AN EVALUATION OF THE PROBLEMS AND PROSPECTS OF MORTGAGE BANKING IN NIGERIA.
TABLE OF CONTENTS
Title page i
Table of content vi
1.0 Introduction 1
1.1 General description of the study 1 – 3
1.2 Justification of the study 3
1.3 Statement of problem 3
1.4 Objective of the study 3
1.5 Methodology of the study 4
1.6 Limitation of the study 4
1.7 Research hypothesis 4
2.0 Literature review 5
2.1 Definition of the mortgage 5
2.2 Definition of immovable property 6 – 7
2.3 Classification of mortgage 7 – 8
2.4 Creation of mortgage 8
2.5 Right and sale without the intervention of the court 9
2.6 Discharge of mortgage 9
2.7 Rights of a prior mortgage 10 – 11
2.8 Equitable mortgage and creation 11 – 12
2.9 Structure of Nigeria mortgage and creation 12 – 13
2.10 Problem of mortgage banks in Nigeria 13 – 14
2.11 Solution to the problems of mortgage 14 – 16
2.12 Solution to the problems of mortgage banking in Nigeria 16
2.13 Mortgage as a security for bank advances 16 – 17
3.0 Research methodology 18
3.1 Methodology employed 18
3.2 Assumption 18 – 19
3.3 Validity 19 – 21
4.0 Data presentation and analysis 22 – 23
4.1 Remedies of the mortgage against the mortgage personality 23- 24
5.0 Summary, conclusion and recommendation 25
5.1 Summary 25 – 26
5.2 Conclusion 26
5.3 Recommendation 26
1.1 GENERAL DESCRIPTION OF THE STUDY
Undoubtedly in a developing country like Nigeria, the desirability for mortgage banking cannot be over stated 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 objectives in its social programmes.
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 at 4% per annual. The bank and insurance companies are equally to invest substantially into fund. Specially, the bank contribution 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 institution is then expected to channel the fund back to the contribution by the way of long terms loans through the mortgage institution are 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 institution at state and national levels.
- The supervision and control of activities of mortgages institution in accordance with such directions may be given in that behalf by the federal executive council.
- The provision of long term credit facilities directly to Nigeria individual at such terms as 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, of 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 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 huddles 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 prescribed some requirement that might include compulsory saving with the occupancy and approved building plans, contribution of 25% of the total loans required for building or purchasing of 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 participant. Therefore, 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 year 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 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 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 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 applicant was recorded resulting from the fair policies of the bank vis-à-vis other private mortgage institution. It is pertinent to mention that the injection of #90 millions was a more conversion of the bank debts to the federal government to equity. Such increase in net worth does not in way increase the available loan able fund to the numerous mortgage applicants. However, the central bank did provide an additional loan able fund of #60 million. In effect FMBN is owned by the federal government and the CBN diligent mortgage accounts.
The federal government attaches important to housing as one of the basic necessities of human beings because of its profound effect on health, welfare and productivity of the individual. The shortage of accommodation in the major cities as per survey by 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 help to have broad knowledge of what a mortgage is all about.
Moreover, the study enable for familiarizes us with some terms used in mortgage institution and their definitions.
Conclusively the various problems and prospects of mortgage institution are also know through this research work.