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Comfort for investors as CBN deepens efforts at growing mortgage market

More than ever before, efforts at driving growth in the fledgling mortgage market in Nigeria is
gaining traction and expectation is that, if there is no drop or relaxation in the tempo of
activities, it won’t be long before the market stats seeing the impact and fruits of those efforts.

The mortgage market in Africa’s largest economy remains in slow growth due to a plethora of reasons some of which are now being addressed in the new efforts which involve major stakeholders in the mortgage industry.

The Nigeria Mortgage Guarantee Company (NMGC), Model Mortgage Foreclosure Bill, and the Uniform Mortgage Underwriting Standards for both the formal and informal sectors of the economy are the
most outstanding of the new initiatives in the industry.

The partnership among the Central Bank of Nigeria (CBN), the Nigerian Mortgage Refinance Company (NMRC) and the Mortgage Banking Association of Nigeria (MBAN) is more than enough comfort for both investors and home seekers that it is a new dawn in the market.

To address the problems associated with land processes, the CBN is partnering with NMRC, which spear-headed the drafting of a Model Mortgage Foreclosure Bill, as well as MBAN and other strategic partners, to encourage the passage of a Model Mortgage Foreclosure Law in every state of the nation.
The apex bank has even provided states with the draft MMFL, and has held an MMFL workshop with their key representatives to ease their task to passage of the law.

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The bank says it is encouraged by the recent surge in housing policy adjudication, led by the most housing-friendly states in Nigeria, citing the Lagos High Court which has delivered ground-breaking decisions positively impacting the industry and giving comfort to intending homebuyers as well as investors.
The judiciary had always been castigated for its slow justice delivery, but the decision by the Court of Appeal in the Thomas Wyatt & Ors matter is an arbiter of the increased sensitivity of the judiciary to
mortgage contract relationships, and it is applauded forthat brilliance and clarity.

Standardization in mortgage processes is also being addressed head-on as could be seen in the Uniform underwriting standards for the formal sector, informal sector, and non-interest sector which have already been adopted, and are being used by the larger section of the industry.

NMRC has launched the MMS mortgage platform, which has been endorsed by the CBN and is encouraging all parties to utilize. This platform will standardize documentation, loan processing and underwriting, property valuation, closing and many other areas.

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The current effort is however not unmindful of the cultural biases towards mortgage loans. The CBN in particular believes that cultural aversion to mortgage loans is actually one of the toughest battles in
the housing sector, but has decided to continue to engage with the public in order to destigmatize mortgage finance, using the positive effects on employment,internally generated revenue (IGR) and generational wealth enhancement.

The bank says it is encouraged by the interest shown at state government levels, and so expects to see significant progress in mortgage friendly legislation in future.

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A significant challenge in the market is lack of knowledge and awareness regarding mortgage loans. The bank’s National Housing Finance Programme (NHFP) national campaign ‘My Own Home’ has been focused on creating such public awareness, and the states and industry are expected to do their part.

There has been a significant uptick in public curiosity regarding various types of home financing, and the bank assures it will continue to encourage all industry players to invest in advertising, education and incentivization to ensure the continued viability of the housing sector.

CBN believes the entrance of a robust and viable mortgage guarantee product into the housing market is clearly a win for all parties concerned, pointing out however that its existence and/or viability will be directly related to the effort the industry operators invest in ensuring a suitable environment for its development, deployment and administration.

Chuka Uroko

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