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FMBN, mortgage banks in talks to deepen NHF operations

By Chinedum Uwaegbulam, Housing & Environment Editor
26 September 2016   |   2:39 am
Recently, FMBN had called on the Economic and Financial Crimes Commission (EFCC) to wade debts owed the organisation, especially misappropriated contributory funds under NHF.
Dr. Femi Johnson

Dr. Femi Johnson

…Total loan default hits N70 billion

With the mortgage sector still caught in a battle for survival and worse hit by the recession sweeping through the housing sector, the apex mortgage institution and Primary Mortgage Banks (PMBs) have begun discussion on affecting an overhaul of modalities to access the National Housing Fund (NHF).

The development, which gathered steam few days ago in Abuja between Federal Mortgage Bank of Nigeria (FMBN) and Mortgage Banking Association of Nigeria (MBAN), also dwelled on resolving the knotty issues surrounding unremitted funds to the apex bank.

In the meeting attended by senior staff of FMBN and the Acting Managing Director/CEO, Richard Esin and MBAN National executives led by its President, Dr. Femi Johnson, Esin lamented that the debt profile under the NHF has risen to N70billion, which greater percentage resides with the developers through the estate development loan scheme and sought measures to arrest the situation.

Recently, FMBN had called on the Economic and Financial Crimes Commission (EFCC) to wade debts owed the organisation, especially misappropriated contributory funds under NHF. The bank alleged that Mortgage Banks, which obtained funds for mortgage finances, for on lending to qualified NHF contributors, declined to disburse the funds to the applicants.

Similarly, the bank accused operators obtaining equity contribution from would-be mortgagors, but refused to deploy it in the provision of mortgage finances to the applicants’ benefit.  Some operators that their licences were withdrawn still encourage innocent and unsuspecting mortgagors to continue to repay their mortgages through fictitious accounts with no intention of remitting it.

However, sources told The Guardian that the meeting resolved two contentious areas.

ONE: FMBN and MBAN will agree on new operational dynamics that will deliver the timeline for any NHF application, for instance, whether is three months or a year,

TWO: that all mortgage banks have till September 30, to sort out individually their arrears of payment with FMBN and if any bank defaults, the name should be published in the dailies.

The source revealed that the association pleaded with FMBN to restructure loans owed by members, as the arrears of loan owed are not up to N3 billion.

He added that the proposed timeline or framework for the NHF processing, also restore confidence to the mortgage sector as Nigerians will be able to know what to expect from operators at any given time.

Meanwhile, Johnson said that the size of mortgage market has grown from N284 billion in 2010 to N518.76 billion in 2016, added that only about 5 per cent of the 13.7million housing units in Nigeria are currently financed with a mortgage.

He suggested the gradual reduction in interest rate in the economy from Current Monetary Policy Rate (MPR) of 14 per annum to a maximum of 6 per annum and removal of operational bureaucracy such as the reduction in cost of title transfer to a maximum of 1 per cent of property value; time to a maximum of three days, and procedures limited to only one Desk (1:3:1).

According to him, the government should subsidize construction targeted at vulnerable and low-end of the market as well as set robust operational guidelines to enhance profitability of mortgage banks and create of cheaper sources of funds.

MBAN president further advocated for the re-capitalisation of FMBN to N500 billion, assistance of CBN on the draft foreclosure laws being pushed through states for adoption to ensure quick passage and enhance mortgage business.

He also advised CBN to collaborate with MBAN on advocacy towards support for the sub-sector in order to enhance public trust and confidence, adding that the introduction of innovative housing finance products will extend the reach of formal mortgages.