loan in arrears with The Institute, provided that he has a payment agreement with at least six (6) consecutive paid installments. CHAPTER V OF REFINANCING OF CREDIT IN ARREARS ARTICLE 40.- Refinancing is a credit that undergoes variations in its main conditions (term, amount or rate) due to difficulties in the payment capacity of the debtor. Likewise, it is considered that credit granted to pay another credit due to payment capacity problems of the debtor in the original operation.

TYPES OF LOANS THAT APPLY TO THIS FIGURE:

• a)

  Debt consolidation (apply to active participants, pensioners by old age and disability and voluntary and suspended participants with guarantee on their contributions).

• b)

  Debt relief (apply to active participants and pensioners by old age).

• c)

  Refinancing of credits in arrears (apply to active, suspended and voluntary participants who are in category III, IV and V in accordance with the classification of the CNBS.

• d)

GENERAL GUIDELINES:

• a)

  A credit analysis is required to establish the new installment by validating term and rate.

• b)

  The new conditions of the credit must be adjusted to the payment capacity and/or current income of the participant.

• c)

  Expenses for legal fees, insurance renewals and closing costs may be included in the refinancing.

• d)

  A second refinancing is permitted, after twelve (12) months have elapsed since the granting of the first refinancing, subject to verification of the causes that prevented him from keeping his refinancing current.

• e)

  Refinancings shall be approved by the Credit Committee, in accordance with the discretionary approval limit in accordance with the regulations of the Credit Committee Regulation.

• f)

  Fiduciary credit refinancing contracts must be signed by the guarantors, whether new or existing, the payment capacity of the current guarantor or new guarantor shall be evaluated (change of guarantor in cases where applicable).

• g)

  Loans that were originally granted through payroll deduction agreement and are no longer employed shall maintain the same interest rate, in view of the fact that these are credits that do not have real guarantees and, in most cases, do not have a guarantor.

REFINANCING CONDITIONS. For the purposes provided for the refinancing of credits, INJUPEMP defines the terms and the annual interest rate to be applied based on its policies, credit products and market conditions. In this sense, those participants who may refinance their credit obligations are:

• a)

  Maintain personal and mortgage loans, outstanding or past due.

• b)

  Demonstrate the diminution of their payment capacity and request refinancing of their credits.

• c)

  Have made at least partial or complete payment of two (2) consecutive or non-consecutive installments in the last six (6) months.

• d)

  Do not have a formal source of income, but have continued making partial or total payments to their credit installments, subject to prior investigation and documentation of income sources (remittances, family income, informal commerce, etc.).

• e)

  In cases where employment was lost and after a period begins to work, a minimum of one installment prior to the approval of the refinancing is requested.

• f)

  Sworn statement on plain paper.

The Mortgage Loans Program of the "INSTITUTE OF RETIREMENTS AND PENSIONS OF THE EMPLOYEES AND OFFICIALS OF THE EXECUTIVE BRANCH" (INJUPEMP) has as its objective to grant loans with mortgage guarantee to Active Participants, Suspended, Voluntary and Pensioners by Old Age, to meet in an equitable manner needs in the areas of Housing, Apartment or Condominium or other destinations established in this Regulation and that in turn allows the Institute to diversify its Investment Program within a reliable framework of security, profitability and liquidity.

Loans with Mortgage Guarantee shall be governed in accordance with the provisions established in:

• a)

  The Law of The National Institute of Retirements and Pensions of the Employees and Officials of the Executive Branch.

• b)

  This Regulation.

• c)

  The Resolutions of the Board of Specialists.

• d)

  The "Regulation of Investments of Public Pension Funds by Public Institutions of Social Foresight" and other regulations issued by the Commission, as well as other controlling entities of the State or Institutions that have regulations applicable to The Institute.

• e)

  The Regulations or Agreements that The Institute enters into with public or private institutions.

• f)

  The special provisions of the Credit Committee and other legal regulations or operational norms that are applicable.

• g)

  The procedure manuals approved by the Board of Specialists as established in Article 18 numeral 7) of the Law of The Institute. CHAPTER II CREDIT SUBJECTS AND ELIGIBILITY CRITERIA.

Conditions and requirements: Active Participant a) Have the personal contributions of the participant registered in The Institute, for a period not less than six (6) months prior to the presentation of the application. b) Present the required documentation, in accordance with the credit guidelines that have been approved by The Board of Specialists, according to the financing modality requested. c) Demonstrate payment capacity in accordance with the credit conditions of Article 9 of this Regulation. d) Be of Honduran nationality or foreigner with permanent residence, over twenty-one (21) years of age or minor of age emancipated. e) That the applicant for a loan for the construction of improvements have the purpose of making improvements to a dwelling, provided that this real estate is not mortgaged as a guarantee of a mortgage loan in another institution. f) That the property to be mortgaged be declared eligible by The Institute in accordance with legal regulations and technical standards, subject to appraisal thereof. g) Not have a mortgage loan with The Institute, in case he has one he must cancel it to meet the requirement, with the exception of the mortgage loan with the destination "other loans with mortgage guarantee" which may be readjusted or refinanced. h) Be current with the payment of obligations for personal loans. Those cases shall be excepted in which the arrears are attributable to his employer duly verified by The Institute. Pensioner by Old Age a) Receive the monthly pension from The Institute or have it suspended due to paid services in the Public Administration. b) Present the required documentation, in accordance with the credit guidelines that have been approved by The Board of Specialists, according to the financing modality requested. c) Demonstrate payment capacity in accordance with the credit conditions of Article 9 of this Regulation. d) Be of Honduran nationality or foreigner with permanent residence, over twenty-one (21) years of age or minor of age emancipated. e) That the applicant for a loan for the construction of improvements have the purpose of making improvements to a dwelling, provided that this real estate is not mortgaged as a guarantee of a mortgage loan in another institution. f) That the property to be mortgaged be declared eligible by The Institute in accordance with legal regulations and technical standards, subject to appraisal thereof. Voluntary Participants a) In the case of applications of Voluntary Participants, they must be current with their contributions and payments. b) Present the required documentation, in accordance with the credit guidelines that have been approved by The Board of Specialists, according to the financing modality requested. c) Demonstrate payment capacity in accordance with the credit conditions of Article 9 of this Regulation. d) Be of Honduran nationality or foreigner with permanent residence, over twenty-one (21) years of age or minor of age emancipated. e) That the applicant for a loan for the construction of improvements have the purpose of making improvements to a dwelling, provided that this real estate is not mortgaged as a guarantee of a mortgage loan in another institution. f) That the property to be mortgaged be declared eligible by The Institute in accordance with legal regulations and technical standards, subject to appraisal thereof.

THE FOLLOWING SHALL NOT BE SUBJECT TO CREDIT:

• a)

  Participants or Pensioners who present real property to be encumbered that do not meet insurability requirements.

• b)

  Participants or Pensioners who present real property located in physical risk zones declared by COPECO, Municipal Governments, or by the State Entity with competence over such matters.

• c)

  Participants or Pensioners who present real property located in high social risk zones declared as such by competent State Institutions.

• d)

  Employees hired by contract.

• e)

  Those who do not accredit effective contributions to the Institute for a period of less than six months.

• f)

  Applicants who do not present complete documentation within the time established in Article 86 of this Regulation.

• g)

  Participants who do not demonstrate capacity to pay.

• h)

  Foreign nationals without permanent residence.

• i)

  Inactive participants. CHAPTER III REGULATIONS.

Loans may be requested individually or jointly, and the applicants must comply with the requirements established in this Regulation.

Financing shall be granted for housing of all types in any geographic location of the Republic of Honduras, provided that the sector where the real property is located is insurable and is not located in a high physical and social risk zone, and has infrastructure and water supply or well water supply services (prior to well appraisal), electric power, sewage system or alternatively a septic tank (prior to certification by the Ministry of Natural Resources and Environment).

When a Housing loan is approved, the applicant shall: a) Pay the costs corresponding to damage and fire insurance premiums. b) Formalize and constitute a mortgage in a public instrument in favor of the Institute with the conditions of the mortgage and loan. The Legal Services Unit of the Institute shall be responsible for issuing the order for the deed, for which it shall provide the printed template of the public deed model, review, validate, and verify that the signature and fingerprint of the participants are recorded in the protocol.

The borrower may transfer, sell, donate, or exchange their housing when they have paid the entirety of the loan with the Institute and the housing has been freed from all encumbrances. If the participant wishes to sell their real property even when they have a pending payment balance, the Institute shall not be required to previously authorize its transfer, except in cases where the deed so indicates.

The Institute shall grant mortgage credit for the release of encumbrances, regardless of the purpose for which the real property was encumbered. Such loans may be individual or joint and the mortgage must be registered in favor of the Institute in the Property, Mortgages, and Preventive Annotations Registry Book of the Property Institute of the jurisdiction of the real property.

The Institute may grant mortgage loans when the purpose is to address personal, family, and economic needs in cases of: Health, family emergency, business, education, travel expenses, purchase of vehicles, or any other purpose, which shall be backed by the respective mortgages duly registered in the Property, Mortgages, and Preventive Annotations Registry Book of the Property Institute of the jurisdiction of the real property given as collateral. CHAPTER IV READJUSTMENT OF THE LOAN AMOUNT

A readjustment to the amount of the original loan may be granted provided that the borrower meets the following requirements:

• a)

  That the borrower's capacity to pay can be verified in accordance with the provisions of this Regulation.

• b)

  That the current loan has been invested or executed as agreed and that when requesting readjustment and/or improvements, these be made to the same housing that was the object of the originally granted financing.

• c)

  When the works to be executed have not been completed due to budget discrepancies in works due to causes not attributable to the borrower.

For loans intended for the construction and improvement of housing, a grace period of six (6) months may be granted to the participant, counted from the date the first loan disbursement is made. During such period, the participant shall only pay interest on balances, which shall be collected from each disbursement made. The grace period shall not be part of the term for repayment of the loan principal nor for calculation of the leveled installment. When it is a readjustment to the original loan, the grace period shall only apply to the amount of the loan readjustment. The participant, if desired, may waive the grace period. CHAPTER V OF THE LOAN DEED.

In order to maintain an up-to-date financial performance of the resources invested in the Mortgage Loan Program, in each and every public deed executed for such purpose, in addition to the general conditions of contracting stipulated in the loan document, the Institute reserves the right to modify the agreed-upon rate according to resolutions issued by the Board of Specialists, in accordance with the provisions of Article 18, numeral 19) of the Law of the Institute.

The variation in the interest rate agreed upon in the Public Deed shall take legal effect from the date of effectiveness of the respective resolution, without any procedure other than the communication effected by any means at the national level. Consideration must be given to the time that will elapse between the date of modification of the interest rate and the date of maturity of the Loan for its specific application. The reduction of the interest rate shall not be applicable to those who have withdrawn from the system and therefore do not maintain their contributions therein, nor to those who are in arrears while maintaining that status.

In addition, in the execution of public deeds it shall be stipulated that when the borrower ceases service and exercises the right to the benefit of separation from the system, or causes withdrawal by operation of law due to the effect of the application of their contributions to the outstanding balance of a personal loan if any, the agreed-upon interest rate shall be increased by two (2) percentage points, effective from the date of their separation from the system.

Notwithstanding the provisions of the preceding article, in the event that the borrower again becomes an active part of the system, the applicable interest rate until that moment shall be replaced and modified by that which governs the mortgage loan program at the time such event occurs, taking into consideration the time remaining to elapse until the maturity of the obligation incurred. CHAPTER VI OF THE EXECUTION OF THE WORK.

In cases of housing construction, improvements, and expansion, the borrower shall commit to the Institute to execute the budgeted work as agreed upon in the loan deed. Any changes must be authorized by the Institute, prior to a report from the Appraiser assigned by it. When after the work budget has been analyzed and reviewed it proves to be higher than the maximum value of the loan that can be granted, the applicant shall demonstrate to the satisfaction of the Institute the availability of complementary funds, which shall be invested in the initial phase of the project to be financed. Once the work supervision has been completed, the Institute shall proceed to make the disbursement according to the programming established by INJUPEMP.

In loans for construction, improvements, repair, or expansion of housing, the Institute shall deliver the funds in partial disbursements, in accordance with the work estimates presented by the contractor and the work progress according to the report of the appraiser assigned by the Institute.

If after the first disbursement, discrepancies of criteria should arise between the borrower and The Institute, regarding the cost of the work and attempting to make it habitable or if there are changes in the design that generate modifications to the original budget, The Institute shall authorize the disbursements when the participant proves that the new costs and designs will be covered by him. In these cases the borrower must guarantee the completion of the work to the satisfaction of The Institute.

The amount of the approved loan shall be delivered in the number of disbursements according to work progress certified by the Appraiser. The first disbursement shall not exceed the percentage authorized by the Board of Specialists as established in Article 18, numeral 19) of the Institute Law.

In the event that the participant, without any justification, does not initiate construction in accordance with the approved work execution calendar and the grace period has elapsed, The Institute shall require him to initiate the works immediately, otherwise it shall demand the return of the advance or execute the guarantee. In the event that the Participant alters, modifies or omits the construction conditions and improvements approved by The Institute, it shall refrain from granting the remainder of the disbursements that correspond to him for this concept for the completion of the work, until the participant corrects the construction conditions in quality and budget. If for any reason the construction of the work is not completed with the remaining pending disbursements and without the possibility of obtaining other complementary funds, the participant must assume for the additional time that the work remains incomplete the payment of insurance coverage that corresponds. CHAPTER VII EXPENSES FOR INSURANCE PREMIUMS.

The closing expenses, including payments for insurance premiums for the mortgage loans in which the participant may incur, shall be at the expense of the participant and paid in order to proceed with the corresponding process. TITLE V OF THE LOAN PROGRAM FOR THE ACQUISITION OF RESIDENTIAL CONDOMINIUMS. CHAPTER I GENERAL PROVISIONS.

In order to materialize the right of Participants and Pensioners to obtain financing, The Institute shall finance the acquisition of condominiums and apartments in Horizontal, Vertical and Mixed Property, through the standards established in Legislative Decree No. 164-2012, which contains the "Condominium Property Law", published in the Official Gazette La Gaceta No. 33,011 of December 28, 2012; and, in this Loan Regulation and other applicable laws, complying with the requirements established in Article 45 of this Regulation.

The modality of acquisition of condominiums and apartments in Horizontal, Vertical and Mixed Property is constituted with the primary objective of granting financing to Participants and Pensioners to meet their housing needs under the particularity of condominium and residential apartment and which in turn allows The Institute to diversify its investment program within a reliable framework of security, profitability and liquidity.

This Program for the acquisition of Residential Condominiums and Apartments has the purpose of financing to Participants the following loan modalities: a) Acquisition of Vertical Condominium b) Acquisition of Horizontal Condominium c) Acquisition of Mixed Condominium d) Acquisition of Apartment e) Improvements and expansions in Condominiums CHAPTER II PROGRAM RESTRICTIONS.

The Institute shall not finance the following Condominium modalities, which are listed in Legislative Decree No. 164-2012 which contains the "Condominium Property Law" published in the Official Gazette La Gaceta No. 33,011 of December 28, 2012: Combined Condominium, Condominium of Condominiums and Condohotel; likewise, the acquisition of Floating and Mobile Houses shall not be financed either. CHAPTER III OF THE FORM AND MODALITY OF LOANS.

The formalization, modalities and procedure to which every Active Participant, Suspended, Voluntary and Age Pensioners shall be subject for the purpose of obtaining financing from The Institute shall be as follows: Loans for the acquisition of residential condominiums, which may be requested individually and/or jointly in accordance with the terms established in the Condominium Property Law, this Loan Regulation and the document by means of which the Insurance Institution extends the coverage note to him.

Financing shall be granted for the acquisition of condominiums in accordance with this Loan Regulation in any geographic location within the Republic of Honduras, provided that the property subject to the mortgage financing is not located in an area denominated as high risk by COPECO, the Municipal Municipality or by the State Entity that has competence over it.

Applications for loans for the acquisition of residential condominiums and apartments shall be considered by the Credit Committee, which shall approve or deny them as appropriate in accordance with what is contemplated in this Regulation.

The maximum amount to be granted in condominium and residential apartment loans shall depend on the payment capacity and the value of the property subject to guarantee, which according to the appraisal value shall be financed up to 90%. The appraisal of the condominium and common areas shall contain the value of the proportional lot, the value of the building and the value of common or complementary works, thus resulting in the total value of the property. TITLE VI APPRAISALS CHAPTER I GENERAL PROVISIONS

Appraisals shall be conducted by an Appraiser registered in the "Registry of Appraisers of Movable and Immovable Assets, Other Assets and Credit Guarantees of Supervised Institutions" of the Commission.

The payment of the appraisal may be paid by the participant to the Appraiser through The Institute, which in turn shall effect payment to the Appraiser upon delivery of the appraisal report and the corresponding receipt. The appraisal forms part of the requirements of mortgage or housing loans and shall contain the analysis of risk zones.

The Institute maintains a database of Appraisers in accordance with the Registry that the Commission maintains for such purpose, and shall consider for these purposes the branches for which the Appraiser is authorized, as established in the Manual of Procedures for Mortgage Loans approved by the Board of Specialists of INJUPEMP.

INCOMPATIBILITY FOR VALUATION CONTRACTS. When the services of real property valuation are required, the Appraiser shall declare in writing to The Institute that he/she is not in the following situations:

• a)

  Have an employment relationship with the owner of the property, with whoever represents it, or with the credit applicant.

• b)

  Have a kinship relationship within the fourth degree of consanguinity or second degree of affinity, with the holder of the property to be appraised or with the credit applicant.

• c)

  That his/her spouse or relatives of the appraiser comprised within the fourth degree of consanguinity or second degree of affinity or his/her Legal Representative, are not members of The Institute's Assembly, of Specialist Directors or whoever assumes their functions, of Division or Unit Heads.

AUTHORIZED BRANCHES FOR VALUATION. In accordance with what is provided in the STANDARDS FOR THE REGISTRATION OF APPRAISERS OF MOVABLE AND IMMOVABLE ASSETS, OTHER ASSETS AND CREDIT GUARANTEES OF SUPERVISED INSTITUTIONS, the natural or legal persons authorized by the Commission and registered in the Registry and selected by The Institute, shall declare in their registration application the valuation branches, among which the following are detailed: Branches for Real Property:

• a)

  Real Estate Valuation;

• b)

  Urban Properties;

• c)

  Rural Properties;

• d)

  Industrial Constructions;

• e)

  Urban Constructions;

• f)

  Rural Constructions. CHAPTER II ON THE RESPONSIBILITY AND OBLIGATIONS OF THE INSTITUTE AND OF THE APPRAISERS.

Obligations of The Institute. With respect to the valuation work performed by appraisers, The Institute shall comply with the following:

• a)

  Provide appraisers with all information, documentation and instructions that are relevant for the valuation of real property, by mandate of the applicant/participant.

• b)

  Maintain the reports of the valuation work performed, in the corresponding files of the debtors, in accordance with what is established in Article 26 of the Law of the National Banking and Insurance Commission;

• c)

  Inform the Commission of the partial or total non-compliance of valuation contracts, due to causes attributable to the appraisers and of any fact that has affected or could affect the reliability of the Appraiser, and must remit, in addition to their comments, the relevant documents, as well as when they have knowledge that an Appraiser is infringing the provisions contained in the "Standards for the Registration of Appraisers of Movable and Immovable Assets, Other Assets and Credit Guarantees of Supervised Institutions." d) Accept the valuation work of professionals who are registered in The Institute's database and properly registered in the Registry that the Commission maintains for such purpose in accordance with the authorized branches; and, e) Any other that the Commission determines.

RESPONSIBILITIES AND OBLIGATIONS OF APPRAISERS. Appraisers assume responsibility for the valuation work performed, and shall comply with what is established in Article 26 of the Standards for the Registration of Appraisers of Movable and Immovable Assets, Other Assets and Credit Guarantees of Supervised Institutions. CHAPTER III ON VALUATION WORK.

VALUATION REPORT ON ASSETS AND CREDIT GUARANTEES. Appraisers shall issue a valuation report for each of the work performed; and deliver the appraisal report to the analyst of the Loans Department. TITLE VII PROGRAM FOR PROTECTION AND ASSURANCE OF THE CREDIT PORTFOLIO CHAPTER I GENERALITIES

The Institute as responsible for the administration of the Fund, must guarantee that investments in loans are carried out within the framework of safety and liquidity. For such purpose it must establish the necessary mechanisms so that there exists, charged to the borrowers, own or contracted coverage on the loan balances, aimed at protecting such investments against the risks associated with the death and disability of the Participant and physical damage to properties. In case that the aforementioned coverage is contracted through private insurance, these services must be bid in accordance with what is established in the State Contracting Law, its Regulations, the Standards for Insurance Contracting by Supervised Institutions that perform Credit Operations issued by the CNBS and other provisions issued by the State Oversight bodies. However, while the actuarial parameters for the constitution of own coverage have not been ruled on by the Commission, the risks shall be covered by insurance contracts issued by Insurance Institutions in accordance with the mechanisms established by the State Contracting Law, its Regulations and the Commission's Standards.

Notwithstanding the foregoing, in accordance with Article 331 of the Constitution of the Republic, which establishes among others that the State recognizes, guarantees and promotes the freedoms of commerce, contracting, enterprise and any others that emanate from the principles that form the Constitution, the debtor of a credit may freely select and without any restriction, nor additional charges, any insurance institution authorized by the Commission, through direct contracting or through an authorized insurance intermediary, provided that the risks associated with the credit operation are covered, according to the minimum coverage conditions established in the STANDARDS FOR INSURANCE CONTRACTING BY SUPERVISED INSTITUTIONS THAT PERFORM CREDIT OPERATIONS. In case that a policy presented by the insured debtor is rejected, for not complying with the established requirements, the Loans Department must inform the debtor in writing, no later than fifteen (15) business days counted from the receipt of the same, explaining the unfulfilled requirements. CHAPTER II ON THE COVERAGE OF PERSONAL LOANS.

Regardless of the mechanism for coverage of investments in loans, in the case of Participants Pensioned for Disability it shall be mandatory to create the reserve of the Program for Protection and Assurance of the Credit Portfolio, in order to provide coverage for the risk associated with non-payment due to the suspension of the pension as a result of the recovery of their functional capacity; in this case, when the participant pensioned for disability requests a loan, The Institute shall deduct from the pension the monthly payment calculated for this risk.

The Program for Protection and Assurance of the Credit Portfolio shall be created by means of a fee established in the corresponding technical note. Said Technical Note, insofar as applicable, shall be in accordance with what is established in the STANDARDS FOR INSURANCE CONTRACTING BY SUPERVISED INSTITUTIONS THAT PERFORM CREDIT OPERATIONS and must be presented prior to the opinion of the Commission. The Loans Division is responsible for the administration of loan coverages whether it is own coverage or contracted coverage, in case The Institute opts for the latter it shall be subject to the bidding process referred to in the State Contracting Law, its Regulations and other provisions issued by the State Oversight bodies, in accordance with what is established in Article 43 of the INJUPEMP Law. In any case, the own or contracted coverage must be framed within the technical parameters that the Commission establishes for this purpose, with The Institute always being the beneficiary of indemnifications for loans granted. Notwithstanding the foregoing, in accordance with Article 331 of the Constitution of the Republic, which establishes among others that the State recognizes, guarantees and promotes the freedoms of consumption, commerce and enterprise contracting, the participant debtor of a credit may freely select and without any restriction, nor additional charges, any insurance institution authorized by the Commission, through direct contracting or through an authorized insurance intermediary, provided that the risks associated with the credit operation are covered, according to the minimum coverage conditions established in the STANDARDS FOR INSURANCE CONTRACTING BY SUPERVISED INSTITUTIONS THAT PERFORM CREDIT OPERATIONS. In case that a policy presented by the insured debtor is rejected, for not complying with the established requirements, the Loans Department must inform the debtor in writing, no later than fifteen (15) business days counted from the receipt of the same, explaining the unfulfilled requirements. CHAPTER III ON THE COVERAGE OF MORTGAGE LOANS.

The Institute shall require the debtor(s) and in his case co-debtors, a Fire and Allied Lines policy issued by an Insurance Institution that meets the requirements proposed by The Institute, to cover mortgages and this must be in force during the period for which The Institute grants the credit, with The Institute designated as beneficiary in the terms established in the STANDARDS FOR INSURANCE CONTRACTING BY SUPERVISED INSTITUTIONS THAT PERFORM CREDIT OPERATIONS.

For the case of insurance policies contracted directly by the insured debtor or through an insurance intermediary designated by him/her, during the credit period, they must comply with the following requirements:

• 1)

  That the policy conforms to the minimum requirements established in the STANDARDS FOR INSURANCE CONTRACTING BY SUPERVISED INSTITUTIONS THAT PERFORM CREDIT OPERATIONS.

• 2)

  The Institute must be identified in the particular conditions of the policy as beneficiary of the insurance policy and in his case when applicable, to the persons that the insured debtor designates to receive the remainders of the life insurance once the outstanding and accrued balances are covered.

• 3)

  They must cover during the validity of the policy the period of duration of the credit, and must be effected by the debtor contracting the policy with validity in accordance with the credit period.

• 4)

  That the premium is paid in such a way that the coverage is not interrupted.

• 5)

  That the policy is contracted with an Insurance Institution legally established in the country. CHAPTER IV ON GUARANTEES.

To guarantee the full payment of the loan granted, the borrower must constitute in favor of The Institute a first and special mortgage on the real property including its present and future improvements. - In case that the borrower requests readjustment to the amount of the original loan, this new credit shall be documented under the denomination of second mortgage, in accordance with the number of readjustments to the loan to which he/she has the right. TITLE VII REGULATIONS AND MODALITIES OF LOANS. CHAPTER I GENERALITIES

To make viable and expedite the process to obtain a loan, the applicant shall be obligated to provide The Institute with all information requested and that is necessary to qualify and approve the loan. It is understood that if within the period of thirty (30) business days the required information is not completed, the proceedings shall be filed without further action.

Everything related to the internal procedure from the receipt of the loan application until its disbursement shall be done in accordance with the guidelines established in the Loan Procedures Manuals.

For any non-compliance in the payment of a loan, The Institute by means of the Loans Division, shall constitute the estimates for credit deterioration, in accordance with what is established in the Standards for the Evaluation and Classification of the Credit Portfolio issued by the Commission. CHAPTER II ON THE INTEREST RATE.

It shall be the responsibility of the Board of Specialists to define and establish the interest rates to be charged on loans granted, which must be defined as variable rates in the respective contracts and must be adjusted annually if economic conditions warrant. In no case shall the interest rate applicable to loans be less than the rate that generates at least an annual real rate on the total investments of the Institute, nor less than the real rate generated by bonds guaranteed by the State at one hundred eighty (180) days maturity and in case these do not exist, those with the next closest maturity period shall be taken as reference, nor less than seventy-five percent (75%) of the average rate of the last twelve (12) months charged by the private national financial system on the consumer portfolio in accordance with what is established in Article 41 of the Regulations for Investment of Public Pension Funds by Public Social Security Institutes issued by the CNBS. The applicable interest rates shall be reviewed by the Board of Specialists in the first six months of each year. The Interest Rates of the Loan Program, as well as the content of the adhesion contracts that INJUPEMP implements for such purposes shall be published on its website.

The interest rate for the LAW OF FINANCIAL INCLUSION AND DEBT CONSOLIDATION (Legislative Decree No. 34-2017) and LAW OF DEBT RELIEF FOR WORKERS (Legislative Decree No. 118-2019) shall be approved by the Board of Specialists; this rate includes the percentage allocated to constitute the reserve for life insurance or the Credit Portfolio Protection and Insurance Program.

In case of a modification to the interest rate, the Institute must communicate to interested parties by placing notices in visible places of the Institute's offices, website and/or publishing said notice, at least in a widely circulated written media of the country. For such purposes, the Institute shall implement the provisions contained in the "Standards for Strengthening Transparency, Financial Culture, Market Conduct and Customer Service in Supervised Institutions" and any standard that replaces it.

In case of loan default attributable to the participant, he shall pay on the overdue installments an additional surcharge to the originally agreed rate of two percent (2%) annually in concept of default, or the rate that the Board of Specialists authorizes at the time; however, in case the default of the Participant is not attributable to him, the Institute shall manage with the State Institution the collection of the pending amounts; once such amounts are received, the Institute shall apply the corresponding adjustments. CHAPTER III OF INSTALLMENTS.

The Institute shall collect the monthly installments made by the borrower through payroll deduction that the employer shall make or through his pension benefit. The Employer by virtue of what is established in the Law of the Institute shall have responsibility for making the transfer of the deducted installments, understanding that the deductions by the Institute shall only be superseded by obligations derived from judicial sentences and laws of greater hierarchy than the Law of the Institute. In the case of voluntary and suspended participants, recovery shall be made at the counter or through the means that the Institute designates for such purpose.

Loans granted to Active Participants and Pensioners shall generally be recovered through level installments that include principal and interest except for those that require a single payment, as is the case with Credit Now and Vacation Loans which shall be paid at maturity. In the case of loans with amortization made through monthly installments, the first payment shall be deducted from the salary or pension corresponding to the month following the month in which the loan was granted and so on until full cancellation.

The active participant who retires from public service or who is on unpaid leave shall be obligated to continue paying his amortization installment monthly through the means that the Institute designates for such purpose.

When the participant is terminated temporarily or permanently from his position for a reason other than his death, he and his employer must communicate such situation to the Institute and consequently the Institute shall execute the guarantees established in the loan contract, guarantee of his contributions or thirteenth or fourteenth month of his salary, vacation bonus and benefits in case there is any pending balance. After having executed such guarantees, the debtor must continue making the originally agreed payments or may request an adjustment to reduce the monthly installment provided that the original loan term is not modified; in any case, payments must be made through the means that the Institute designates for such purpose.

If the participant retires from the Institute, he may pay in advance the entire pending balance or the monthly installment corresponding to the benefit he receives shall continue to be deducted.

If the borrower has the right to transfer values to another institute or return of improper contributions, the pending balance of the loan that he had with the Institute shall be deducted ex officio prior to the transfer or return; said operation must be notified in advance to the Participant.

If the voluntary or suspended participant requests the granting of the benefit of separation from the Institute and provided there is any pending balance for personal loan, the Institute shall deduct such pending balance from the amount resulting from the respective benefit.

Notwithstanding the limits established in the credit conditions approved by the Board of Specialists, the amount to be financed to participants who meet the requirements must be limited to the amount corresponding to their payment capacity or the projected amount of the net old-age pension, in the latter case, when it concerns Participants whose term for the total amortization of the Loan exceeds the age established for their retirement. CHAPTER IV OF THE PARTICIPANT'S INCOME.

The payment of all loans that are granted shall be deducted or amortized from the following income:

• a)

  From net monthly income by concept of salary that the active participant borrower receives.

• b)

  From income by concept of thirteenth and fourteenth month of salary.

• c)

  From the net pension that the old-age and disability pensioner receives.

• d)

  From net income that the inactive participant has in private business or own business.

• e)

  From income in concept of vacation bonus.

• f)

  Other income charged to the Participant. CHAPTER V OF DEFAULT ADMINISTRATION.

The Default Recovery Committee is created, which shall be responsible for defining administrative guidelines for the recovery of extrajudicial and judicial default and shall be composed of:

• a)

  Chief of the Loan Division, who shall preside as President.

• b)

  Chief of the Legal Services Unit, who shall serve as Secretary.

• c)

  Chief of the Portfolio and Collections Department.

• d)

  Chief of the Loan Department.

A loan shall fall into default when, after the agreed payment date, the borrower does not pay the corresponding installment due to non-deduction from payroll or social benefits. Excluded from default are those that fall into arrears due to late payment by the employer. In this case the Institute shall require the participant and/or his Employer immediately to analyze the causes of such default. If the causes of default are related to the cessation in service by the Participant, the Institute shall execute the guarantees that correspond and that were previously agreed upon with the participant, his guarantors and his Employer. Without prejudice to the foregoing, the Institute reserves the right to proceed by administrative or judicial means requesting payment of the default balance, default interest, court costs and payment of the remaining pending installments until cancellation of the loan.- Employers who have made the withholdings and have not submitted them in a timely manner to the Institute shall be required by administrative or judicial means.

In the event that employers present outstanding balances attributable to non-compliance with contracts and/or agreements, amounts or surcharges shall be added to the amounts owed, whose amounts shall be obtained by applying a rate of interest for this purpose to the total amount of the outstanding installments, using a monthly interest rate of two percent (2%).

When a borrower returns to public service and again contributes to the Institute and has pending balances, they may cancel the amounts owed through a single payment, or sign a payment agreement and in the event they have pending loan payment balances, the Collections and Account Management Department shall establish a payment plan for the cancellation of arrears.

In addition to the preceding articles, the following provision shall also be applied to loans: The non-deduction of monthly installments by the employer does not relieve the participant of their obligation to amortize the debt with their respective ordinary and default interest; in these cases the participant shall be obliged to amortize the pending payment installments, through the procedure applied by the Collections and Account Management Department, for which purpose those participants are excepted from default interest surcharges who demonstrate that their employers made the deductions of the corresponding installments and that they were not remitted to the Institute, whereby default interest shall be charged to the employer until the respective payment is made. In the event that the participant ceases their work without the employer having made the respective deductions, the participant shall be responsible for canceling them.

The following general criteria for arrears recovery are established:

• a)

  In the case of an Active or Voluntary Participant who has accumulated one (1) or more overdue installments for reasons attributable to them and/or their Employer, the Institute shall proceed to carry out collection management through administrative proceedings;

• b)

  When for reasons beyond their control the Borrower, regardless of their status, does not conclude or subscribe to an Arrangement or Payment Agreement and presents arrears greater than sixty (60) days, the Institute may make ex officio payroll deductions from the salary or pension of Sureties or Co-debtors for amounts greater than the agreed loan installment until the entire arrears are paid; in accordance with the authorization previously made by the borrower, the surety or co-debtor;

• c)

  Once the collection actions through administrative proceedings have been exhausted, the Institute may apply the amounts corresponding to Ex Officio Withdrawal to the outstanding balances of the Borrower who are in an inactive status condition with arrears greater than ninety (90) days for the pending balance that at that time is shown including capital, interest, insurance, or installments of the Program for the Protection and Insurance of the Credit Portfolio. If a pending payment balance remains, the Institute reserves the right to execute the appropriate legal actions against the borrower and guarantor, if any. Prior to making an ex officio application to the Participant's Contributions, the Institute shall notify the Participant by means of electronic mail, notice board, telephone call or the means established for this purpose by INJUPEMP, leaving evidence of such notification in the file;

• d)

  If after exhausting collection actions through administrative and pre-legal proceedings and applying ex officio withdrawal to the outstanding balances of the Borrower and there is still a balance to collect; the Institute may carry out judicial collection actions in accordance with what is established in the contract and in applicable legislation, whether against the principal debtor, joint guarantors, co-debtors or Employers;

• e)

  If the arrears are due to the death of the Participant, the Institute shall apply what is established in Articles 31 of this Regulation; and,

• f)

  If the Borrower had the right to refunds for any reason, the pending balance of the loan shall be deducted ex officio prior to the Institute proceeding with the corresponding refund.

The Legal Services Unit of the Institute shall be responsible for executing the guarantees to recover the loan granted.

The accounting of loans considered uncollectible shall be carried out in accordance with the regulations and technical guidelines issued by such Commission. - The amount of the uncollectible balance must be recorded in the file of each debtor and must be available in their credit history in the computer system used for the granting of loans and benefits. Notwithstanding the foregoing, the fact that the uncollectible balance is applied against the accumulated impairment estimate on credits, in accordance with what is established in the Standards for the Evaluation and Classification of the Credit Portfolio and the Accounting Framework Based on Combined IFRS with Prudential Norms Issued by the Commission, Applicable to Public Social Security Institutes does not exempt borrowers or guarantors from facing their responsibility to the Institute.

Loan applications that were pending before the entry into force of this Regulation shall be subject to the provisions of the previous Loan Regulation, without prejudice to adapting its application in accordance with what is established in this Regulation, insofar as it is applicable.

Officials and employees of the Institute are prohibited from accepting gifts in cash or of material value from those persons who are conducting credit or other proceedings with the Institute, directly or indirectly, through family members or through third parties related to such officials and employees.

All officials and employees who are part of the loan process have the obligation to maintain strict confidentiality with the information of the participants and of the Institute itself.

All those legal, technical instruments or other provisions concerning loans shall be subject to this Regulation.

The percentages of Investment in Loans shall be subject to the limits established in Article 42 subsections c) of the Regulation for Investment of Public Pension Funds by Public Social Security Institutes. Likewise, to what is established in the Law on Financial Inclusion and Consolidation of Debts and the Debt Relief Law for Workers; as well as the amounts established in the budgetary provisions authorized annually by the Secretariat of Finance, or any other provision of greater legal hierarchy.

Non-compliance with what is established in this Regulation shall give rise to the application of sanctions established in the Internal Work Regulation, the Law of the Institute and its Regulation, the Labor Code, applicable internal and external norms, the Sanctions Regulation to be applied to Supervised Institutions issued by the Commission and other laws.

The credit conditions applicable to the different loans of the Institute shall be defined under the best conditions of safety, performance, liquidity and fairness based on market conditions and shall be established in this Loan Regulation and the different Procedures Manuals approved by the Board of Specialists.

This Regulation repeals the Loan Regulation approved by the Assembly of Participants and Contributors of the National Institute of Pensions for Employees and Officials of the Executive Branch (INJUPEMP) on March 11, 2015, through Resolution No. 002-2015 of Minutes No. 009-2015 and published in the Official Journal La Gaceta No. 33,680 dated March 12, 2015.

This Regulation may only be reformed or repealed by the Assembly of Participants and Contributors, in accordance with what is established in Article 9 numeral 6) of the Law of the Institute of Pensions for Employees and Officials of the Executive Branch (INJUPEMP) and it has been approved on this same date by the Assembly of Participants and Contributors and its effectiveness shall be from the publication in the Official Journal La Gaceta.