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THE IMPACT OF MORTGAGE BANKING IN NIGERIANS ECONOMIC DEVELOPMENT PROGRAMMES.

 

ABSTRACT

        This is a research on Mortgage Banking in Nigerian Economic Development Programmes.

        The research sorted to know for the existence of mortgage banking has been fact by the people and to the extent their objectives has been achieved.

        In carrying out this research the researches made us of oral interested and questionnaire and the finding infere that mortgage bank it towards the economic development has been felt through many areas of their promotional activities such as loan advancement home and house renovators and refurbishment etc.

        Therefore, it was this base that mortgage banking has been appreciated by the greatly achieved.

 

                         

CHAPTER ONE

 

1. BACKGROUND OF THE STUDY

FEDERAL MORTGAGE BANK OF NIGERIA (FMB)

Housing is one of the Importance factors that determine Urban forms and constitutes the single most serious problem facing large cities in Nigeria today.

        In the 1950s and 1960s, the need to finance housing in Nigeria remained so small mainly because of low urbanization level.  The byoyancy of the Nigeria economy in the 1970s and the uneven spatial distribution of industrial development accelerated the rate of urbanization in Nigeria.  The heretherto uncontrolled and unplanned urbanization resulted in housing shortages in qualitative and quantitative forms.  There existed today a yawning   gap between the demand and supply of decent accommodation.  The consequence of excess demand over supply, was high rent, and the growth of informal rationing system which discriminated against the poor to the extent that over half of the urban population in Nigeria live in slump against this background and considering the fact that housing provides the physical frame work in which man’s human, social, economic and cultural resources are realized, entrenched and integrated, it becomes obvious that adequate housing deserved great attention.

        In realization of the importance attached to housing the federal government of Nigeria established the Federal Mortgage Bank of Nigeria in the year 1977 as a successor to Nigeria Building society established in the year 1956.

1. STATEMENT OF PROBLEM

 

Mortgage Banking was established by the Federal Government of Nigeria to assist in financing housing prograts as a means of checking the magnetude housing problems facing the Urban cities.  But this aspiration has not been fully realized due to pressing problems facing the mortgage banking.

        In Nigeria, in the disbursement of loan to individual developes, some of those problems  includes;

1. Now repayment of housing loans given out to individual, this situation of non repayment makes it highly difficult for the mortgage banks to still extend such housing loans to other customers who has a need the loan, for housing development.
2. The ability of the individuals to declare his or her actual income is another major problem facing the bank.  This situation makes imperstively difficult for mortgage bank to disburse enough loan, enough to complete the individual’s housing project.  In a situation of such kind, the mortage bank will require the customer to bring the house to a point before applying to the bank to come in with a loan that will be enough to complete the building project.
3. The inability of the individual to obtain title documents like this certificate of occupancy (CFO) for urban areas create a problem to the mortgage bank in disbursing loans.

   1. INTRODUCTION

 

The Nigeria building society was the first mortage institution to be established in 1956 to finance house building not necessarily home ownership it was financed by substantial equity by the colonial later common wealth development corporation (CDC) and the federal and regional government in the regions, housing corporation were established, partly to build and save or let estates.

Housing and impact mortgage finance represents the third area where special intervention is made necessary by the sheer magnitude of the problems. 

The Federal mortgage bank of Nigeria (FMBN) was established in 1977 as a fully owned federal government housing development finance agency under the federal mortgage bank Act No 7 of 1977.  This  step followed the dissolution of the Nigeria building bank society (NBS) whose assets and liabilities were taken over by the FMBN.  The Nigeria building society was itself incorporated in December 1956 with a capital of N3.25m and jointly owned by the common wealth Development corporation (CDC), the Federal government of Nigeria and the Eastern Nigerian government in the proportion of 60 percents, 31 percent and 9 percent respectively.  The federal military government however tool over the (CDC) share of the capital in 1972.  the authorized share capital at the time federal mortgage bank of Nigeria (FMBN) 1987 diary.

The firm of Bereuschool move Bosboom (Management consultant) was contracted by the federal government to supervise the take off of the new bank for a 3years period of from 1977.

With the exit of the Dutch management consultants in July 1980, the management operations of the bank became wholly independous in the same time.  There was also a charge in the authorized share capital and ownership structure of the bank.  The authorized share capital increased to N150 million jointly subscribed by the federal government and the central bank of Nigeria in the proportion of 60 percent to 40 percent respectively.  The federal government appoints the chairman and members of the board of directors.  By 1931, the bank has established branches in all the state capitals.  Underscoring its national outlook, since then additional forty-three (43) home savings center had been established in major in outside the state capitals.  This is decidedly to expand it sprend of service delivery as we as to widen its savings mobilization buse.

The 19 branches offices were organized into 4 zones otherwise known as area offices.

Each branch office is self-accounting and is empowered to approve individual mortgage loans up to N65,000.00 which has to be rectified by the head offices for the time being, the low lending rate and longer matarity spread of FMBN loans have led to an influx of mortage applicants from allux over the federation since 1977 to date.

The mortgage assets of the bank have been increasing steadily over the years.  As at 30th June 1977, the next mortgage assets of the bank was N75 million but as at 31st December 1982.  The next assets of the bank stood at N326 million between 1977 and May 1986, a total loan disbursement of N365, 560, 130 was 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 requirement of private developers, state housing corporation and big commercial ventures.

1. PURPOSE OF THE STUDY

 

There may be several purposes opened to any one carrying out a research of this nature but my own purposes are narrowed down as follows.

1. To examine the extent to which mortgage bank have conformed to the federal government and central bank stipulated credit guideline to operate of nature housing fund scheme.
2. To evaluate the reason why despite federal government finding, they fed relevant to extend credit to operators of national housing fund.
3. To find out the purpose of mortgage creation.
4. To find out why the guidelines are not workable within the context of the present mortgage structure without jeopardizing their business interest.
5. To identify the problem of mortgage bank as regards the disbursement of loans to the national housing fund and actual causes of loan disbursement delay.
6. To investigate as far as mortgage banking is concerned and its resultant effect to the people and the overall economy.
7. To also examine other area of the guidelines that constitute problem.