IMPACT OF MORTGAGE BANKING IN NIGERIANS ECONOMIC DEVELOPMENT PROGRAMMES
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IMPACT OF MORTGAGE BANKING IN NIGERIANS ECONOMIC DEVELOPMENT PROGRAMMES
ABSTRACT
This is an investigation into mortgage banking in Nigerian economic development programmes.
People conducted research to learn about the existence of mortgage banking, and their goals were met to a large extent.
In conducting this research, the researchers used oral interviews and questionnaires, and the findings infer that mortgage banks have contributed to economic development through a variety of promotional activities such as loan advancement, home and house renovators and refurbishment, and so on.
As a result, mortgage banking has been immensely welcomed by the accomplished.
CHAPTER ONE:
0.1 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
FMB (FEDERAL MORTGAGE BANK OF NIGERIA)
Housing is one of the most important aspects determining urban shapes, and it is the single most critical challenge confronting Nigeria’s large cities today.
The need to finance housing in Nigeria was minimal in the 1950s and 1960s, owing to the country’s low urbanisation level. The Nigerian economy’s byoyancy in the 1970s, as well as the unequal spatial distribution of industrial development, hastened the rate of urbanisation in Nigeria.
Previously unmanaged and unplanned urbanisation resulted in qualitative and quantitative housing shortages. There was a huge gap between the demand for and supply of suitable housing today.
The result of excess demand over supply was high rent and the expansion of an informal rationing system that discriminated against the poor to the point where more than half of Nigeria’s urban population lives in poverty.
Given this context, and given that housing provides the physical framework within which man’s human, social, economic, and cultural resources are realised, entrenched, and integrated, it is clear that suitable housing deserves special attention.
In recognition of the importance of housing, the federal government of Nigeria founded the Federal Mortgage Bank of Nigeria in 1977 as a successor to the Nigeria Building Society, which was formed in 1956.
1.2 STATEMENT OF THE PROBLEM
The Federal Government of Nigeria launched mortgage banking to assist in funding housing projects as a means of addressing the magnetude housing problems that urban cities face. However, due to pressing issues in mortgage banking, this aim has not been fully realised.
Some of the issues encountered in the delivery of loans to individual developers in Nigeria include:
a. Individual housing loans are no longer being repaid; this condition makes it extremely difficult for mortgage banks to continue extending such housing loans to other customers who require the loan for home construction.
b. Another key issue confronting the bank is the ability of individuals to declare their true income. This condition makes it exceedingly difficult for a mortgage bank to offer a loan large enough to complete the individual’s housing project.
In such a case, the mortgage bank will demand the customer to bring the house to a certain stage before applying to the bank for a loan sufficient to complete the building project.
c. The individual’s failure to get title documents such as this certificate of occupancy (CFO) for urban regions causes a challenge for the mortgage bank in disbursing loans.
1.3 FORMAL INTRODUCTION
The Nigeria Building Society was the first mortgage institution to be established in 1956 to finance house building rather than home ownership. It was financed by substantial equity provided by the colonial later common wealth development corporation (CDC) and the federal and regional governments in the regions. Housing corporations were also established, partly to build and save or let estates.
The third sector where particular assistance is required due to the scale of the problems is housing and mortgage finance.
Under the Federal Mortgage Bank Act No. 7 of 1977, the Federal Mortgage Bank of Nigeria (FMBN) was created in 1977 as a fully owned federal government housing development finance organisation. The FMBN took over the assets and liabilities of the Nigeria Building Bank Society (NBS) after it was dissolved.
The Nigeria Building Society was founded in December 1956 with a capital of N3.25 million and is owned in equal parts by the Common Wealth Development Corporation (CDC), the Federal Government of Nigeria, and the Eastern Nigerian government (60 percent, 31 percent, and 9 percent, respectively).
However, in 1972, the federal military administration took over the (CDC) half of the capital. the authorised share capital at the time of the Federal Mortgage Bank of Nigeria (FMBN) establishment in 1987.
The federal government hired Bereuschool move Bosboom (Management consultant) to oversee the launch of the new bank for three years beginning in 1977.
With the departure of the Dutch management consultants in July 1980, the bank’s management operations became completely independent at the same time.
There was also a charge in the bank’s authorised share capital and ownership structure. The authorised share capital was increased to N150 million, with the federal government and the Central Bank of Nigeria each contributing 60% and 40%, respectively.
The chairman and members of the board of directors are appointed by the federal government. By 1931, the bank had branches in all of the state capitals. To emphasise its national focus, an additional forty-three (43) home savings centres have been built in important cities outside of state capitals since then. This is clearly intended to broaden its scope of service delivery as well as its savings mobilisation buse.
The 19 branch offices were divided into four zones, sometimes known as region offices.
Each branch office is self-accounting and has the authority to approve individual mortgage loans of up to N65,000.00, which must be corrected by the head offices for the time being.
Since 1977, the low lending rate and longer maturity spread of FMBN loans have resulted in an influx of mortage applicants from all over the federation.
The bank’s mortgage holdings have continuously increased throughout the years. The bank’s next mortgage assets were N75 million on June 30, 1977, but N75 million on December 31, 1982. Between 1977 and May 1986, the bank’s assets totaled N326 million,
with a total loan disbursement of N365, 560, 130 made to 12,000 mortgage (federal motgage bank of Nigeria diary of 1987). In 1986, a wholesome loan type was introduced to serve the loan requirements of private developers, state housing corporations, and large commercial ventures.
1.4 OBJECTIVE OF THE STUDY
There may be various objectives open to anyone conducting this type of research, but my objectives are as follows.
a. To assess the extent to which mortgage banks have followed the federal government and central bank credit guidelines in order to administer the nature housing fund scheme.
b. To assess why, despite the federal government’s findings, they fed relevant to grant credit to operators of the national housing fund.
b. Discovering the goal of mortgage formation.
d. Determine why the standards are inapplicable in the context of the current mortgage structure without jeopardising their commercial interests.
e. To identify the mortgage bank’s difficulty with loan distribution to the national housing fund, as well as the actual causes of loan disbursement delay.
f. To conduct research on mortgage banking and its impact on people and the economy as a whole.
g. To look into other areas of the guidelines that are problematic.
1.5. SIGNIFICANCE OF THE STUDY
The study was undertaken to determine how and to what extent mortgage bank loan disbursement policies had assisted the operators of the National Housing scheme in realising the government’s general aspiration of house for all by the year 2000.
I believe that if the conclusions of this study are followed, it will allow donors and the general public to begin participating in mortgage development through floating mortgage institutions.
1.6 SCOPE OF THE STUDY
Given Nigeria’s vast geography and dispersed federal and state ministries, this research will be conducted in the Nigerian cities of Aba, Abia State, and Enugu, Enugu State. Potential respondents will include employees of federal and state ministries, as well as employees of chosen lending banks.
1.7 DEFINITION OF TERMS
BANK: Many authors and educated elites have defined the term “bank.” However, for the purposes of this project, a bank is defined as any individual or organisation that performs basic financial services and is licenced as a bank by the federal government of Nigeria as a banking institution.
MORTGAGE: A legal agreement in which a bank or similar organisation lends money to one to buy or build a house, with the money repayable over a specified period of years.
MORTGAGEE: A person or organisation who lends money to people in order for them to build or buy a house.
MORTGAGOR: A person or organisation who borrows money from a bank or similar organisation in order to build or purchase a home.
BANK LOAN: A bank loan is a financial facility issued by a bank that is meant to be used to finance a specified purpose.
DISBURSEMENT: To pay money from a significant sum that has been collected for a certain purpose.
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