AN EVALUATION OF THE PROBLEMS AND PROSPECTS OF MORTGAGE BANKING IN NIGERIA. (A CASE STUDY OF FEDERAL MORTGAGE BANK)
These researches present an evaluation of problems and prospects of mortgage banks. Federal mortgage banks are the case studies choose by researcher on which the research is to be carryout. Mortgage bank are faced with serious problems and these problems are growing at an alarming rate for the purpose of this project critical analysis of these problem in needed and likely solution to the problem should not be left untouched. This research work will be basically treat this topic as related to the impact of mortgage bank in housing delivery in Nigeria, also the remedies of the mortgage against mortgage personally shall be mention in the research work. in this project it has been present chapter by chapter.
1.1 GENERAL DESCRIPTION OF THE STUDY
Undoubtedly in a developing country like Nigeria, the desirability for mortgage banking cannot be overstated housing is basic to means need and survival, it is second only to food in the hierarchy of man’s needs. Not surprisingly, therefore, the government has made a cardinal objective in its social programs.
Moreover, to facilitate the provision of shelter for all (perhaps before the year 2000), the government promulgated the National Housing Fund (WHF) decree No 3 of 1992. by the provision of the decree on government is to make some unspecified contribution to the fund. Employees are to part with 2.5% of their monthly income at a fixed interest rate of 4% per annual. The bank and insurance companies are equally to invest substantially into the fund. Especially, the bank contributed to the fund stands at 10% of their loans and advances per annual at an interest rate of 1% above the interest rate payable in current accounts.
Operationally, the Federal Mortgage Bank of Nigeria (FMB), the apex bank for all mortgage institutions is then expected to channel the fund back to the contribution by the way of long terms loans through the mortgage institution is allowed a maximum spread of 4% above banks borrowing rate.
On the whole, the decree is raised some fundamental issue which generated reactions to mortgage institution in the country at such rate and upon such terms as may be determined by the bard in accordance with the policy directed by the Federal Executive Council being rates and terms, designed to grant comparative facilities of Nigeria individual desiring to acquire houses of their own.
The encouragement and promotion of the development of mortgage institutions at state and national levels.
The supervision and control of activities of mortgages institution in accordance with such directions may be given on that behalf by the federal executive council.
The provision of long-term credit facilities directly to Nigerian individuals at such terms may be determined by the board in accordance with the policy directed by the executive council.
The provision with the approval of the commissioner at competitive commercial rates of interest, or credit facilities to commercial property developers, Estates Developers, and other specialized types of building.
Acceptance of term deposits and saving from mortgage institution, trust the post office and private individual as the board may determine.
The promotion of mobilization of saving from the public.
From the participants and members of the public for instance it is argued that the mandatory contribution by the working populace is unrealistic vis-à-vis the low and fixed interest rate it attracts against the prevailing market rates.
Besides, the various hurdles to scale through by contribution before they can benefit from the fund have also become a source of concern. It is argued that the mortgage institutions on whose shoulders rest the onus of fund disbursement to prospective beneficiaries would definitely prescribe some requirement that might include compulsory saving with the occupancy and approved building plans, the contribution of 25% of the total loans required for building or purchasing of a house.
However, as lofty and laudable as the national housing fund decree is, it still required some fine turning in order to meet the yearning of all participants. Therefore, the government should bank 5% of their total annual credit portfolio to the National Housing Fund (NHF).
Meanwhile, the mortgage institution, which came into being in December 1996 after many years of research and planning has the following aims and objectives in the light of the foregoing, decree 70f 20 1997 spent it out the objectives of the federal mortgage bank of Nigeria which are the following:
The provision of long term credit facilities
The investment of money in companies engaged in the manufacture or production of building materials in the country with a view to establishing the cast of such materials.
To carry out research aimed at improving housing patterns and standards both in urban and rural areas and monitor the mortgage finance activities ad building contraction industry in Nigeria.
Finally, to combine with reputable insurance companies to organize a mortgage protection system designed to guarantee liquidity to mortgage as well afford them the opportunity to have liberal premium/promise.
The promulgation of the decree 7 of 20th January 1977, dissolved the NBS and established the federal mortgage bank (FMN). The (FMBN), took over the assets and liabilities of NBS at the establishment. FMBN had an authorized capital of 20 million divided into 200,000 shares at #100 each.
In June 1979 an unprecedented influx of mortgage applicants was recorded resulting from the fair policies of the bank vis-à-vis other private mortgage institutions. It is pertinent to mention that the injection of #90 million was a more conversion of the bank debts to the federal government to equity. Such an increase in net worth does not in a way increase the available loanable fund to the numerous mortgage applicants. However, the central bank did provide an additional loanable fund of #60 million. In effect, FMBN is owned by the federal government and the CBN diligent mortgage accounts.
The federal government attaches importance to housing as one of the basic necessities of human beings because of its profound effect on the health, welfare, and productivity of the individual. The shortage of accommodation in the major cities as per a survey by the federal office of the statistics was an indication of the inability of the Nigeria building society to scope with the demand for shelter.
1.2 JUSTIFICATION OF THE STUDY
This study is very essential in that helps to have a broad knowledge of what a mortgage is all about.
Moreover, the study enables for familiarizes us with some terms used in mortgage institution and their definitions.
Conclusively the various problems and prospects of mortgage institutions also know through this research work.
1.3 STATEMENT OF THE STUDY
This research work will basically treat this topic as related to the impact of mortgage banks. furthermore, those impacts of the mortgage institution when granting a loan to people purpose will be treated in this research work.
In addition, the remedies of the mortgage against the mortgage personally shall be mention in this research work.
1.4 OBJECTIVES OF THE STUDY
The objectives of this study are to evaluate the prospects and challenges of mortgage institutions in Nigeria.
1.5 METHODOLOGY OF THE STUDY
For the purpose of this research work, I have to adopt the method was used as the method of personal; interviews.
Due to lack of sufficient time and to avoid untold hardship that may attend the gathering of accurate information, I decided in this research work to choose a federal Mortgage Bank as my case study.
In the process of collecting relevant information, I adopted the personal interview method as my primary source of information and it gives an opportunity of having a brief discussion with some customers on the process and purpose of THE EVALUATION OF PROBLEMS AND PROSPECTS OF MORTGAGE BANKING IN NIGERIA.
Also, the researcher made use of the bank’s annual report and journals for some other information, which could not be obtained through the personal interview.
1.6 LIMITATION OF THE STUDY
This research work has suffered some set back byways of having assessed some vital information and documents. This was as a result of the fact that banks operate in a very strict and confidential environment most of their documents and information can not be deliberate given to an outsider without some restriction.
However, some of the information concerning the and are unrevealed as a result of the anxiety created by the bank.
Also, on the course of the research work, this is the financial problem before the completion of this research work.
In addition, the researcher has to travel to the headquarter of the bank to ask for permission and clearance before getting the information needed from the branch chosen as a case study.
1.7 RESEARCH HYPOTHESIS
Ho: Mortgage operation is significant to low-level profit.
Hi: Mortgage banking is significant to urban development
Ho: Mortgage operation is significant to low-level profit.
Hi: Mortgage banking operation is not significant to low level.