‘Uniform underwriting standards will ease home financing’
The Federal Government through the Central Bank of Nigeria introduced My Own Home scheme as part of the Nigeria Housing Finance Programme (NHFP). Do you think the programme has lived up to expectation?
Yes, I do believe the programme lived up to its name.
How? The programme was established, specifically to catalyze the housing industry – which simply meant to encourage the market to start discussing, creating and implementing programmes to increase mass awareness regarding housing solutions, and to initiate programmes and products for the market to then absorb and develop into sustainable programmes. We can see the results in the increase in media coverage, mass discussions and loan applications in the market.
The Nigeria Mortgage Refinance Company (NMRC) is one of the physical establishments of the programme, and one of its core activities was to serve as the implementing agency for programmes incubated by the Nigeria Housing Finance Programme (NHFP), which it is doing quite effectively.
The NHFP is supposed to be a catalytic programme to jump-start the housing market and give the banks capacity to disburse loans to home seekers. When will this aspect of the activities commence?
This is actually a little incorrect, so allow me to clarify. There has been a miscommunication about the mandate of the NHFP unfortunately. The programme was established to catalyze the market through programme and policy development, not to provide funding for the market to use in giving out loans.
The market is expected to be able to better source and loan out funds due to policy support, long-term loan programme development, and a more favourable market environment to incentivize investors to put their money in the market.
So that was already largely achieved, and we are now seeing the effects on the market from the increase in lending activities year after year, since the programme commenced through its sunset on December 31, 2018.
What will be the place of private sector in ensuring sustainable housing finance?
The private sector is the only place that can develop sustainability in any sector in any country. As we know, government subsidies are vulnerable in that they must end at some point, leaving the market unable to meet the expectations of incoming borrowers relying on such subsidies.
Also, they skew the true condition of the market, leaving it less unable to sustain itself once the subsidies are pulled out.
The private sector should ideally use government policies and favourable programme development to fashion out niche programmes and speak for itself in the promotion of its expertise, capacity and attractiveness so investors will favourably consider their requests for funding.
There has been uneasy calm about the performance of the mortgage industry in Nigeria. With your experience in the United States, what are the major challenges facing the sub-sector?
As I have stated multiple times in the past, we do ourselves a great disservice when we try to run before we walk. The US system is benefitting from over 100 years of trial and error. Our mortgage industry is less than two decades old. I actually believe, the building blocks have now been properly laid through interventions and policy development. I also know that the industry has largely been working extremely hard to grow its business, so I am confident that in five to 10 years, we will be saying more positive things about the industry. A little more patience and continued hard work will see us through.
Affordable housing has become a slogan often misinterpreted by the populace. What is affordable housing?
Affordable housing simply means housing that can be successfully purchased and maintained by the intending buyer. What is affordable to me is a derivative of what I would qualify to purchase under the specific guidelines for housing finance programmes designated “affordable”. We must be careful however, to always distinguish and separate “affordable” housing from “social” housing (which is basically provision of adequate housing for the lower-income segment of the population, who would ordinarily not be able to access such housing).
The Federal Government of Nigeria has in place some mortgage institutions and agencies, the likes of the Federal Mortgage Bank of Nigeria (FMBN) and Federal Government Staff Housing Loan Board (FGSHLB) and Family Homes Funds. How do Nigerians at home and in diaspora, particularly in USA, enjoy these facilities?
The only way is to continue to create mass awareness opportunities like the forum being organized by the Housing Circuit magazine and the Nigerian Consulate in the US. It is critical to provide cogent, accurate, unbiased and useful information for our communities in other countries.
The Mortgage Bankers Association of Nigeria (MBAN) and their collaborators are also conducting homebuyer awareness campaigns for Nigerians in the UK, US and Canada.
All Nigerians are welcome to Google such activities and attend them for further information on what is available to them. Homebuyer education should also continue to be encouraged, using the recently deployed Uniform Underwriting Standards (of which there are four versions) for adequacy of preparation for mortgage applications.
Nigerians in diaspora, USA inclusive, are willing to invest in real estate in Nigeria, but are ignorant of the existence of credible platforms. What are the pitfalls in real investment and how will the Real Estate Investment and Mortgage Finance in Nigeria conference help Nigerians abroad to own homes?
There has been an unfortunate crisis of confidence due to past activities of unscrupulous people that have taken advantage of intending buyers, who were unable to come home and complete their home purchase transactions personally. There are now Uniform Underwriting Standards (UUS) developed specifically for Nigerians in diaspora, that should drastically ease access to financing for home purchase in Nigeria, and we will discuss its salient features during the conference.
The message of the conference, however is mainly that there are now established processes and corporate operators, as well as legal protections for such transactions and to provide resources for such intending buyers to access in their search for legitimate transactions and platforms for such transactions.
The fact that the conference is being held with the endorsement and patronage of the Nigerian Consulate only enhances its critical positioning in the information sector, and the value of the Housing Circuit vision in organizing it. Definitely everyone that attends will leave with the most current information on home ownership opportunities in Nigeria as well as practical steps to prepare for mortgage finance application and approval in the system.
What will be the expectations from the conference, which is holding in collaboration with the Nigerian Consulate, New York?
The conference is a critical forum to encourage the meeting of minds between the Nigeria housing system operators and Nigerians in diaspora.
Again, the goal is to increase confidence in the established housing sector and encourage our brothers and sisters to re-consider the opportunities available in Nigeria, not just for homes for their personal use, but also for investment and income generation projects. It is a known fact that real estate investment is now a global phenomenon, and in fact there are investors in Nigeria from all over the world today, so the conference is expected to contribute to a mind-set change, encouraging Nigerians in diaspora to include property back home in their investment portfolios.
Finally, the conference will provide opportunity for interested investors to network and deliberate with stakeholders in the Nigerian housing sector for information on their projects and the processes for engaging to own properties in the most lucrative developments in the Nigerian market.
Finally, there will be a presentation on the four Uniform Underwriting Standards in effect in the Nigerian mortgage system, which are: Uniform Underwriting Standards for Employees with formal (salaried) income; Uniform Underwriting Standards for the Self-Employed borrower; Uniform Underwriting Standards for Non-Interest mortgages and Uniform Underwriting Standards for borrowers in diaspora.
Can the forum lay groundwork for the launch of social housing in Nigeria?
The forum should definitely encourage the dissemination of information on all levels of housing – luxury, regular, affordable and social – in Nigeria.
The Family Homes Fund is expected to present information on financial investment opportunities for Nigerians, especially those who invest with ethical mindset. Nothing can be more ethical than using one’s funds for the provision of housing to the less fortunate, while receiving a yield typically better than what would be offered on IRAs, 401ks and the like, in diaspora.
The conference platform also includes those Nigerians overseas, who are employed in menial jobs with low income, yet want to have a place to call their own at home. It will also serve as an opportunity to create a database of attendee Nigerians and their income levels, to assist in advocacy for social housing availability to all Nigerians, whether at home or in diaspora. This is a very exciting concept, and it is quite gratifying to see the leadership being provided by both the Nigerian Consulate and the Housing Circuit magazine for the continued progress and prosperity of Nigerians in diaspora.
What is really the challenge in implementation of social housing in Nigeria?
The main challenge of social housing in any system is that it has to be funded with money from somewhere. Government subsidies are usually the primary source of such housing, but we must accept that government money is not infinite. There are multiple issues to be addressed in any “developing” economy – from housing to power to transportation to agriculture, education etc. so the government can only allocate so much to each sector.
I must commend the government on the review and redesign of the social housing system in Nigeria though. The Federal Mortgage Bank of Nigeria (FMBN) is now offering loans with zero down-payment to qualified buyers up to N5 million.
Also, the Family Homes Fund (FHF) is a government intervention designed to provide low-funding possibilities to developers as well as financing support to qualified borrowers.
A Nigeria Mortgage Guarantee Product was in development at the end of 2018, and I hope it is successfully implemented very soon.
So many programmes and policies have been designed for the country, and it will be a pleasure to join my voice in spreading awareness about them.
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