• Sunday, September 24, 2023
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Tackling illiquidity burden in mortgage system

mortgage sector

. A consummate finance expert, Ogundimu is no new comer in NMRC. He has seen and known it all and, therefore, has a couple of things to say about this secondary mortgage institution.

“We have been able to address the liquidity challenge in the mortgage system”, Ogundimu says, despite experts’ strong view that some primary mortgage banks (PMBs) are still struggling over liquidity issues. He insists that “PMBs that are not liquid are those that are not doing well who cannot access our funds”, pointing out that the high interest rate in the mortgage system is a function of the macro-economy which is beyond their control.

This is simply a testimonial that NMRC is achieving part of its statutory mandates. In Nigeria, the inequality created by lack of affordable housing places a moral obligation on all housing stakeholders to use every tool at their disposal to find solutions to the problem of accessing sustainable and affordable housing finance.

Nigeria has heavy housing burden with an unchanging deficit estimated at 17 million units. It also has low home-ownership level put at a little above 10 percent. All these easily find explanation in the country’s mortgage system that has remained a fledgling, liquidity-squeezed and unable to fund even low cost housing.

The coming of the NMRC, A private sector-led company with the public purpose of developing the primary and secondary mortgage markets by raising long‐term funds from the domestic capital market as well as foreign markets for providing accessible and affordable housing in Nigeria, was aimed to address this problem.

Government’s attempts at addressing the country’s housing problem with the establishment of both the Federal Mortgage Bank of Nigeria (FMBN) and National Housing Fund (NHF) to provide low interest rate mortgage for people to build or buy houses, have been anything but successful.

But there have been spirited efforts by the refinance company to not only reposition the country’s mortgage sector, but also to break down barriers to home ownership by providing liquidity, affordability, accessibility and stability to the housing market.

The company has the vision to be the dominant housing partner in Nigeria by providing liquidity and access to affordable housing finance and, in line with that, it has come out with some innovative initiatives aimed to improve mortgage market transactions and also fast-track affordable housing delivery.

When the company was established, part of the mandate given to it was to promote wider spread of home ownership, accessibility and affordability which explains the setting up of what it calls ‘Housing/Mortgage Market Information Portal (MMIP)’ aimed to enable it to gather data for intelligence and profiling of federal, states civil servants and informal sectors (off-takers) for affordable housing.

This is an effective policy and decision making tool on land allocation, infrastructure and concessions.  MMIP enables decisions on creating polycentric cities in order to decongest major urban centres.

Another initiative the company has come up with is the NMRC Mortgage Market System (MMS) which  is a transformational change that integrates the entire housing market, covering construction finance, primary and secondary mortgage.

The system which is available to all players in the housing industry has the benefit of removing duplications of effort in gathering data and documents; improving the turnaround time, reducing the cycle time of transactions and helping in making homes more affordable.

Described as a world class system that brings all players in the mortgage and housing market into a centralised technology ecosystem, MMS allows a systematic market to operate and concentration of activities to take place.

What the system seeks to achieve, besides bringing credibility and attracting investors to the mortgage market, is also to let players and sundry individuals know what is going on in the market; the system creates a marketplace where there is information flow and people can see what is going on.

The system is a national market that is not only about mortgage but also the entire housing finance and so it allows people to see the pipeline projects and know who is bringing what to the market. It also allows NMRC, as a refinancer, time to determine when to go to the market to raise bonds.

 MMS also allows market operators to track all the activities within the construction industry. With it they can see which developer is doing what and in which location. It also allows them to begin to compare prices and know which property is being sold and in which location. This way, the developers will begin to be more competitive in the way they do their thing.

For the mortgage banks, the new system allows them to begin to manage their own systems by themselves using the uniform underwriting standards which NMRC has produced and, with that, they can evaluate their applications based on the underwriting standard.

It is hoped that the use of these systems, especially the MMIP, for federal and state governments mortgage asset registry will reduce cost of homeownership; eliminates breaks in the chain of title; improve hard naira savings on each loan for homeowners and lenders, and reveal identity of servicer and investor available to homeowners via phone or internet.


Chuka Uroko