ROLE OF FEDERAL MORTGAGE FINANCE LIMITED IN HOUSING FINANCE
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ROLE OF FEDERAL MORTGAGE FINANCE LIMITED IN HOUSING FINANCE
CHAPITRE ONE
INTRODUCTION (1.0)
Shelter is commonly recognised as the second most important human necessity, after food. However, housing in all its forms is more than just a place to live because it includes all of the social services and utilities that go into making a community or neighbourhood livable.
Housing challenges in Nigeria are large and complex, and effective solutions have yet to be developed. The hunt, however, continues. In the midst of this search, the Federal Mortgage Bank of Nigeria was founded as a fully owned Federal Government Housing Development Finance institution by FMBN Decree Number 7 of 1977. In 1956,
the Nigerian Building Society (NDS), precursor of the Federal Mortgage Bank of Nigeria, was founded. FMBN began operations on July 1st, 1977 as a fully owned Federal Government entity for housing finance, inheriting the assets and liabilities of the Nigerian Building Society.
For a long time, the Federal Mortgage Bank of Nigeria was the primary source of long-term funds in the Nigerian home finance sector. Commercial and Merchant Banks’ roles in this industry have remained mostly peripheral,
as they find long-term lending unproductive due to the short-term source of their capital. Specifically, Decree No. 7 of 1977 requires the bank to: –
– Provide long-term loans to individuals, estate developers, and mortgage lenders for housing and property development.
– Promote and facilitate the development of mortgage institutions, as well as supervise and control their operations; the legal framework is outlined in Decree No. 53/89.
– To mobilise financial assets and savings
– Assist enterprises involved in the manufacture of building materials in their operations.
– Conduct and support applied research to better its activities and the sector’s operations.
– Provide technical help services on many elements of the field.
The President of the Federal Republic of Nigeria established the National Housing Policy in 1991, which identifies housing finance as the cornerstone of any legitimate housing service.
It should be remembered that the National Housing Policy was a topic of national debate from 1984 to 1986. The debate became required to guarantee that a diverse variety of viewpoints were considered in developing the policy.
By Decree No. 3 of 1992, the National Housing Fund was formed to ensure the ongoing flow of low-cost funding for long-term housing investment for the benefit of all Nigerians.
The fund will be maintained and administered by the Federal Mortgage Bank of Nigeria in order to provide long-term housing loans to individuals via wholesale lending to primary mortgage institutions.
– Any Nigerian earning =N=3000.00 or more per year shall donate 2.5% of his or her basic monthly salary or income to the fund.
– If you are self-employed or own your own business, whether as a trader, professional, or businessperson, you must contribute to the fund.
The fund will also be supported by commercial and merchant banks, insurance firms, and the federal government. FMBN must register all possible contributions to the fund. FMBN will send a registration form to an employee via his or her company. Each employer must be similarly registered in order for their contributions to be deducted and remitted.
You will be assigned a participation number, which should remain the same even if your place of employment changes. If you are self-employed, you must also register. You must obtain a form from any FMBN branch. Your employee (if you have one) should also be registered.
Following registration with the funds, your employer is required to deduct 2.5% of your monthly salary and remit it to FMBN. If you are self-employed, you must pay the FMBN directly. Subscribers will be given a passbook in which to record their monthly contributions.
This passbook must be maintained in a safe place because it will be required for every transaction, and an annual summary of one’s contribution will be delivered to him.
The pool of contributions is intended to give low-interest home loans to all Nigerians. You must be a contributor to the fund in order to borrow from it. The housing loan will help you buy, build, or improve your home. If a contributor want to borrow from the fund, he only needs to apply to any mortgage institution, where he will receive additional information and help.
The interest rate at the time you take the loan will remain unchanged until the loan is fully repaid, with a repayment duration of twenty-five years. Whether or not the contributor borrows from the fund, his contribution will earn interest. When a contributor reaches the age of sixty, retires, or is unable to work due to illness,
he is entitled to a refund of his contribution plus interest. It is important to note that the Mortgage Institutions Decree of 1989 (Decree 53/89) established the legal framework that governs the operations of major mortgage institutions in Nigeria. The Decree gives every institution the authority to:
– Make a loan or advance to someone for the improvement or extension of a dwelling place;
– Accept savings and deposits from the general public and pay interest on them. The FMBN is divested of its retail banking and mortgage operations by its inception, allowing it to focus on its appropriate function as the nation’s top mortgage lending agency.
The Federal Mortgage Finance Limited (FMFL)’s principal functions are as follows: –
– To ensure a fair distribution of mortgage lending activity throughout the country.
– To operate as an efficient and productive mortgage institution that serves as a model for private mortgage institutions.
– To control the rate and magnitude of expansion in the mortgage financing business; and
– To reduce unnecessary and fraudulent losses while ensuring timely and adequate loan recovery performance in order to offer chances for structured growth in the provision of housing financing.
1.1 GOALS AND OBJECTIVES OF THE STUDY
The following are the aims of this study: –
– Examine the operational financial intermediaries in the housing industry, particularly Federal Mortgage Finance Limited, using the Maiduguri Branch as a case study.
– Identify the issues impeding its successful functioning, as well as re-examine some of its essential concepts and aims.
– To propose solutions in light of changing circumstances in which it has been forced to work.
– Look ahead to the future of the institution and the industry in which it operates.
1.2 SIGNIFICANCE OF THE STUDY
The study’s significance stems from the Federal Government of Nigeria’s recognition of the need to divest the old Federal Mortgage Cooperation and,
as a result, the establishment of the Federal Mortgage Finance Limited with the corporate mission of providing responsive and credible housing finance services to all segments of the Nigerian population. As a result, it is appropriate to emphasise the significance of this research work here: –
– How far does the Federal Mortgage Finance Limited go to achieve equal distribution of mortgage lending activities?
– Has the institution been able to operate as an efficient and effective mortgage institution, qualifying it to be a leader among private main mortgage institutions?
– Has it been able to influence the amount and rate of growth of mortgage finance? Industry arrived in order to generate prospects for structure expansion in the provision of housing finances.
1.3 RESEARCH METHODOLOGY
Three strategies were employed to acquire data for this study project. Data was collected from customers and employees of the Maiduguri branch of Federal Mortgage Finance Limited, and a questionnaire was provided to consumers and employees of (FMFL) under the supervision of the Branch Mortgage Officer.
Personal interviews with the Bank Mortgagors officer, Branch Manager Maiduguri, Branch Solicitor, and Branch Estate Surveyor are used as the second technique. Consultation with “Mortgage News” is the third method.
The Federal Mortgage Finance Limited’s quarterly in-house journal Volume 1 number 1 and 2, as well as other relevant materials, were used to put this study effort into context.
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