• Wednesday, February 28, 2024
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Stoking legislative reform towards model mortgage


The legislature in the 36 states of the federation are all settling down now with the new members learning the rope while the old and returning members are perfecting their arts for effective legislative duties.

Expectedly and as is characteristic of Nigeria, virtually all of these legislative houses had a number of bills pending which have been inherited by the new assembly. One of such bills which the sponsors wanted urgently was the adoption of a model mortgage and foreclosure law by the states.

The bill was packaged as part of efforts at growing a mortgage system that would drive affordability in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.

At the fore-front of the drive for this law is the Nigerian Mortgage Refinance Company (NMRC) which is riding on the relative success it has achieved in the last few years of its establishment and pushing for the adoption of the law by the states.

Given the importance of the law, mortgage sector stakeholders are urging the new states assembly to resume deliberations on it with a view to making their respective states adopt the law and pave the way for improved activities in the mortgage sector and, by extension, in the property market.

What NMRC is driving at, according to one its directors whose primary mortgage bank is a major shareholder in the company, is to get various states houses of assembly to pass foreclosure laws as a prelude to mortgage-backed affordable housing delivery.

This idea, when it filtered out, was good news and remains so for home seekers who may need mortgage facility because foreclosure law, upon adoption, fast-tracks the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.

According to the authorities of the mortgage refinancing company, the model mortgage and foreclosure law is in its final form for engagement with 21 pilot states committing to the implementation of an enabling environment for the development of the mortgage market.

The company hinted that it would be focusing on building capacity and completing outstanding operational activities. At various times, it has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage banks.

Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage Bank’s managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria. He assured that his bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.

NMRC is quite conscious of the demands and obligations inherent in the Nigerian business environment as it assures that it will continue to anchor all its services on global best practices, good corporate governance and strict risk management practices.

NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.

“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, the official said, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.

Right now, the company is working under market conditions hoping that, over time, as the market deepens and grows, the issue of single digit interest rate will be expected. Whatever the rate is today, the desire is to drive it down to single digit.

After all, part of its mandate at inception is to increase liquidity in the mortgage system by raising funds from the capital, foreign and local, and using same to refinance mortgages to be originated by participating primary mortgage lenders.

To its credit, the company has visited the market twice and raised about N18 with which it has refinanced the loans presented by a few primary mortgage lenders as at the last quarter of 2018.