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FMBN and NHF loans in time of coronavirus

Because it is part of the Nigerian economy in particular and the global community in general, the Federal Mortgage Bank of Nigeria (FMBN) is not insulated from the unfriendly impact of coronavirus (Covid-19) pandemic which has been described as a global health emergency.

But the apex mortgage bank says it is on top of its bit, especially in ensuring that efforts of the government to increase access to affordable housing post Covid-19 does not suffer setback.

To do this, authorities of the bank say efforts are on to ensure the inclusion of the informal sector in affordable housing schemes in the country using their banks BVN to guarantee them.

“Efforts are also on to open up Diaspora mortgage market; documentations for this are being worked out and will be presented to the housing minister soon for further development.  We are not unmindful of the importance of technology to review the current mortgage application process,” said Ahmed Dangiwa, the bank’s CEO, who spoke in Abuja recently.

The National Housing Fund (NHF) whose operation is supervised by the FMBN is one area that people worry about, chiefly because of their contributions and commitments to the fund.

With businesses generally experiencing a slowdown and the income of individuals and firms being reduced, the payment of rents, rates and loans are already suffering defaults as people channel their financial resources to sustaining themselves and their families. This makes them less likely to fulfill loans and mortgages obligations, leading to possible decline in the growth of the sector.

However, Rahimatu Aminu-Aliyu, Executive Director, Loans and Mortgages at FMBN, says the bank is committed to growing the housing sector through its strategic and well-thought plans. “We are aware of the situation in the economy and would do our best by providing loans and refunds to NHF contributors.

“FMBN will be at the forefront of stimulating growth in the housing sector through our activities. We will continue to provide loans for real estate construction and to NHF contributors. Due to the prudent management of NHF resources, we have adequate funds to meet our own loan applications for the time being,” she assured.

Aminu-Aliyu allayed the fears of NHF contributors with regards to resuming full operations and processing of existing loan applications, assuring further that, as an institution, FMBN is working hard to resume full operations as quickly as possible.

Their focus, she revealed, would be on loan applications that are under process so that they can conclude and disburse as quickly as possible. “This is to, therefore, assure NHF contributors with existing loan or refund applications that we will ensure that we conclude their request in good time,” she said.

On the issue of loan repayment, the executive director says the bank understands that some borrowers may experience challenges with repayment due to the economic impact of COVID-19 pandemic, advising that those with NHF mortgage loans, in private and informal sector should talk to their primary mortgage banks (PMBs) on their challenges.

“We are all aware that CBN has taken the initiative to provide bank loan forbearance measures to ease the burden on customers who are facing repayment challenges. We also want to follow that initiative since our corporate goal is to provide housing to Nigerians,” she said.

She, however, cautioned loan subscribers who are able to make repayments to do so in their best interest and avoid deferring their repayments.

“For borrowers who are still able to make repayment, I will strongly advise that they continue making regular repayments as it is in their best interest. Forbearance does not mean that you will not be required to pay. It is only that repayment is postponed to a later day. This kind of arrangement means additional cost to the customer because the missed repayments are added to future payments,” she noted.

Aminu-Aliyu pointed out that government, as part of its efforts to get things running in the country, did not default on paying workers’ salaries and, therefore, no default is expected in this area.

“As we are all aware, so far, there is no federal or state agency or parastatal that did not pay its salaries so we expect that in all the formal sectors, all the repayment is made. So far, we have not seen a challenge on the formal sector. So we are expecting that the PMBs will liaise with the beneficiaries and continue the repayment,” she said.

For some time now, the federal government has been talking about diversification and this applies to its agencies including FMBN. The bank on its own is working towards diversifying its sources of funds, but according to the executive director, the current effort is to see how the bank can be recapitalized.

“Our source of funds is from the NHF contributors and we are, as much as, possible trying to see how we can improve on that source of fund. Away from NHF contributions, other source of income are commercial banks and insurance companies; we are trying to see how we can access them,” she said.

The bank, according to her, is also making efforts to recover non-performing loans owed by defaulting estate developers.  “When we resumed office in 2017, we met a huge number of non-performing loans on projects that have been started and been stagnant,” she revealed.

Continuing, she said, “It was the fault of the contributors that have been held there. The approach we took was to have an interaction with those developers who have at various stages collected money from FMBN to build and, at a point, for one reason or another, were not able to complete the project.”

Aminu-Aliyu , said that, on case by case basis, they have been able to get some review, some exit and this is what they have been doing since the first and second year they resumed.

“That is what gave birth to the re-launching of Rent-to-Own because we have had many sites abandoned, some completed some were not completed; we had to complete so that we could get people into the houses without paying a dime. So we have tried as much as possible to get all those loans performing again,” she said.

The executive director assured that FMBN would not relent in its efforts at creating products that attract investors and also move away from the one digit interest rates as part of efforts towards allowing investors make profit.

 

 

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