Atika Balal
26 June 2008
Abuja — An umbrella body for all licensed primary mortgage institutions in Nigeria, Mortgage Banking Association of Nigeria (MBAN), says it is prepared for the proposed reforms in the sector.
The MBAN Executive Secretary, Kayode Omotosho, said that MBAN is putting pressure to ensure that all Mortgage/Housing sector related bills are passed into law on time.
This, he said, would transform the National Housing Fund [NHF] to the National Housing Trust Fund [NHTF] Scheme.
According to him, the day-to-day management of the scheme will still be retained by the FMBN as a managing agent, but it will be subject to the scrutiny of the Board of Trustees. The bill will soon be passed by the National Assembly, Omotosho said.
He said the committee of Mortgage Institutions of Nigeria[COMIN],which comprises the Chief Executive Officers of all Primary Mortgage Institutions PMIs as well as the Central bank of Nigeria[CBN], Nigeria Deposit Insurance Corporation[NDIC], Mortgage Banking Association of Nigeria[MBAN] and other stakeholders have forwarded its recommendations to the CBN on the anticipated reforms.
"The final report from the CBN might not be radically different from our recommendations.
On recapitalization, we recommended a range between N500 million and N1 billion for a suggested period of 36 months to meet the capitalization requirement. MBAN does not expect less than 24 months from CBN in its final report on a capitalization range of between N500 million and N2 billion."
He added that the committee recommended some incentive that would minimize the pains of the consolidation exercise as done for the Universal Banking and Insurance Sectors.
"MBAN is striving to achieve what operates in developed countries where the mortgage sector contributes about 60% to their National Gross Domestic Product (GDP).
We are making efforts to encourage people to own houses and thereby generate employment. The main issue is that there would be a high incursion of universal banks into the mortgage housing sectors of the economy. But this may turn out to be of positive effect in the long run since PMI's can enter into collaborative arrangements with Universal Banks to finance housing estates' projects of huge costs."
While stating that the mortgage business is the provision of long term funds to finance home ownership he explained that the reverse is the case in Nigeria since there is a preponderance of short term funds.
"The situation is quite different in Nigeria. Only the National Housing Funds (NHF) Scheme is the source for long term funds in the country and just a small percentage of Nigerians are contributors to the scheme. To be eligible for the NHF loan requirements, one must have a regular source of income."
He added that other requirements for the NHF loan include one's ability to pay back within the period of 25 years depending on age while the NHF account must be opened with an initial deposit of N10, 000.
"The interest rate is as low as 6 percent per annum and the house being financed will be used as collateral. One must also save up to 10% of the loan amount as their equity contribution with a PMI and be registered with and be contributing to the National Housing Fund (NHF) for at least six months before applying."
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