Regulations on Loans from Injupemp Year 2015

The Loan Program of the NATIONAL INSTITUTE OF RETIREMENT AND PENSIONS OF EMPLOYEES AND OFFICIALS OF THE EXECUTIVE BRANCH (INJUPEMP) is hereby established as an investment operation in accordance with the provisions of the "Regulation for the Investment of Public Pension Funds by 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 Institute's Law and applicable current regulations, in order to financially strengthen 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, in compliance with the Institute's Law and all applicable legal regulations.

This Regulation has the following objectives:

• a)

  To establish the guidelines and eligibility criteria for granting loans to 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 more favorable conditions 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. CHAPTER II CREDIT CONDITIONS

The maximum credit amounts to be granted, payment terms, interest rates, and commissions shall be authorized by the Specialists Board as established in Article 18, numeral 7) of the Institute's Law.

Payment of monthly loan installments shall be made no later than the last day of each month. The Institute shall maintain a detailed record of payments made, applying the criterion of outstanding balances for the calculation of current interest. Such payments shall be withheld by employers or made through the means designated by the Institute. In any case, payment shall be made to the Institute no later than the last day of each month.

In the case of Voluntary Participants and those in Suspension status, personal loans may be granted up to ninety percent (90%) of the total amount of contributions maintained in the Institute, and one hundred percent (100%) to Active Participants.

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

• a)

  Net monthly income.

• b)

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

• c)

  The amount of the participant's and their spouse's gross income in joint loans.

• d)

  The amount of the participant's and their spouse's net income in joint loans. The maximum percentages for determining the maximum payment capacity of participants shall be approved by the Specialists Board and shall be defined in the credit conditions, seeking the best conditions of security, performance, liquidity, and equity for the Institute.

Joint loans may be granted when one of the spouses is an Active Participant, in Suspension status, or Voluntary Participant of the Institute and their relationship is by marriage or by legalized common-law union according to the Family Code. The quasi-net relationship shall be that established by the Specialists Board as provided in Article 18, numeral 7) of the Institute's Law, but in no case may it exceed the net income of the applicant.

The value of the total leveled installment to be paid by the borrower comprises the amortization of capital and interest; the participant is obligated to pay in the monthly loan installment for housing the proportional amount of life and property insurance.

The Institute may establish the collection of administrative charges on the loan amount; said charges shall be determined in compliance with financial user protection regulations, and prior to their application, the Institute shall present to the Commission its technical consent for its respective ruling.

In the event that the participant meets the retirement requirements during the amortization period 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 60% of said pension. For the amortization of mortgage loans, a maximum term of twenty-five years (25) is established; in any case, the maximum amortization period may not exceed the number of years between the age reached by the old-age pensioner and the date they turn seventy-five years of age (75).

The Institute shall grant Personal and Mortgage Loans under the following modalities and for the purposes required by participants as follows: a. Personal Loans 1) Loans on Contributions 2) Loans with Guarantee 3) Debt Consolidation 4) Loan Restructuring 5) Credit Now b. Mortgage Loans 1) Construction on land owned by the participant or their spouse or household partner. 2) Land acquisition. 3) Housing acquisition (including condominiums and apartments). 4) Improvement and/or expansion of housing (property of the participant or their spouse or household partner). 5) Release of encumbrance. TITLE II. ADMINISTRATIVE ORGANIZATION OF THE LOAN PROGRAM CHAPTER I ADMINISTRATION OF THE LOAN PROGRAM

The Loans Division is composed of the Loans Department and the Portfolio and Collections 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, forwarding necessary recommendations to the Specialists Board through the Credit Committee.

The Loans Division functionally depends on the Specialists Board, and its functions are closely related to the Divisions of Legal Services, Finance, Information Technology, Administration, and Benefits, and at all times its actions must be framed within the provisions of this Regulation and the applicable regulations in the matter. CHAPTER II. OF THE LOANS DEPARTMENT

Functions of the Loans Department:

• a)

  Receive and analyze loan applications presented by participants.

• b)

  Forward to the Credit Committee the analyses and credit recommendations issued on mortgage loan applications and special cases received, accompanying said analysis with the respective supporting documentation.

• c)

  Process personal loan applications approved that meet all requirements established in this Regulation, which are forwarded by the Loans Department.

• d)

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

• e)

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

• f)

  Schedule credits that must, in accordance with this Regulation, be submitted for approval before the Credit Committee.

The Credit Committee is hereby created, which shall be composed of the following members:

• a)

  The head or designated person of the Loans Division, who shall serve as President;

• b)

  The head or designated person of the Legal Services Division, who shall serve as Secretary;

• c)

  The head or designated person of the Finance Division, who shall serve as member with voting rights. The heads or designated persons shall act with the right to speak and vote. Members shall incur civil, criminal, and administrative liability to the Institute if their vote determines matters in contravention of legal provisions. If any member votes against for disagreement with the opinions, it shall be noted in the respective minutes of the session in which the matter was discussed.

POWERS OF THE CREDIT COMMITTEE:

• a)

  Know, approve or deny applications for loans with mortgage guarantees and special cases not contemplated in this Regulation, which are forwarded by the Loans Department.

• b)

  Know, approve or deny applications for refinancing of loans.

• c)

  Render opinions on applications for the constitution of mortgages on property financed by the Institute, for which the corresponding legal and technical opinions shall be required.

• d)

  Prepare and submit for approval all Procedure Manuals derived from this Regulation and Standards issued by the Commission on this matter.

• e)

  Review and propose the general conditions and interest rates to be applied to the different types of loans granted by the Institute, to be reviewed by the Investment Committee and subsequently approved by the Board of Specialists.

• f)

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

• g)

  Other functions that may be attributed to it in accordance with the Laws and Regulations of the Commission, as well as by the provisions issued by the Board of Specialists.

RESPONSIBILITIES OF THE CREDIT COMMITTEE. Members of the Credit Committee shall have civil, administrative, and criminal responsibility for the actions they take in the performance of their duties and powers. Among their responsibilities are the following: 1) Render opinions on all matters related to credit operations that are submitted to their consideration. 2) 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.

SESSIONS OF THE CREDIT COMMITTEE. The Credit Committee shall meet as many times as necessary to approve or deny credit with diligence and agility without requiring a resolution in which it shall be established with the attendance of the majority of its members and its decisions shall be made by simple majority.

BOOK OF MINUTES OF THE CREDIT COMMITTEE. The sessions held by the Credit Committee shall be recorded in the respective Book of Minutes of the Committee. Said book shall be in charge of the Secretary of the Committee who shall have control and custody of the opinions issued by it.

RESOLUTION OF LOAN APPLICATIONS. For each loan that is approved or denied by the Credit Committee, the respective record shall be issued individually or collectively. Special cases due to illness or domestic hardship of participants and pensioners not contemplated in this Regulation shall be forwarded to the knowledge and approval of the Credit Committee; for such purposes, a record of the special cases that arise resolved must be maintained, which shall be in charge of the Loans Division. Employees and officials who have the authority to approve personal, mortgage or special loans without fulfilling the requirements established by the Law, this Regulation and other norms that may be issued, shall be civilly and administratively responsible for losses that may be generated as a consequence of the decisions adopted.

Powers of the Portfolio and Collections Department:

• a)

  Prepare and Execute the general guidelines on the coordination and operational management of the portfolio and collection, 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)

  Manage the recovery of overdue credits, exercising the pertinent administrative actions.

• c)

  Design a system for monitoring credit behavior, which is appropriate to the needs of the Institute.

• d)

  Generate monthly statistics, perform analyses and periodic reports of the credit portfolio.

• e)

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

In the event that the Institute implements in the future, directly or through third parties, a loan service or other service through electronic transmission platforms, telephone access systems to internet data, the provisions of Articles 16 subparagraphs a), c), and d); and 25) shall not be applicable for the granting of credits to affiliates, the foregoing always provided that the implemented system is responsible for the analysis of credit applications and there is no objection from the Commission.

To be eligible for financing, every participant in the Institute must meet the following conditions and requirements: Active Participants a) Have personal contributions of the participant registered with the Institute for a period of no less than six (6) months prior to the submission 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 type of financing requested. c) Not be older than sixty-five (65) years of age in the case of loan applications with a guarantor. d) Demonstrate payment capacity in accordance with the credit conditions of Article 8 of this Regulation. e) Be a Honduran national or foreigner with permanent residence, older than twenty-one (21) years of age or an unemancipated minor. f) To grant a Personal Loan with a guarantor, the Institute shall require the guarantors it considers necessary to ensure credit recovery and these shall have equal or greater payment capacity than the applicant. g) In the event that the guarantor is from the private sector, the amount of the loan shall be limited based on the obligations held by the borrower and the guarantor. Participants in Suspension a) Maintain their contributions with the Institute in full. b) In the event that contributions have been applied ex officio to the payment of a previous loan, have reimbursed said account and the corresponding interest. c) Comply with the requirements described in subsections a), 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 services in 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 of age. d) Comply with the other requirements required by this Regulation and any other provision or credit procedure manuals approved by the Board of Specialists as established in Article 18 numeral 7) of the Institute Law. e) Be covered by insurance protection or any other coverage approved by the Institute as a mechanism to cover 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 of age. d) Enroll in the Program for Protection of Personal Loan Portfolio that covers the risk of non-compliance of debt payment due to Death and/or Rehabilitation of the Pensioner for Disability. e) Comply with the other requirements required by this Regulation and any other provision or credit procedure manuals approved by the Board of Specialists as established in Article 18 numeral 7) of the Institute Law.

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 in compliance with its contractual obligations.

Every participant who returns to the Public Sector and has entered into an agreement for reimbursement of contributions and after a minimum of six (6) months in continuous payment of installments of said reimbursement agreement and six (6) months of effective contributions, may obtain financing for an amount equal to the reimbursed values plus the new contributions as of the date of application.

The following shall not be subjects of credit:

• a)

  The participant who, having withdrawn their contributions, has not reimbursed them, nor has entered into a payment agreement in accordance with what is established in the previous article.

• b)

  The Participant whose contributions have been applied in whole or in part ex officio in the cancellation of previous financing, and which have not been reimbursed or a respective payment agreement has not been entered into with the Institute.

• c)

  The participant whose application for retirement 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 8 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 25 of this Regulation.

• f)

  The Active Participant, Pensioner for Old Age or Disability who presents arrears in category III, IV and V according to the Credit Information Center of the Commission or Private Credit Bureau and whose refinancing is not intended for rehabilitation with the Institute and debt consolidation in accordance with the "REGULATION OF THE LAW OF THE OPTIONAL PROGRAM FOR THE CONSOLIDATION OF DEBTS OF THE HONDURAN WORKER". Exceptions are made in cases where the Active Participant, Pensioner for Old Age or Disability presents final settlement documents issued by the Financial Institution in accordance with the Institute.

• g)

  The participant who presents wage garnishment may only opt for a loan for a maximum amount equal to their contributions, according to participant status.

The recovery of all loans granted shall be guaranteed by:

• a)

  The total of contributions accumulated with the Institute by the participant.

• b)

  Fiduciary guarantee to be constituted for this purpose.

• c)

  The reserve of the Program for Protection of Credit Portfolio of Personal Loans or Life Insurance policies, endorsed to the beneficiaries covered for death or disability of the debtor, as well as the Fire and Allied Lines Insurance of the Mortgaged Guarantee of the debtor.

• d)

  In a complementary manner, by the labor benefits of the borrower participant when so authorized.

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 with the Institute;

• b)

  Those who previously served as guarantors and have not complied with the Institute;

• c)

  Those who previously served as borrowers and have not fulfilled their obligations.

• d)

  Those who as of the date of the application are employed as employees or officials of the Institute.

All those cases related to requests for personal loans whose specific procedure is not regulated in this regulation and that cannot be resolved by the Loans Department shall be presented for resolution to the Credit Committee.

When by effect of the application ex officio of the quotations maintained in the Institute the outstanding balance of a delinquent credit is canceled, the borrower who returns to the system shall be obligated to return only the quotations plus interest that ceased to be collected that have been applied to him in accordance with the legal mechanism established.

Notwithstanding the provisions in the preceding Article, by way of exception, when the borrower debtor has been subjected to an application ex officio without having returned to the Public Sector and wishes to pay the applied quotations, he may restore the same, as well as the interest that the Actuarial and Statistics Division of the Institute determines, by making payment of such amounts. CHAPTER IV. PROGRAM FOR PROTECTION OF THE PERSONAL LOAN PORTFOLIO

INJUPEMP, as responsible for the administration of the Fund, shall establish the necessary mechanisms so that there exists, at the expense of the borrowers, own coverage or contracted through private insurance in accordance with what is established in the State Contracting Law, its Regulation and other provisions that the controlling entities of the State may issue, intended to protect the Personal Loans Portfolio against the risk of death of all Participants without any distinction. In both cases, the coverage shall be framed within the technical parameters that the Commission shall establish for such purposes. Regardless of the mechanism of coverage of the investments in loans referred to in the preceding paragraph, in the case of Participants Pensioned for Disability, it shall be mandatory to create the reserve of the Program for Protection of the Personal Loan Portfolio, in order to provide coverage for the risk associated with non-payment due to suspension of the pension as a result of reassessment of functional incapacity, in this case, when the participant pensioned for disability requests a loan, the Institute shall deduct from the pension the monthly fee calculated for this risk.

The Program for Protection of the Personal Loan Portfolio shall be created through the establishment of a fee set forth in the corresponding technical note. Said Technical Note, insofar as applicable, shall be in conformity with what is established in the REGULATIONS FOR THE CONTRACTING OF INSURANCE BY SUPERVISED INSTITUTIONS THAT CONDUCT CREDIT OPERATIONS, and shall be presented previously for the opinion of the Commission. Without prejudice to 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 of enterprises and any others of the principles formulated by 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 REGULATIONS FOR THE CONTRACTING OF INSURANCE BY SUPERVISED INSTITUTIONS THAT CONDUCT CREDIT OPERATIONS. Without prejudice to 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 of enterprises and any others of the principles formulated by 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 REGULATIONS FOR THE CONTRACTING OF INSURANCE BY SUPERVISED INSTITUTIONS THAT CONDUCT CREDIT OPERATIONS. In the event that a policy presented by the debtor Insured is rejected for not meeting the established requirements, the Loans Department shall inform him in writing within no more than fifteen (15) business days counted from the receipt thereof, explaining the unmet requirements.

In the case of insurance policies contracted directly by the debtor Insured or through an insurance intermediary designated by him, during the validity of the credit, they shall comply with the following requirements:

• 1)

  That the policy conforms to the minimum requirements established in the REGULATIONS FOR THE CONTRACTING OF INSURANCE BY SUPERVISED INSTITUTIONS THAT CONDUCT CREDIT OPERATIONS.

• 2)

  The Institute must be identified in the particular conditions of the policy as the beneficiary of the insurance policy, and in the case when appropriate, the persons that the debtor Insured designates to receive the remaining amounts of the life insurance once the balances and amounts owing have been covered.

• 3)

  They shall cover during the validity of the policy the period of duration of the credit, and the debtor must effect the contracting of the policy with validity in accordance with the period of the credit.

• 4)

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

• 5)

  That the policy be contracted with an Insurance Institution legally established in the country. CHAPTER V. OF THE GUARANTIES

To guarantee the full payment of the loan granted, the borrower shall establish in favor of the Institute a first and special mortgage on the real property including its present and future improvements. In the event that the borrower requests an increase to the amount of the original loan, this new credit shall be documented under the constitution of a second mortgage, in accordance with the number of increases to the loan to which he is entitled. CHAPTER VI. INCREASE TO THE LOAN AMOUNT

An increase to the amount of the original loan may be granted provided that the borrower complies with the following requirements:

• a)

  That the payment capacity of the borrower can be accredited in accordance with what is agreed in the contract and that the increase and/or improvements made have been carried out on the same property subject to the financing originally granted.

• b)

  That the borrower has invested or executed it in accordance with what is agreed and that the increase and/or improvements made have been carried out on the same property subject to the financing originally granted.

• c)

  When the works to be executed have not been completed due to reasons of inability or the work budget is not attributable to the borrower. CHAPTER VII. GRACE PERIOD

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 on which the loan is granted, during which period they shall only pay interest on outstanding balances, which shall be charged for each disbursement made. The grace period shall not form part of the term for payment of the principal of the loans nor for calculation of a level payment. When it is an increase to the original loan, the grace period shall be applicable only to the amount of the increase to the loan. CHAPTER VIII. OF THE LOAN DEED

In order to keep updated the financial performance of the resources invested in the Housing Loan Program, in all and each one of the public deeds granted for such purposes, in addition to the general conditions of contracting stipulated in the loan document, the Institute reserves the right to modify the agreed rate according to resolutions issued by the Board of Specialists as established in Article 18, subsection 7) of the Law of the Institute.

The variation in the interest rate agreed in the Public Deed shall take legal effect as of the date of the effectiveness of the respective resolution, without further action than the communication that is made by any means at the national level, taking into consideration for its specific application the time to elapse between the date of notification of the interest rate and the date of maturity of the Loan. The decrease in the interest rate shall not be applicable to those who have withdrawn from the system and therefore do not maintain their records in it, nor to those who are in arrears while they remain in that condition.

In addition to the granting 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 ex officio by effect of application of his quotations to the outstanding balance of a personal loan if he has one, the agreed interest rate shall be increased by two (2) percentage points, effective as of the date of separation from the system.

Without prejudice to the provisions in the preceding article, in the case that the borrower returns to be an active part of the system and proves to have payment capacity, the interest rate applicable until that moment shall be replaced by the one that governs the housing loan program at the time such event occurs, taking into consideration the time remaining to elapse until maturity of the obligation contracted. CHAPTER IX. OF THE EXECUTION OF THE WORK

In the cases of construction of housing, improvements and expansion, the borrower shall commit himself to the Institute to execute the budgeted work in accordance with what is agreed in the loan deed. Any changes must be authorized by it, prior to the opinion of the appraiser assigned by it. Where after the work budget has been analyzed and reviewed, the work should result in a cost superior to the maximum value of the loan that may be granted, the applicant shall accredit to the satisfaction of the Institute the availability of complementary funds, which would be invested in the Initial Phase of the project to be financed. Once the work supervision has been carried out, the Institute shall proceed to make the disbursements of the amount granted.

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 made. The first disbursement shall not operate the percentage that the Board of Specialists authorizes according to what is established in Article 18, subsection 7) of the Law of the Institute.

If after the first disbursement, discrepancies in criteria arise between the borrower and the Institute regarding the cost of the work and the intention to make it habitable, or if there are changes in the design that generate modifications to the original budget, the Institute shall authorize disbursements when the participant proves that said costs and designs would 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 as determined by the appraiser. The first disbursement shall not be subject to the percentage authorized by the Board of Specialists as established in Article 18, subsection 7) of the Institute's Law. CHAPTER X. CLOSING COSTS

The Closing Costs for mortgage loans in which the participant must incur shall be at the participant's expense, and may be financed by the Institute through the loan granted to him, provided that the respective appraisal permits it and the analysis of payment capacity allows it.

In order to materialize the right of Participants and Retirees to obtain financing, the Institute shall finance the acquisition of Vertical Condominiums, Horizontal Condominiums, Mixed Condominiums and apartments, through the standards established in Legislative Decree No. 164-2012 containing the "Condominium Property Law" and in this Loan Regulations, and other laws governing the registration of property and mortgages and possession of housing, complying with the requirements established in Article 42 of this regulation. TITLE V. PROGRAM OF LOANS FOR THE ACQUISITION OF RESIDENTIAL CONDOMINIUMS CHAPTER I GENERAL PROVISIONS

The modality of acquisition of condominiums and apartments in horizontal, vertical and mixed property is constituted with the principal objective of granting financing to Participants and Retirees. The requirements for obtaining financing from the Institute shall be the following: 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 Regulations, and for which the Insurance Institution or Department in charge of administering insurance contracts and the Institute's Credit Protection Programs shall extend the coverage note.

Financing shall be granted for the acquisition of condominiums in accordance with this loan regulation in any geographic location of the Republic of Honduras, provided that the property subject to mortgage financing is not located in an area designated as high-risk by COPECO, the Municipality, or the State Entity having jurisdiction.

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

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

Selection of Appraisers. Appraisals shall be conducted by professional appraisers registered in the "Registry of Appraisers of Movable and Real Assets, Other Assets and Credit Guarantees" of the Commission.

Payment may be made by the participant to the appraiser through the Institute, which in turn shall pay the professional appraiser upon delivery of the appraisal report and the corresponding receipt. The appraisal is part of the requirements for mortgage or housing loans and must contain an analysis of risk zones.

The Institute, based on the Mortgage Loan Procedures Manual approved by the Board of Specialists, must select real estate appraisal services from among the appraisers registered in the Registry maintained for such purpose by the Commission, and must consider for these purposes the areas for which the appraiser is authorized.

Incompatibility for Appraisal Contracts. When real estate appraisal services are required, the appraiser must declare in writing to the Institute that he or she is not in any of the following situations:

• a)

  Having an employment relationship with the property owner, with whomever represents him or her, or with the credit applicant.

• b)

  Having a family relationship within the fourth degree of consanguinity or second degree of affinity with the property owner or with the credit applicant.

• c)

  That his or her spouse or relatives of the appraiser within the fourth degree of consanguinity or second degree of affinity, or his or her Legal Representative, are not members of the Institute's Assemblies, of Specialist Directors, of Division Heads, or officials of similar rank.

Authorized Areas for Appraisal. In accordance with the provisions of the STANDARDS FOR THE REGISTRATION OF APPRAISERS OF MOVABLE AND REAL ASSETS, OTHER ASSETS AND CREDIT GUARANTEES OF SUPERVISED INSTITUTIONS, natural or legal persons authorized by the Commission and registered in the Registry and selected by the Institute must declare in their registration application the appraisal areas, among which the following are detailed: Areas for Real Estate: Real Estate Appraisal; Urban Properties; Rural Properties; Industrial Constructions; Urban Constructions; Rural Constructions. CHAPTER II. RESPONSIBILITY AND OBLIGATIONS OF THE INSTITUTE AND OF THE APPRAISERS

Obligations of the Institute. In relation to appraisal 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 appraisal of real estate by a mandate of the requesting participant.

• b)

  Maintain the reports of appraisal work performed in the corresponding files of the debtors, in accordance with what is established in Article 26 of the Institute's Law of the National Commission of Banks and Insurance;

• c)

  Inform the Commission regarding partial or total non-compliance with appraisal contracts, where such is attributable to appraisers, and of any fact that has affected or could affect the credibility of the appraiser, and must remit, in addition to its consents, the relevant documents, as well as when it becomes aware that an appraiser is violating the provisions contained in the "Standards for the Registration of Appraisers of Movable and Real Assets, Other Assets and Credit Guarantees of Supervised Institutions" d) Accept appraisal work from professionals who are registered in the Institute's database and properly registered in the Registry maintained for such purpose by the Commission in accordance with authorized areas; and, e) Any other that the Commission may determine.

Responsibilities and Obligations of Appraisers. Appraisers assume responsibility for appraisal work performed, and must comply with the following:

• a)

  Prepare appraisal reports in accordance with the provisions of the "Standards for the Registration of Appraisers of Movable and Real Assets, Other Assets and Credit Guarantees of Supervised Institutions"; the Commission may require appraisers to provide documentation and information substantiating the work performed.

• b)

  Personally conduct appraisal work, and in the case of legal entities, the specialized technical personnel working for them, which must be conducted with independence of judgment, without conflicts of interest, and methodologically objective.

• c)

  Inform the Commission immediately when the applicant provides insufficient information or refuses to provide necessary information, as well as the occurrence of any other facts that limit or condition their appraisal work.

• d)

  Observe in each of their appraisal works a level of ethics and technical competence.

• e)

  Not publicly discuss appraisal work without the express authorization of the contracting party.

• f)

  Maintain a record of the appraisal reports issued, creating a file for each, which must contain, at minimum, the work papers, the appraisal reports, and their annexes.

• g)

  Point out in the appraisal report the discrepancies and deficiencies found during the conduct of the work and during the inspection visit.

• h)

  Fix to a given date the conditions and current situation of the property in accordance with current parameters, without including artificial incremental or decremental factors or expectations of what the property might be worth in uncertain future.

• i)

  Good treatment and respect toward the credit applicant.

• j)

  Deliver appraisals promptly and with quality.

• k)

  Preserve information from their appraisal work for a period of five (5) years, counted from the date of performance, in such a way as to permit its identification, location, and consultation.

• l)

  In the case that the appraiser is a legal entity, the signature of its legal representative must be included in the appraisal reports.

• m)

  Send semiannually to the Commission a detailed list of appraisals performed according to Annex 3 of the STANDARDS FOR THE REGISTRATION OF APPRAISERS OF MOVABLE AND REAL ASSETS, OTHER ASSETS AND CREDIT GUARANTEES OF SUPERVISED INSTITUTIONS, during the first fifteen (15) business days of the month following the close of the respective semester.

• n)

  Inform the Commission by the appropriate means, in the case of legal entities, of the institution, removal, or death of the General Manager or Legal Representative. o) Any other that the Commission may determine. CHAPTER III. APPRAISAL WORK

Valuation Report on Assets and Loan Guarantees. Appraisers shall issue a valuation report for each of the work performed; and shall deliver the appraisal report to the analyst of the Loans Department. TITLE VII REGULATIONS AND MODALITIES OF LOANS CHAPTER I GENERAL PROVISIONS

In order to visualize and expedite the process for obtaining a loan, the applicant shall be obligated to provide the information requested and that is necessary to qualify and approve the loan. It is understood that if within a period of ten (10) business days the required information is not completed, the procedure shall be disconfirmed and the application may be filed away.

All matters related to the internal procedure from the receipt of the loan application until the disbursement is made shall be conducted in accordance with the instruments established in the Loan Procedures Manuals. CHAPTER II. INTEREST RATE

It shall be the responsibility of the Specialists Board to define and establish the interest rates that will be charged on the loans granted, which rates shall be defined as variable rates in the respective contracts and shall be adjusted annually should 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 of return on 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 should this be the case, those from the next longer maturity term closest shall be taken as reference, nor less than seventy-five percent (75%) of the average rate of the last twelve (12) months in the private national financial system on consumer loans. The applicable interest rates shall be reviewed by the Specialists Board in the first six months of each year.

The interest rate for the OPTIONAL PROGRAM FOR THE CONSOLIDATION OF DEBTS OF THE HONDURAN WORKER (Legislative Decree No. 34-2013), shall be that approved by the Specialists Board and which is in effect as of the date of disbursement, said rate includes the percentage designated to establish the reserve for life insurance the Program for Protection of the Personal Loan Portfolio and the return of uniformity of the same. This return percentage must be calculated and accumulated in the borrower's account statement and recorded in a credit account.

In case a modification to the interest rate occurs, the Institute shall notify the interested parties by posting notices in visible places of the Institute's offices and/or publishing said notice, at least in a written medium of greater circulation in the country. For these purposes, the Institute shall implement the provisions contained in the "Standards for the Strengthening of Transparency, Financial Culture and Service to the Financial User".

In case of default of the loan attributable to the participant, the participant shall pay on the matured installments plus an additional amount to the originally agreed rate of two percent (2%) per annum as default interest, or the rate that the Specialists Board authorizes at that time; however, in case the default by the participant is not attributable to the same, the Institute shall manage with the State Institution the collection of the values in full; once such values are received, the Institute shall apply the corresponding adjustments. CHAPTER III. INSTALLMENTS

The Institute shall collect the monthly installments made by the borrower through payroll deduction made by the employer. The Employer by virtue of what is established in the Law of the Institute shall have the responsibility to carry out the transfer of the deducted installments, it being understood that the deductions of the Institute would be surpassed only by the obligations derived from judicial sentences and laws of greater hierarchy than the Law of the Institute.

The loan shall generally be recovered through level installments that include principal and interest except for those that require a single payment or other benefits. The first payment shall be deducted from the salary corresponding to the month following the month in which the loan was granted and so on successively until its total cancellation.

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

When the participant is terminated temporarily or permanently from the position for a cause other than death, the participant and the employer shall notify the Institute of this situation and consequently the Institute shall execute the guarantees established in the loan contract, guarantee of their contributions or thirteenth or fourteenth month of their salary and benefits in case there is any outstanding balance. After having executed said guarantees, the debtor shall 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 shall be made through the means designated by the Institute for such purpose.

If the participant retires from the Institute, the participant may pay the entire outstanding balance in advance or may pay the level installment according to the established amortization. CHAPTER IV. INCOME OF THE PARTICIPANT

The payment of any loan granted shall be deducted or amortized from the following income:

• a)

  From the net monthly income received by the active participant borrower.

• b)

  From income from the thirteenth and fourteenth month.

• c)

  From the net pension received by the pensioner or retiree.

• d)

  From the net income that the inactive participant has in a private company or own business. CHAPTER V. ADMINISTRATION OF DEFAULT

The Default Recovery Committee is created, which shall be responsible for defining the administrative guidelines for the recovery of extrajudicial and judicial default and shall be composed of: a) Chief of the Loans Division. b) Chief of the Legal Division c) Chief of the Loan Portfolio and Collection Department. d) Chief of the Loans Department.

When a borrower returns to service and contributes again to the Institute, the borrower may cancel through a single payment the amounts owed, or sign a payment agreement. In case the affiliate makes a payment and once their status is modified, the Credit Committee shall establish a payment plan for the cancellation of the default or shall calculate the total value to be refinanced and the Credit Committee may authorize a new loan.

In addition to the preceding articles, the following provision shall also apply to loans: The failure of the employer to deduct monthly installments shall not release the participant from his obligation to amortize the debt with its respective ordinary and default interest. In these cases, the participant shall be obliged to amortize pending payment installments through the procedure applied by the Portfolio and Collection Department. For this purpose, those participants are excepted from default interest penalties who can demonstrate that their employers made the corresponding installment deductions and that these were not entered into the Institute, which would generate default interest charges against the employer until the respective payment is made. In the event that the participant ceases employment without the employer having made the respective deductions, the employer shall be responsible for paying them.

For personal loans, in the case of a participant who incurs default on two (2) consecutive installments, the Portfolio and Collection Department shall proceed to conduct the respective collection efforts through appropriate channels, understood that after the months of default have elapsed, the Institute's quotations maintained on account shall be applied ex officio for the outstanding balance presented at that time, including capital, interest, insurance, or installments of the Personal Loan Portfolio Protection Program, and expenses. If a payment balance remains outstanding, the Institute reserves the right to execute appropriate legal actions against the borrower and guarantor, if applicable.

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

The accounting of loans that are considered uncollectible and that are duly qualified by the Commission shall be conducted in accordance with the regulations and technical guidelines issued by said Commission. The amount of the uncollectible balance must be recorded in the file of each debtor, and the information used for organization of loans and beneficiaries must be recorded in the system. Notwithstanding the foregoing, the fact that the uncollectible balance is applied against the reserve for uncollectible accounts shall not exempt borrowers or guarantors from meeting their responsibility to the Institute.

Loan applications that are in process 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 appropriate.

It is prohibited for the Institute's officials and employees to accept gifts in cash or of material value from those persons who are conducting credit or other proceedings with the Institute, either directly or indirectly, through family members or through third parties related to said officials and employees.

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

Members of the Credit Committee shall refrain from hearing credit files when they have a particular interest in the same or when the participants are within the first to fourth degree of consanguinity and first to second degree of affinity. In these cases, the interested party must communicate such circumstance to the Specialist Directory.

The Institute shall make provisions for doubtful debt reserves in accordance with what is established by the National Commission of Banks and Insurance.

All legal and technical instruments and other provisions relating to loans shall be subject to this Regulation.

Non-compliance with the provisions of this Regulation shall give rise to the application of sanctions established in the Internal Work Regulation, Law and General Regulation of the Institute's Law, Labor Code, and other applicable internal and external laws and regulations.

For purposes of this Regulation, the following is understood to mean: INJUPEMP: National Institute of Pensions and Retirements of Employees and Officials of the Executive Branch. IHSS: Honduran Social Security Institute. COMMISSION: National Commission of Banks and Insurance. CIC: Credit Information Center.

For purposes of this Regulation, the following is understood to mean: ACQUISITION: Action by which the participant acquires a new or existing dwelling for residential use. HOUSING EXPANSION: Material works executed for 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 his family unit. APARTMENT: Urban or suburban building that meets the characteristics of a dwelling with all basic services and installations necessary to be habitable. CONTRIBUTIONS: Amount of money that periodically the employer must contribute to the Institute and those that the voluntary participant makes to cover the corresponding employer proportion. COMMON AREA: Things and property of general or restricted use regardless of whether it is built or not, and according to whether they are destined for use and enjoyment of all Units or only some of them, it is composed of free common area and constructed common area. CONSTRUCTED COMMON AREA: Corresponds to constructions that remain in co-ownership, are indivisible areas and of general and common use. FREE COMMON AREA: Is the part of land that becomes property of all condominiums and is intended for general use and does not allow any construction. JOINT GUARANTEE: Personal guarantee of any natural person with demonstrated capacity to pay, that backs and responds jointly and severally for the borrower's credit. APPRAISAL: Opinion issued by an appraiser registered with the Commission, which consists of appraising a property to determine its current market price (realization value), analyzing in detail the legal, physical, and economic conditions that are its own and the external ones that can influence the sales price. DOMESTIC CALAMITY: Any family event, socioeconomic situation, or demonstrable medical condition whose severity affects the normal development of the participant's activities. PAYMENT CAPACITY: The financial capacity of the participant measured through his net cash flows that has his financial obligations of short and long term. CONDOMINIUM: Is a form of property built on real property voluntarily constituted by its owner or owners, susceptible to independent use by different owners and subject to special regulations whose operation implies the existence of particular or exclusive property with independent real estate registration and property for common collective use of an indivisible nature. HORIZONTAL CONDOMINIUM: The modality where each owner is the exclusive owner of his own land and of the building constructed on it and co-owner of common areas. MIXED CONDOMINIUM: Those where Vertical and Horizontal Condominium can be presented in the same unit. VERTICAL CONDOMINIUM: Modality by which each owner is the exclusive owner of the part of the building that corresponds to him, which can be made up of several floors and with common owners of all the land and buildings or installations of general use. 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. COMMISSION: The National Commission of Banks and Insurance. QUOTATIONS: Amount of money that periodically the participant pays to the Institute and that is deducted from his salary, subject of quotation. This includes amounts of money that exceptionally the participant who has voluntarily joined the Institute pays. SPOUSE: Man or woman who are part of a marriage legally recognized by the State of Honduras. QUOTATIONS: Amount of money that periodically the participant pays to the Institute and that is deducted from his salary subject of quotation. This includes amounts of money that exceptionally the participant who has voluntarily joined the Institute pays. CREDIT: Operation by which participants enter into the Institute and that is deducted from his salary that exceptionally the participant who has voluntarily joined the Institute pays. LEVELED INSTALLMENT: Fixed and periodic amount of capital and interest, whose amortization reduces the capital balance, according to the established payment plan. PORTFOLIO AND COLLECTION DEPARTMENT: Administrative area of the Institute responsible for control, monitoring, and recovery of credit portfolio. LOAN DEPARTMENT: Administrative area of the Institute, in charge of managing the placement of financial resources allocated for the credit item. SPECIALIST DIRECTORY: Superior body of administration and execution of the Institute. THE INSTITUTE: The National Institute of Pensions and Retirements of Employees and Officials of the Executive Branch. (INJUPEMP) COLLATERAL GUARANTEE: Guarantee that backs the granted credit and constitutes one of the secondary sources of payment, in case the borrower does not comply with the payment plan. MORTGAGE: Is the preferred real guarantee constituted by the borrower in favor of the Institute over the real property that is the object of the loan. INSURANCE INSTITUTION: Natural or foreign legal person domiciled in the country, authorized by the National Commission of Banks and Insurance that is engaged on a regular and systematic basis in marketing insurance or bonds. PARTICIPANT: Shall be understood by participant, the Active Participants, Voluntary Participants, Participants in Suspension, and Pensioned Participants due to Old Age and Invalidity of the Institute. ACTIVE PARTICIPANT: Any person who is working in the public sector and is registered with the Institute, in accordance with the Law. INACTIVE PARTICIPANT: Any person who ceases to work in an incorporated Institution and to whom the benefit of separation has been granted. VOLUNTARY PARTICIPANT: Any person who, after ceasing to work in an incorporated Institution, using the right conferred by the Institute's Law, contributes voluntarily through an agreement with contributions and quotations, in the time and manner provided in the Law. PARTICIPANT IN SUSPENSION: Any person who ceases to work in an incorporated Institution and who does not exercise his right to the benefit of separation. PENSIONED PARTICIPANT: Any person who enjoys a pension for old age or invalidity in the INJUPEMP. PENSION: Income paid with monthly periodicity to the Participant or beneficiary who is entitled in accordance with the Law. PENSIONED FOR OLD AGE: Any natural person in full enjoyment of the benefit of old age pension, legally granted or awarded by the Institute. PENSIONED FOR INVALIDITY: Any person in full enjoyment of the benefit of invalidity pension, legally granted or awarded by the Institute. AMORTIZATION PERIOD: Program of periodic payments of capital and interest, made by the borrowing participant to progressively reduce the outstanding balance of a loan until its total payment. REDUCED TERM: The decrease of the original term of a loan, as a consequence of its amortization in accordance with the contract. BORROWER: Any participant without distinction of gender to whom a loan is granted in accordance with this Regulation. LOAN: Amount granted to a participant in accordance with the terms and conditions established in this Regulation. URBAN PROPERTIES: Those that are located in populated centers and that are intended for housing, commerce, industry, or any other purpose located, as well as, unbuilt land, provided they have the general basic services of the populated center, and those that have completed and received their urban housing works, whether or not they are legally inhabited. OPTIONAL PROGRAM FOR DEBT CONSOLIDATION: Program to provide a real solution to the problems generated by the high indebtedness of the Honduran population under Legislative Decree No. 34-2013 containing the "Law of the Optional Program for the Consolidation of Debts of the Honduran Worker". READJUSTMENT: 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. Likewise, a credit granted to pay another credit due to problems with the debtor's payment capacity in the original operation shall be considered as such. REFINANCING: Is a credit that undergoes variations in its main conditions (term, amount, or rate) due to difficulties in the debtor's payment capacity. Likewise, a credit granted to pay another credit due to problems with the debtor's payment capacity in the original operation shall be considered as such. EX OFFICIO WITHDRAWAL: Administrative operation that consists of the application of quotations for the purpose of crediting or paying a delinquent loan. PROPERTY DAMAGE INSURANCE: Is a MANDATORY insurance to be subscribed by the participant to guarantee damage to the real property that is the object of the financing. LOAN APPLICATION: Form completed and signed by the participant to formalize his loan application, and with which the process of analyzing and verifying the applicant's eligibility for the requested financing begins. 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. SALARY OR WAGES: Is the monthly income regular compensation in money that the public participant receives as compensation for his work. CREDIT SUBJECT: Any participant who meets the requirements established in this Regulation. COMMERCIAL VALUE: Is the amount of money expected to be obtained in the event that the real property or other assets given as security for credit are sold, considering acquisitions/sales of similar properties, as well as the characteristics of the valued properties. REPLACEMENT VALUE: Is the amount necessary to replace a real property or other assets given as security, if they are partially damaged or destroyed by natural causes or by decision of the owners. APPRAISER: Registered professional who, by virtue of his higher education and experience, is duly qualified to perform the valuation of property given as security by a debtor or loan applicant. USEFUL LIFE: Estimated time of use of a building, provided that such use correctly fulfills the function for which the asset was created.

It is understood that the application of the provisions contained in this Regulation are independent of the regulations contained in other regulations in force in the Institute, since this Regulation governs specific matters that pertain only to loans.

The credit conditions applicable to the different loans of the Institute shall be defined under the best conditions of security, performance, liquidity, and equity based on market conditions and shall be established in the Manual of Procedures approved by the Directory.

This Regulation repeals the Regulations for Personal and Housing Loans approved by the Board of Directors on December 18, 2006 and January 4, 2007, respectively, as well as any provisions and regulations that have been issued subsequently in this regard.

This Regulation has been approved on this same date and shall be effective as of final publication in the Official Gazette La Gaceta. CREDIT CONDITIONS PERSONAL LOANS [TABLE WITH CURRENT CONDITIONS AND REFORMS] CREDIT CONDITIONS HOUSING LOANS [TABLE WITH CURRENT CONDITIONS AND REFORMS] SECOND: This Regulation shall be published in the Official Gazette "La Gaceta" for the corresponding legal purposes. THIRD: This Resolution is of immediate execution. BE IT ENACTED. Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of INJUPEMP, on the eleventh (11) day of the month of March of the year two thousand fifteen (2015). ING ZOILA PATRICIA CRUZ PRESIDENT MSc. MARTHA V. DOBLADO ANDARA SECRETARY 12 M 2015.