The Nation Newspaper

Tag: mortgage

  • Mortgage costs fall by £1,700 in four weeks

    A mortgage rate war among banks has reduced the cost of a typical home loan by £1,700 in just four weeks, figures show.

    Dozens of new deals have been unveiled since the turn of the year, offering borrowers lower rates and cheaper fees. The latest round of cuts made by First Direct, allows borrowers to lock into a 2.89 per cent rate for a decade – a record low for such a long period.

    The announcement follows similar moves this week by HSBC, Barclays and Norwich & Peterborough building society.

    Calculations for The Telegraph showed families who remortgaged a £200,000 loan would be as much as £1,689 better off over the next half-decade compared to a month ago. Costs are being driven down by fierce competition between lenders and indications that the Bank of England will keep interest rates low for longer. Mortgage brokers are predicting even cheaper deals to come, with two-year rates tipped to fall below one per cent and five-year deals below two per cent “within weeks”.

    Mark Harris of broker SPF Private Clients, said: “Lenders are keen to advance more money this year and they’re cutting their prices to attract customers. Banks will hope to make money by selling customers other products such as current accounts and credit cards.” Aaron Strutt, of Trinity Financial, another broker, said: “For fixed rates to go below 1 per cent would be extraordinary, but that now looks likely to happen very soon.”

    The best new deals since January include a 1.19 per cent two-year fix from HSBC for someone with a 40 per cent deposit, down from 1.29 per cent before. For someone with an 80 per cent deposit the best two-year rate has fallen from 1.98 per cent to 1.79 per cent, following a move by Marsden Building Society to undercut the Post Office.

    The cheapest five-year rate is First Direct’s 2.28 per cent, which was one of a number of cuts made on Friday. The biggest savings from the mortgage rate war were for people with a 10 per cent deposit, figures from broker London & Country showed.

    A month ago, borrowers could get a five-year loan from Skipton Building Society for 3.99 per cent with a £1,055 fee. The cheapest rate is offered by Norwich & Peterborough, which charges 3.84 per cent with a fee of £1,285. Over the course of the loan, the borrower will repay £1,689 less.

    The calculations showed every type of borrower taking a mortgage today would be better off than in January. The rate reductions would give them at least an extra £200 over the course of their loan, regardless of the size of their deposit. Mr. Harris said banks were able to offer cheaper deals partly because the outlook for interest rates had changed.

    The Bank of England voted to hold interest rates at 0.5 per cent for the 71st successive month. Economists said falling inflation, driven by the slump in oil prices, had reduced the urgency for rate rises. Martin Beck, an economist at the EY ITEM Club, the respected financial forecaster, said: “We are of the view that there won’t be an interest rise in 2015.”

     

    • Culled from The Telegraph

  • Mortgage lending hits six-year high

    Mortgage lending in the United Kingdom (UK), rose to its highest level in six years at the end of last year.

    But, first-time buyers returned to the housing market, figures from banks and building societies showned last week. However, the number of new buyers is still much lower than before the credit crunch, and the data came as separate official analysis showed how far the number of young homeowners has collapsed over the past decade.

    Despite a slowdown in sales in the final three months of the year and fears tighter rules on lending introduced in April would slow the market, an estimated £205.6billion was lent during the year, the bulk of it for house purchases, the Council of Mortgage Lenders (CML) said. It was an increase of 17 per cent on 2013’s figure of £176billion and the highest level of lending since 2008. The increase was driven by strong lending in the spring and summer as confidence returned to the housing market, driving up activity and prices in many parts of the country, and lenders became more willing to offer loans to borrowers with small deposits.

    The CML’s Chief Economist, Bob Pannell, said the number of first-time buyers had increased in 2014, but remained below the high seen in 2007. “First-time buyers were a key driver, helped by government initiatives such as Help-to-Buy. As a result, the number of first-time buyers topped 300, 000,” he said. “While a far cry from the half-million that we might regard as ‘normal’, this was the highest number of first-time buyers since 2007.”

    Analysis by the Office for National Statistics, also showed how young people have dropped out of home ownership over the period since 1980. The report revealed that as recently as 1991, around 65 per cent of 25-to-34-year-olds in England had bought their own home, but by 2012 – the latest figures available – the percentage had declined to less than 45 per cent. Among 35-to-44-year-olds, the proportion of owners was also down sharply, from almost 80 per cent to around 65 per cent. The report showed that through the 1980s and into the 1990s one in three 16-to-24-year-olds could afford to buy their own home, compared with one in 10 today.

    The ONS said the number of UK first-time buyers peaked nearly three decades ago in 1986, when more than 600,000 young people climbed on to the property ladder.

    •Culled from The Guardian UK

  • No longer at ease with weak mortgage banks

    No longer at ease with weak mortgage banks

    The revocation of licenses of over 25 mortgage banks unable to meet the new minimum capital requirement stipulated by the apex bank is an attempt to separate the boys from the men, reports Ibrahim Apekhade Yusuf 

    These are certainly not the best of times for a good number of the mortgage banks operating in the country presently.

    Reason: their attrition rate these days is becoming as rapid as they are fighting hard to survive the biting credit crunch in the system.

    For economic watchers particularly, the revocation of the operating license of over 25 mortgage banks by the Central Bank of Nigeria (CBN) is a pointer to hat fact that all is not well in the sector.

    The revocation was communicated by the CBN via its gazettes dated 14 and 19 November, 14 and 19, 2014.

    Specifically, among the licenses withdrawn is 16 Primary Mortgage Institutions that failed to meet CBN’s stipulated 30-days deadline to show proof of their existence and/or evidence of operations in the immediate past one year, recently.

    In the course of the recent examination of all licensed Primary Mortgage Institutions (PMIs) carried out by the CBN, 16 PMIs were not found at their last known addresses.

    The Nation however learnt that the firms most affected were those that have unexpectedly closed shops or have ceased to carry on the business for which they were licensed for a continuous period of six months, as well as failed to render monthly returns to the CBN for at least six consecutive months, in contravention of Section 58 (1) and (4) of the BOFIA, 1991.

    The NDIC has subsequently been appointed the provisional liquidator to wind up the affairs of the closed financial institutions, according to a public notice by the corporation, a copy which was made available to The Nation.

    The corporation said it would soon make public announcement and publication on the verification and payment of insured deposits for depositors, creditors and shareholders of the affected banks.

    Affected PMBs

    According to the CBN, among the affected institutions are Alliance and General Mortgage Limited, Benhouse Building Society, Consolidated Estate Building Society, Cymon Savings and Loans, Euro-Banc Savings and Loans, First Amalgamated Building Society, First Capital Savings and Loans, Global Building Society as well as Harvard Trust Savings and Loans.

    Others are Home Foundation Savings and Loans, Jubilee Building Society, Lagoon Homes Savings and Loans, Leverage Home Savings and Loans, Mid Land Mortgages, Mortgage PHB, MultiBlanc Savings and Loans and Mustard Seed Mortgage.

    Others include Omega Savings and Loans, Password Savings and Loans, Post Service Savings and Loans, TMC Savings and Loans and Crystal Edge Microfinance Bank.

    Problem of mortgage banks

    To many analysts, among the mortgage operators, it is known fact the sector is facing a harsh economic downturn, notwithstanding the global economic crisis as the scarcity of long-term funds is hitting them hard. The short-term funds are mostly sourced from the money market, where commercial banks also complete for funds.

    Their cash flow is also hampered by their inability to tap into the National Housing Fund (NHF) for their contributors through FMBN, and becoming a window for the collection of the fund, which has prompted umbrella body of the mortgage banks -Mortgage Banking Association of Nigeria (MBAN) to liaise with CBN and local financial institutions and international development agencies in planning to float a liquidity facility company.

    Official estimates show that about 65 PMBs were in operation before the recent withdrawal of licenses, which may have further dip the number of operators to about 40 banks. But operators say the figures are much lower than that number. About 292 PMBs were licensed between 1990 and 1998.

    In July 1997, the Federal Mortgage Bank of Nigeria (FMBN), which later handed over 195 firms to CBN in 1998, revoked the licenses of 97 of the firms. The initial minimum share capital for PMBs was N5 million, rising first to N20 million and later N100 million.

    Statistics released by CBN shows that loan and advances in the sector between 2008, 2009 and 2010 are N108, 531,488, N121, 290,217 and N124, 165,992 respectively; deposits for he same period are N166, 234,932, N151, 122,301 and N168, 577,083 respectively and shareholders’ funds are N70, 345,140,N86, 614,813 and N80, 341,095 respectively.

    Worries over new capital benchmark

    Under a new guideline, mortgage firms had been categorised into national and state mortgage firms. While the former are allowed to operate in any or all parts of the federation after the payment of a new N5billion minimum paid up capital, the state PMBs are restricted to only one state if they satisfy payment of N2.5billion capital requirement.

    Several PMBs were believed to be lagging in terms of meeting up with the new capital requirement, thus making them easy target for the CBN’s sledge hammer.

    Speaking exclusively with The Nation recently, Mr. Anthony Okechukwu Ewelike is the pioneer Managing Director/Chief Executive, AG Homes Savings & Loans Plc while noting that his firm is a fledging primary mortgage bank with an asset base of over N8billion, he also admitted that shoring up their capital base has been a rather herculean task.

    “The toughest challenge for me has been how we recapitalise the company. It’s quite a tough thing because it’s by government fiat, Central Bank fiat. You must capitalise or you go under,” he said.

    Expatiating, he said: “Today, it’s been difficult with the climate of investment we have. You see what is happening in the oil market, what the capital market is doing, as such, investors are very skeptical and we have seen a lot of banks shut down. So before you can convince someone to come, he must believe that you have something to offer him or her. So, the toughest challenge I have had as the CEO AG Homes Savings & Loans Plc is how to recapitalise the bank.”

    Nigerian Mortgage Refinance Company to the rescue

    It is however instructive to note that the federal government in its determination to turn the tide in the mortgage sub-sector had at last quarter conceived the idea of a special refinancing vehicle called the Nigerian Mortgage Refinancing Company (NMRC). The NMRC vehicle was set up by the government in collaboration with the Federal Ministry of Finance and the CBN, after several postponements in the past.

    The company is also supported by the World Bank, which approved $300 million (about N48 billion).

    The NMRC is expected to help increase liquidity in the housing sector, provide secondary market for mortgages and thereby increase the number of people able to purchase or build homes at an affordable price in the country.

    A report by the Federal Ministry of Finance said 14 pilot states had been earmarked for the programme, adding governors of the states had agreed to provide and fast-track land titles, foreclosure arrangements and service plots.

    The company is also expected to help create more than 200, 000 mortgages in the next five years at an affordable interest rates.

    “To provide for those at the lower end of the economic ladder, there will be an expansion of mass housing schemes through a restructured Federal Mortgage Bank and other institutions to provide rent-to-own and lease-to-own options,” it said.

    The ministry said that the idea would help many Nigerian families to own a home.

    On the modus operandi of the NMRC, the Chief Executive Officer NMRC, Mr. Sonnie Ayere said mortgage loan applicants must provide 20per cent equity.

    “Right now, we say 20 per cent for a normal salary worker, and for payment, people have to pay through deduction at source for the public sector and even possible for the private sector.”

    According to Ayere, the criteria will be the guidelines that a mortgage lender will have to meet to be eligible for loan, adding that for a property to be eligible for refinancing, it must have tenure of 20years.

    Vote of confidence for NMRC

    In the view of Managing Director of ASO Savings and Loans, Hassan Musa Usman, he believes the NMRC will open a new vista of hope in helping developers in the country have funds to provide more housing units.

    He expects that the company would help in the quest to increase housing stock in the country.

    According to him, “it means that we as mortgage bankers can now create more mortgages for 10 to 20 years or so, knowing very well that whatever we create, we can sell up to the Mortgage Refinancing Company.

    “The NMRC will in turn issue long-term bond in the market, as it can afford to wait for the entire money (loan given out) to be paid. But we (mortgage banks) can pay up our own cash, go back and access new loans. What this means is that, for instance, with just N100 million, I can conveniently go and create loans worth N100 billion, package them, and after three months, sell them off to MRC. Then I can get loan worth N100 million from them and afterwards go back and create fresh loans. This can be done over and over again.”

    Echoing similar sentiments, Ewelike said the advent of the NMRC is a welcomed development for a sector in dire need of a lifeline.

    “I can tell you that the special purpose vehicle for mortgage which the NMRC is all about will help to boost the sector to a large extent, especially help achieve the federal government’s quest to improve housing delivery for the growing populace, ” he stressed.

    President, Mortgage Banking Association of Nigeria, Femi Johnson is also on the same page with Ewelike.

    According to him, the recapitalisation of mortgage banks was a pointer to a better mortgage finance system in the country and that with the NMRC, “loans at lower interest rates of 13 to 15 per cent for 20 years. So, definitely, there will be an improvement when all these monies come into the system. There will be new long term funds that are going to come into the system and so these banks will be able to finance mortgages for longer terms.”

    The NMRC, Johnson noted, already has loan of about $250 million at 0.75 per cent interest for 40 years and with a 10-year moratorium from the World Bank. The mortgage company will raise money from the capital market through government guaranteed bonds.

    He stated, “The NMRC will be able to raise money that pension fund will be able to invest in. Today we have about N4 trillion to N5 trillion of pension funds in the market, and once the fund is government guaranteed, Pension Fund administrators will be able to invest in it; so, this money will be channelled into housing.

    “So, definitely there will be a lot of money channelled into housing and housing finance this year; the outlook is bright.”

    A mortgage broker, Mr. Oloyede Obatoyinbo was also optimistic that the recapitalsiation of the mortgage sub-sector by the government in form of the special vehicle will help the cause of the sector tremendously, as more mortgage loans will be available as there will be more competition in the industry. “There may likely see a drop in interest rates, but the success of this whole thing depends largely on the activities and performance of the Nigerian Mortgage Refinance Company (NMRC),” he said.

    Defining moments for mortgage banks

    According to analysts, the new rule of engagement set by the apex for mortgage banks may be a good omen for the sector after all.

    It will be recalled that recently, following the recapitalization exercise of the CBN, 36 mortgage firms got licenses to administer mortgage portfolio in Nigeria. 10 mortgage firms were approved to remain in business with a national license having met the N5billion minimum capital; 26banks to operate with a state license for meeting up with only N2.5billion capitalisation, while others were delisted.

    A circular issued by the CBN revealed the following PMIs namely Abbey Platinum, Mayfresh, Jubilee Life, Aso, Trust Bond, Sun Trust, Infinity Trust, Haggai and Imperial Homes attained the National License status.

    On the list of the remaining approved 26PMIs by the CBN since only ten names were released, a source in CBN which asked not to be named because he is not authorised to speak on behalf of the bank said no list has actually been released to the public by the CBN for the 26PMIs and it will be incorrect for anyone to speculate.

    “There is really no official list from the CBN yet and it will be incorrect for me to say this PMI is on the list and that one is not there. We can only wait till an official list comes out from the CBN,” he said.

    As to whether the public should expect a significant impact now that the recapitalisation process seems to have been concluded and approved PMIs given the nod to start operations, the MBAN boss downplayed the expectations of market watchers about what had happened.

    “There can’t be any serious impact. The mortgage banks have recapitalised since December last year and if there has not been any serious impact on mortgage administration in the country since then I don’t think anything will change with just the national or state approvals given to PMIs,” the further explained.

    “Although it is expected that with the recapitalisation there will be more mortgage loans available, there will be more competition in the industry that may likely see a drop in interest rates, but the success of this whole thing depends largely on the activities and performance of the Nigerian Mortgage Refinance Company (NMRC).”

  • Govt directs mortgage institutions to process 66,400 applications

    Govt directs mortgage institutions to process 66,400 applications

    The Federal Government has instructed primary mortgage inistitutions (PMIs) to process the applications of the over 66,000 Nigerians who applied for the 10,000 Nigerian Mortgage Refinancing Company (NMRC) housing programme.

    Addressing journalists in Abuja yesterday, the Coordinating Minister for the Economy and Minister of Finance Dr. Ngozi Okonjo-Iweala said “due to the over subscription (for the scheme) a decision has been taken to give all applicants to the lending members of NMRC to share on a pro-rata basis. Lending members of NMRC are expected to have the refinancing window of up to 20 years.”

    The initial offer of 10,000 mortgage application was over subscribed by 66,402 Nigerians who showed interest in the home ownership programme of the NMRC.

    Okonjo-Iweala directed the 17 PMIs and four commercial banks involved in the mortgage exercise to share the 66,402 applications among themselves and prequalify those who meet the criteria for accessing mortgage facilities under the NMRC initiative and get back to the government in eight weeks.

    According to her, President Goodluck Jonathan is monitoring the implementation process and assured both mortgage institutions and applicants that there is enough money to fund the 66,000 applications for now.

    Applications for the 10,000 housing programme under the NMRC closed on the 5th of this month this year with 66,402 applications received from “exceedingly excited Nigerians with applications coming from the 36 states and the FCT”.

    She said 63 per cent of the applicants were male while 37 per cent were female. She said people “tend to apply individually as 89 per cent applied in their own names while only 11 per cent were joint applicants as couples.”

    Those in the 31-40 years age bracket submitted the highest number of applications suggesting interest among the actively working group of Nigerians.

    Nigerians she said “showed that we prefer three bedroom flats/houses, with 62.7 per cent of applicants applying to acquire this property type. 32 per cent wanted two bed flats and a small percentage applied for one bedroom flats and one bedroom self-contained flats.”

    The programme she noted is for people who do not own a home, and from the information given by the applicants, “96 per cent of applicants are living in rented houses; most people (51 per cent) applied for buildings in Abuja with 18 per cent of applicants opting for Lagos. 92 per cent of the applicants have stable jobs while eight per cent are self employed.”

    Already, mortgage lenders have pre-qualified some people and asked them to look for their houses. She commended mortgage institutions for keeping to the time they said they will need to use to process applications which is eight weeks and also reducing the criteria for accessing the mortgage from 15 pages of information to just two pages.

    The mortgage lenders are expected to sift through the applications and analyse and pre-qualify all applicants culminating in the amounts each lender is willing to advance to the applicant.

  • FMBN mulls Diaspora mortgage scheme

    FMBN mulls Diaspora mortgage scheme

    The Federal Government, through the Federal Mortgage Bank of Nigeria (FMBN), is finalising a process that will build houses for Nigerians living abroad in the country, its Chief Executive Officer, Mr. Gimba Ya’u Kumo, has said.

    He told The Nation in Abuja that the initiative comes under the aegis of the Diaspora Home Ownership Scheme, now nearing completion.

    Kumo said: “I’m happy to let you know that we are for the first time trying to launch what we call the Nigerian Diaspora mortgage programme. This is a programme that will make Nigerians that are living outside the country to have houses of their own in their country of origin.”

    Already, Kumo said the mortgage institution was seeking to raise funds from international agencies, especially from Asia, to execute the programme.

    He said payment for the homes would be tied up to the VISA and Mastercard gate of the owners, adding that a consultant has been appointed to work out the modalities with the appropriate bodies. He said it would be made public and launched in New York, United States (U.S.).

    He further said preparatory to the initiative, the bank has been privileged to deliver three lectures in the U.S. on the scheme and one in London, all aimed at sensitising and testing the waters before the commencement.

    According to him, the bank has recorded tremendous success since he took over its management in December 2010. For instance, Kumo said the first thing his team did was to strengthen the collection process of the mortgage firm, as it was able to move the collection of the National Housing Fund (NHF) by almost 300 per cent, that is, from N700 million in 2010 to the present collection level of N2.5 billion. Besides, the bank’s operation has been upgraded from manual operation to fully computerised institution, thereby making it possible to institute a new electronic collection for the NHF, that is, NHF e-collection.

    Kumo said there was need for greater participation and integration of other groups and individuals into the government housing delivery scheme, especially through the cooperative societies.

    He said in the 22-year-old FMBN, 45 per cent of its portfolio came through mortgage and estate development schemes, which were achieved in the last three years – a feat he attributed to the collaboration between the bank, Nigerian Labour Congress, Trade Union Congress, Nigerian Employers Consultative Association and the Nigerian Union of Journalists (NUJ).

    He admitted that the establishment of the Nigerian Mortgage Refinances Company (NMRC) in January, would further boost housing delivery in the country.

    Kumo said the organisation had been able to deliver 6, 100 houses across the nation.

  • Easy mortgage for Nigerians in diaspora

    Easy mortgage for Nigerians in diaspora

    •As FMBN rolls out guidelines

    Barring any last minute change in plans, the Federal Mortgage Bank of Nigeria (FMBN) will soon commence the Diaspora mortgage model to serve the needs of Nigerians abroad who want to own homes in the country.

    Managing Director of the Bank, Gimba Ya’u Kumo, who disclosed that the Nigeria Diaspora Loan Scheme was developed in order to broaden the delivery channels for mass housing through the National Housing Fund Scheme (NHF) as provided by its core mandate.

    Kumo disclosed that the FMBN is currently concluding arrangements on securing an international payment gateway through which the funds will be channelled.

    He said, “We want to carry everybody along once it becomes operational and that is why we are seeking to secure an international gateway payment means through Visa and MasterCard.

    “Already, we have had two meetings with them and also liaising with the Central Bank of Nigeria for necessary assistance and approvals.”

    The FMBN boss said that the money from the product will be domiciled in the CBN because it is foreign currency and also to give the bank the opportunity to use it as security to borrow internationally to fund the project.

    Part of the guidelines for accessing the product, Kumo disclosed, is that prospective homeowners would be required to make monthly contributions of the equivalent sum of US $100 over a minimum period of three years. The cumulative monthly contributions, he said, is meant to contribute savings to the contributor which is refundable with interest upon exit from the NHF scheme in accordance with the NHF Act.

    The product is offered to Nigerians in the Diaspora who satisfy conditions of being above the age of 18 years, who earn regular income and have evidence of the right to reside in their country of residence.

  • Lawyer presents book on mortgage law

    Lawyer presents book on mortgage law

    To bridge knowledge gap in banking law and legal aspects of mortgages, a lawyer, Pat Anyadubalu has launched the book:  Banking Law and Mortgages in Nigeria.

    Anyadubalu said he wrote the book due to the absence of a banking law book written by a core legal practitioner. He said most of the books available on the subject were written by academics, who do not write for the laymen.

    He said: “The book is out to sensitise the government to encourage private mortgage, where property owners would look at issues of rent in which its constant payment should be able to equal to mortgage.”

    At the presentation in Lagos were House of Representatives Speaker Aminu Tambuwal, represented by Dayo Bush-Alebiosu, Chief Judge of Anambra State, Justice Peter Umeadi, and Senator Chris Ngige.

    Others are House of Reps Deputy Chairman on Information, Hon. Afam Ogene, who chaired the event, former governor of Enugu State, Dr. Okwesilieze Nwodo, represented by Mr. Ben Akah, Mr. Philip Balepo, Mr Taiwo Taiwo, who reviewed the book, among others.

    Senator Ngige said Anyadubalu has left a trail after his stint as a lawyer in banking industry, describing the lawyer as a professional banker and legal practitioner.

    Justice Umeadi, who praised author for the “brilliant work”, said there were a few lawyers that had sufficient knowledge about mortgage law. He said he would make copies of the book available to all judges on the Anambra State bench, promising to also extend to lawyers, who may want to know more about mortgage law.

  • CBN bars mortgage banks from leasing

    CBN bars mortgage banks from leasing

    The Central Bank of Nigeria(CBN) has spelt out operating modalities for microfinance banks (MfBs), primary mortgage institutions (PMIs) and finance companies.

    In a statement, the CBN said PMBs shall maintain a minimum ratio of 50 per cent of mortgage assets to total assets, 75 per cent of which must be residential mortgages.

    Also, a minimum of 60 per cent of PMBs’ loanable funds, defined as total deposits plus on-lending loans, shall be devoted to the creation of mortgage assets.

    According to the CBN, the PMBs are not to engage in leasing business or take proprietary position in real estate development.

    “The maximum loan from a PMB to an individual shall not exceed 5.00 per cent of its shareholders’ funds unimpaired by losses and 20 per cent in the case of a corporate body. All PMBs shall be required to comply with the uniform underwriting standards for mortgages and commercial real estate financing,” it said.

    For MfBs, the CBN said the sector’s loan portfolio would, at all times, comprise a minimum of 80 per cent micro-loans and a maximum of 20 per cent macro-loans. The maximum loan by an MfB to any individual borrower, director or related borrower is not exceed one per cent of the shareholders’ funds unimpaired by losses, while a maximum of five per cent is prescribed for group borrowers.

    Also, insider-related loans shall not exceed five per cent of the shareholders’ funds unimpaired by losses. For this purpose, loans under a staff scheme shall not be taken into account. State and local government’s equity participation in MfBs is allowed under the revised guidelines to facilitate financial inclusion.

    However, all such investments must be gradually divested to private-sector investors within a maximum of five years.

    In addition to the Head Office, Unit MFBs are allowed to have not more than one branch within the Local Government Area approved for their operation. This is subject to the availability of free funds (shareholders’ funds unimpaired by losses, less fixed assets and long term investments) of at least N20 million and maintenance of the prescribed minimum prudential requirements.

    The minimum capital requirement for finance companies (FC) during the programme period shall be N100 million only. All existing FCs shall be required to comply with this requirement 18 months.

    The minimum amount that a finance firm can borrow from any one person or corporate organisation is N50,000. Conversely, the maximum loan by a finance company to any person or maximum investment in any venture shall be 20 per cent of its shareholders’ funds unimpaired by losses.

  • Thoughts on a welcome mortgage

    Thoughts on a welcome mortgage

    ‘The worst form of inequality is to try to make unequal things equal.’ ——Aristotle

    Jacques-Anatole-François Thibault, who is universally known and addressed as Anatole France was that French writer of satire and fantasy that won the Nobel Prize for Literature in 1921. Though not a lawyer, he was exercising his artistic freedom when he wrote: ‘The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges.’ He must have realised shelter as being, alongside good hospitals and education, a most important thing that a society needs. Homelessness is a serious problem in any society because a house, no matter how lowly, is a home when it shelters the body and comforts the soul.

    Anatole France’s statement in our clime seems idealistic because its applicability looks more real in developed societies of the world. In our society, the statement has no applicability as only the rich amongst us could boost of living in good homes and environment while many of the lucky poor live in shanties/slums just as several other unlucky plebeians live under the bridges in Lagos and other cosmopolitan cities of the world. Quite presumably, the realisation of the truism in France’s comment that not only the rich, but also average income earners should own houses, prompted Governor Babatunde Raji Fashola of Lagos State to decide to help aspiring home owners in the state to own one.

    To show his characteristic seriousness, the governor of archetype recently launched the Lagos Home Ownership Mortgage Scheme (Lagos HOMS). And available for purchase through mortgage are newly completed 1,104 units of flats and terraces, while 3,156 other units are under various stages of construction. The governor further disclosed at the launch that work would soon commence on additional 4,454 units across the state. The solely government-financed project was done through sustained initial monthly savings of N200 million that was later increased to N500 million monthly. The scheme provides a minimum payment period of 10 years that would attract a reasonable maximum interest of 9.5 per cent per annum.

    The conditionality includes that aspiring owners must be first-time home owners with none on ground, either acquired privately or bought from government and the claim must be backed by sworn affidavit; only for Lagos residents irrespective of origins but must have stayed for not less than 180 days; and must show a residency card issued by LASIMRA. Additional requirements include proof of payment of tax for an uninterrupted period of five years preceding application, while house choices eligibility must match with applicants’ proven income sources; successful applicants must live in the houses while violations would lead to re-possession, pay-off and or re-offer to others.

    This Fashola initiative is just a consolidation of what Pa Lateef Jakande pioneered in the state as far back as early eighties and which Asiwaju Bola Ahmed Tinubu, the master strategist, broadened and greatly improved upon to give thousands of Lagosians opportunity to own homes in a state where the housing deficit is placed at one million units per annum. This is understandable in a Lagos with strong economy and people’s pull; thus the state understandably is witnessing an attendant increase in the demand for housing that has shot prices of properties beyond the reach of average Nigerians. Even rents have become so high that the government of the state, through its legislative assembly, came up with a relatively new Tenancy Law with the primary goal of protecting tenants from shylock landlords that have turned their houses into crude oil.

    The policy is no doubt very good. But the institutional/legal modus for deciding beneficiaries and the eligibility criteria for owning them need not be drastically inequitable. And this has led to the question of whether it can survive in this kind of environment where employment turnover is dangerously high. While it could be argued that the flats are in cadres, how does one correlate the fact that the law regulating it says that aspiring owners must be first-time home owners with no pre-owned home, whether acquired privately or bought from government in the state? So, a man that works in Apapa/Island/Lekki axis of Lagos, who managed to build a small structure in a manageable but not necessarily safe surrounding in Agbado/Abule-Egba/Alakuko/Agege/Egbeda/Igando/Aboru et’al end of Lagos that his funds could cover, cannot upgrade by getting one of these flats because he owns something called property in a Lagos slum. Yet, others that live along Lagos/Ibadan Expressway, Ojudu/Sango Ota end of Ogun State among others with LASRA cards and evidence of tax payment in the state can convenient bid for the flats. What about those with personal properties but who would now leverage on the fact that they are unknown to law because they are yet to be registered with the government to get the flats? Those that have registered titles with the state government after payment of required fees will be unjustly denied access to the mortgage, despite meeting other conditions.

    While I could discern the altruistic motive of the government for inserting this provision in the widely reported law, may I quickly add that the mischief that it will cause in the long run to those owning properties in suburbs of Lagos, but would have otherwise qualified to bid for these flats in decent areas and environment is greater than whatever good is officially desired. The target of BRF are those politicians that are attempting to buy up entire Lagos and the civil servants that unduly allocate such flats to themselves in the past but majority of those that would now suffer the sins of these classes of Lagosians are neither politicians or civil servants that already live and own properties, courtesy of abuse of government policy, in the choicest areas of the state.

    This column believes that it is a good thing that BRF has taken the good housing initiatives of Jakande and Tinubu a bit further, but it would not be too late if fractional part of the flats could be used as pilot study for the mortgage while others are rented out to gainfully employed Lagosians who are currently desirous of decent and affordable accommodation. This is the model in London and other developed countries where such tenants after demonstrating good tenantable conduct for years are offered the right of first refusal to buy. Such model can be emulated in Lagos.

    The policy is good because the principle behind it will ensure maximisation of space and elimination of slums in the state. However, the inequality that the initiative’s law would create under the guise of eliminating fraudulent and gluttonous acquisition of properties by the ‘haves’ to the detriment of the ‘have-nots’ is something the governor has to look into. Like l told the governor when some members of this paper’s Editorial Board interviewed him last December, except this mortgage policy identifies now with the peculiarities of the people of the state, the probability that it won’t be messed up and eventually discarded by succeeding government is very slim. And that won’t rub off favourably on the credibility the BRF administration has earned through its exemplary commitment to the welfare of the majority, so far. After all, my learned senior and Lagos governor must realise that law as an instrument of social engineering, as espoused by Rosco Pound, that inimitable legal theorist, should not trample on the just in its bid to emasculate or punish the unjust.

  • ‘Lack of mortgage cause of housing problems’

    ‘Lack of mortgage cause of housing problems’

    LACK of mortgage facilities has been identified as one of the major factors affecting Nigeria’s housing policy.

    This factor, according to the Managing Director, Highpoint Global Realty Limited, Mrs. Imaobong Usoroh, is inhibiting the low income earners from becoming a potential landlord.

    She spoke with reporters in Uyo, Akwa Ibom State capital, ahead upcoming housing and building materials exhibition tagged “AKWABUILD”.

    “I think one of the greatest problems in the Nigerian housing policy has to do with the mortgage policy. If you look at an average man in Nigeria, he cannot walk into any bank right now and get a mortgage to finance a home.

    “Unlike what is obtained in advanced countries, anybody with good credit can walk up to a bank, even without a dime, and get 100 per cent mortgage financing to buy or build a home. The credit facility can be spread for the next 30 years.

    “But in Nigeria, there is nothing like that. The only bank that is doing that in Nigeria is the Federal Mortgage Bank through the National Housing Scheme, where the money is pooled through the Federal Mortgage Bank. That is the only source you can go in and get that money and buy a house,” she said.

    According to her, the event, slated for March 20 and 22 will be declared open by Akwa Ibom State Governor Godswill Akpabio and it will address some of the challenges in the built environment.

    She said: “The platform would provide veritable opportunity for both local and international exhibitors to rub minds on issues and challenges of the built environment while evolving a synergy for bringing the country’s housing deficit to an end.”