Seven-Year Wait for Mortgage Crushes Nigerian’s Dream for a Home

Pius Okebe has waited so long for a loan to build a house in Nigeria’s commercial hub of Lagos that he’s worried he may be getting too old to qualify for the amount needed to finance it.

Seven years after applying, the used-tire trader is now banking on the latest government attempt to kick-start the Nigerian mortgage market: President Muhammadu Buhari’s plan to inject $1.4 billion into a state-backed lender. The measure is part of efforts to boost home ownership in a country where only 50,000 people out of almost 200 million have housing finance.

“I’m hoping I will get the loan,” Okebe, 42, said as he packed up his supplies on a rainy afternoon in the commercial capital, Lagos. “Although I know as I mature in age, the amount they can give me reduces.”

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The challenges the government faces in addressing a shortage of 17 million houses are daunting. Gripped by poverty, Nigeria has no formalized title-deeds registry and most homes consist of informal structures on land passed down from one generation to the next. Rapid urbanization is also causing a proliferation of slums and shanty towns.

Not the First

Buhari’s drive to provide more affordable homes and clear a backlog of applications for mortgages comes as he faces a tough race in his re-election bid next year and contends with an economy struggling to recover from 2016’s contraction. The 75-year-old is counting on lawmakers to approve a proposal by the end of this year to pump 500 billion naira ($1.4 billion) into Federal Mortgage Bank of Nigeria, or FMBN, to increase its capacity to fund mortgage providers.

He won’t be the first president to try rejuvenate Nigeria’s mortgage market since the country first started a building society in the mid-1950s. In the 1970s, the lender was renamed as FMBN as part of indigenization policy aimed at ending foreign dominance in the economy — a decade after gaining independence from Britain. But years of under-funding has seen FMBN achieve little success in its attempt to grow mortgages.

FMBN has recently stepped up its game after a meeting with mortgage lenders two months ago, according to Olayemi Rabiu, managing director of Lagos-based Resort Savings and Loans Plc, a mortgage lender started in 1993 and which is in talks over a recapitalization. The state-backed lender has stopped funding property developers after debts went unpaid and is dealing only with individual customers through mortgage lenders, he said.

Quicker Turnaround

“They are disbursing heavily now and regularly,” he said. “The time is now faster. Unlike before when you can wait for 5 to 10 years, now within 8 months you will know whether you can get it or not.”

FMBN, which has more than 18,200 mortgages, is confident the legislation needed for the lender’s recapitalization will be put in place before the next administration takes office in May, said Chief Executive Officer Ahmed Musa Dangiwa.

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The company also started a rent-to-own project that will eventually result in the development of 20,000 new homes, FMBN’s CEO said. A pilot program kicked off in August with 3,000 houses. The state-owned funder can lend at interest rates of as low as 4 percent, compared with the central bank’s benchmark rate of 14 percent.

While the government’s renewed push is seeing some progress, more needs to be done to entice commercial banks, said Abiola Rasaq, head of investor relations at United Bank for Africa Plc, Nigeria’s third-largest lender by revenue.

Funding Mismatch

Most Nigerian banks raise their funding from short-term deposits, when mortgages require long-term financing. Delays with getting building plans approved or title deeds finalized also adds to the cost of the loan that most developers can’t afford, he said.

“We’re optimistic about the Nigerian mortgage sector and we’ve seen a few good things evolving particularly in some states such as Lagos and Ogun, which are making it easier to obtain title documents,” Rasaq said. “There is a mortgage gap and banks are willing to bridge that. We need to De-risk the segment and put incentives to encourage banks to properly lend to the sector.”

Buhari’s administration is trying to reduce the risk of non-payment by next year starting the Nigerian Mortgage Guarantee Co., which will cover up to 50 percent of any losses in the event of a default, to improve lending to low-income earners.

At the same time, Nigeria Mortgage Refinance Co., which mimics Fannie Mae in the U.S., is helping some of the country’s 35 real estate lenders to reorganize about 30,000 mortgages to free up capital with the goal of doubling its 40 billion naira in assets.

For a country that vies with South Africa as the continent’s biggest economy, Nigeria’s mortgage industry is small, with the equivalent of $260 million in loans, compared with more than $90 billion for its more industrialized southern peer.

Okebe needs the programs to turn into reality if he is ever to build a home. Otherwise, it will be impossible without government support because he hasn’t been able to save enough.

“I still need the loan — if I have to take money from my business, the business will collapse,” he said. “The mortgage bank has told me that government is doing something about the situation and that I might smile next year. I’m praying for that to happen.”

Source: Elisha Bala-Gbogbo and Emele Onu

New mortgage law to push interest rates below 20% – Atta Akyea

Government has announced a new mortgage regime which will enable more people take up mortgage facilities with interest rate below 20 percent.

According to Works and Housing Minister, Samuel Atta-Akyea government is currently drafting a Legislative Instrument to allow it use part of the pensions fund to support banks in the sale of affordable housing units to Ghanaians.

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The country currently faces a housing deficit of 1.7millon, a figure government is trying to reduce. Commercial banks are charging between 25 and 35 percent interests on mortgage loans a figure analysts say is too high for the ordinary Ghanaian.

Speaking to Citi Business News, after the launch of Eden Heights Apartments, Works and Housing Minister, Samuel Atta-Akyea Akyea said the new mortgage regime will ease the financial burden on Ghanaians.

“Some people have executive houses, but when you have a government of conscience and you want to minister to those who are handicapped in terms of low income levels then you have to make things easier for everyone. We owe it to Ghana to roll out different forms of houses for the people. Houses that they can buy. So that the housing deficit of 1.7 million will be a thing of the past”.

Experts in the housing industry have estimated that government would have to build 190,000 to 200,000 units each year for the next 10 years to bridge the housing gap. Currently millions of Ghanaians do not stay in proper houses with basic facilities such as toilet and bathrooms.

Government again says it is in talks with some investors to develop container houses to accommodate the thousands of homeless Ghanaians.

“What kind of accommodation will you give people of that nature? Some countries have container housing and in that there are toilets that you can flash. There are investors who are ready to build such houses,” said Atta- Akyea.

Asked if government would complete the unfinished housing units started by previous governments, Mr. Atta Akyea said funds allocated for the construction of those facilities were diverted and therefore the Attorney General would be investigating those contracts.

Source:      Citinewsroom

United Wholesale CEO: Freddie Mac just made mortgage lending a better deal for borrowers

Also, PIWs are now called Appraisal Waivers

Both Freddie Mac and Fannie Mae are leading the charge to improve mortgage lending in the wake of the rising interest rate environment, according to the latest video “3 Points with Mat Ishbia,” the CEO of United Wholesale Mortgage.

Some of the latest updates are big (Freddie Mac) and some are small (Fannie Mae). But both mean more opportunity for mortgage brokers.

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According to Ishbia, Freddie Mac made 3 major changes to its mortgage lending landscape — that is its requirements for loans its willing to bundle into the secondary market. For example, regular student loan payments can now be considered as a credit to the borrower. Plus there are ways to get more cash back for your refinance clients.

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Second, Ishbia discusses briefly the latest updates to Fannie Mae’s Desktop Underwriter and Day One Certainty. Spoiler: the website is more user friendly and PIWs are now called Appraisal Waivers.

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Third, it’s true that mortgage rates are on the rise, and are expected to keep going that way for some time. But don’t despair.

Ishbia asks and answers: “Does that mean there will be no refinance opportunities for you?… no, there’s opportunity out there for you,” he says, citing several instances where the current mortgage environment can be effectively marketed by loan brokers.

Jacob Gaffney

Why most banks aren’t giving mortgage – Ubosi

 

High cost of money, nature of funds and short tenor of finance have been adduced, among reasons, why most commercial banks are not granting mortgage finance to enhance housing development and homeownership in Nigerian.
President, African Region of International Real Estate Federation (FIABCI), Mr. Chudi Ubosi, said this in a chat with news men in Lagos.

Specifically, he said banks were not giving mortgage due to the fact that less than 10 per cent of their funds come with less than 365 days tenor, which could not match real estate development that requires long-term capital.

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Long-term and capital intensive nature of real estate investment, he said, have made it difficult for banks to grant mortgage finance of 15 to 30 years with their short term money.

On how to unlock opportunities in housing finance, Ubosi said that banks were reluctant to give mortgage to real estate developers because 90 per cent of their funds were call (short term)monies.
“Call money is the one you just go to the bank, write a cheque and withdraw. Not less than 10 per cent of money in the bank is money that has less than 365 days tenure,” he said.

Apart from high cost of funds, he pointed out that exorbitant interest rate of 30 to 32 per cent being charged on loans by banks have made it difficult for mortgage financing.

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Ubosi said: “With this kind of set up, it is difficult for banks to give you a 30-year mortgage. They won’t even give you a 10-year mortgage because they have to be jobbing with people’s funds. So it is difficult for bank to give a 10 year mortgage.
“And because their own cost of money is high, there is no way you are going to get their money at lower than what they get it. It will come with a margin to cover their expenses, salaries and cost of running generators.”

The African FIABCI boss, who is also the principal partner, Ubosi Eleh and Company, warned that unless the government sorted out the economy, it would be difficult for banks to grant mortgage for home ownership

On the ways out of the woods, he canvassed for the restructuring of the nation’s economy and building of strong institutions to support mortgage finance.
He said: “Unless this economy is restructured and, at the same time, build strong institutions so that if I take money from the bank and refused to pay, I will not go to court and tie up the bank for the next 15 years trying to collect N1million back from you, it would be difficult for banks to finance mortgage.”

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According to him, there must be strong institutions, the legal system must be strong and the policing system must also be strong to support mortgage finance.

“If banks are even given mortgages at five per cent for 20 years, today I can tell you that people will collect that money and fix it in deposit account or on investment with 18 to 20 per cent per annum. And if we don’t have strong institutions, nothing will happen to them,” he said.
Ubosi also believes that investment of pension funds in mortgage finance would go a long way, urging the authority to work on this to reduce housing deficit of 17 million among Nigerians.

Nigeria needs to provide 740,000 houses yearly for next 20 years to bridge accommodation gap of 17 million.
For this to happen, he harped on the need to change some of the pension laws to enable pension funds and their administrators invest in real estate.

Dayo Ayeyemi

Need for active insurance industry in mortgage economy

 

Like action and reaction, insurance and mortgage are equal and opposite and this is why, in advanced economies of the world, an active insurance industry is highly needed for the mortgage economy. While mortgage lending is a risk, insurance, by its function, acts as a hedge against risk. It is a cover.

To develop a healthy mortgage industry, therefore, there is need for a mortgage insurance functioning as  a policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage.

This is why the new the Mortgage Guarantee programme, a new initiative by the Central Bank of Nigeria (CBN), is quite instructive. This is a kind of mortgage given to a borrower by a lender, where an identified third party will take responsibility for the loan if the borrower defaults. The programme is structured in such a way that once the borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

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Besides incentivizing mortgage lenders, a quality mortgage guarantee programme is also used to provide credit loss protection to lenders in case of borrower’s default and, according to CBN officials,  a robust primary mortgage market is a synergy of several components, all working together to effect affordability and access for intending buyers.

Investopedia, an encyclopedia of investment initiatives, identifies three aspects of mortgage insurance. These are private mortgage insurance (PMI), mortgage life insurance, or mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss. Private mortgage insurance may be called ‘lender’s mortgage insurance’ (LMI) if the premium on a PMI policy is paid by the lender and not the borrower.

For these reasons and more, an active insurance industry is needed for the growth and development of a functional mortgage industry. The mortgage industry in Nigeria is still a fledgling and fingers are frequently pointed to an insurance industry that is not as active participant as it should be.

For some reasons, in this country,  in spite of  everything the people have learnt, policy is still shaping the industry whereas, in advanced economies, it is the other way round—industry shapes policy because people in the industry are the ones implementing the policy every day.

The mortgage industry in United States, for instance, has been robust for decades and it is with continued activity. One is not however, saying that Nigeria should replicate what happens in the US here, because Nigeria has its own unique characteristics which must be recognized and respected.

Click here to watch weekly episodes of our Housing Development Programme on AIT

What the mortgage players in Nigeria should do however, is to make the US system a base-line because that system represents the global standard.  Adenike Fasanya-Osilaja, a mortgage and finance consultant advises that “we have to start learning that system and adapt it to meet our own unique cultural system and unique needs”.

Nigeria needs to lay a very good foundation for mortgage industry growth to ensure that what happened in America in 2006 with sub-prime mortgage crisis does not repeat itself here. The Nigerian Mortgage Refinance Company (NMRC) is a big possibility that can change and shape the mortgage system in this country and could also be an umbrella for the industry.

One of the high points of NMRC, as a secondary mortgage institution, is its long term, low rate global funds and, because the mortgage industry here is not yet buoyant, NMRC, whether it is succeeding now or not, can be a significant tool for achieving these attributes of a working mortgage industry.

Fasanya-Osilaja believes that the mortgage industry should be shaping NMRC and not NMRC shaping the industry, advising that the Central Bank of Nigeria (CBN), through the NMRC, should be listening to the voice of the industry.  “Experience has proved to me that the CBN is quite ready to listen and learn. The problem here, however, is that the industry has been rather passive”, she noted.

Click here to download Abuja International Housing Show Mobile App

This industry has to be standardized so that global players, from global perspectives, could view the local industry from the perspective of NMRC and mortgage banking association of Nigeria (MBAN) and see something to hold on to in their investment decisions. Despite the current challenges, the Nigerian economy could conveniently support the growth of the mortgage industry as the country is one of the fastest growing economies in the world where talent resource is amazing.

The mortgage consultant advises further that Nigeria needs to understand there is time for competition and also time for association and each is as critical as the other. “The only thing that will stop this industry from growing is over-regulation by people who are not in the industry and therefore will not understand the effect of their policy on the actual market”, she said, emphasizing the urgency of an active insurance industry to drive the needed growth in the mortgage industry.

As a step forward, mortgage insurance could come with a typical ‘pay-as-you-go’ premium payment, or may be capitalized into a lump sum payment at the time the mortgage is originated. For homeowners who are required to have PMI because of the 80 percent loan-to-value ratio rule, they can request that the insurance policy be canceled once 20 percent of the principal balance has been paid off.

Chuka Uroko 

Nigeria mortgage economy: Need for active insurance industry

 

Like action and reaction, insurance and mortgage are equal and opposite and this is why, in advanced economies of the world, an active insurance industry is highly needed for the mortgage economy. While mortgage lending is a risk, insurance, by its function, acts as a hedge against risk. It is a cover.

To develop a healthy mortgage industry, therefore, there is need for a mortgage insurance functioning as a policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage.

This is why the new the Mortgage Guarantee programme, a new initiative by the Central Bank of Nigeria (CBN), is quite instructive. This is a kind of mortgage given to a borrower by a lender, where an identified third party will take responsibility for the loan if the borrower defaults. The programme is structured in such a way that once the borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

Get your daily housing news on your mobile phone : Download from Google Play Store Now

Besides incentivizing mortgage lenders, a quality mortgage guarantee programme is also used to provide credit loss protection to lenders in case of borrower’s default and, according to CBN officials, a robust primary mortgage market is a synergy of several components, all working together to effect affordability and access for intending buyers.

Investopedia, an encyclopedia of investment initiatives, identifies three aspects of mortgage insurance. These are private mortgage insurance (PMI), mortgage life insurance, or mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss. Private mortgage insurance may be called ‘lender’s mortgage insurance’ (LMI) if the premium on a PMI policy is paid by the lender and not the borrower.

For these reasons and more, an active insurance industry is needed for the growth and development of a functional mortgage industry. The mortgage industry in Nigeria is still a fledgling and fingers are frequently pointed to an insurance industry that is not as active participant as it should be.

For some reasons, in this country, in spite of everything the people have learnt, policy is still shaping the industry whereas, in advanced economies, it is the other way round—industry shapes policy because people in the industry are the ones implementing the policy every day.

Click here to watch weekly episodes of our Housing Development Programme on AIT

The mortgage industry in United States, for instance, has been robust for decades and it is with continued activity. One is not however, saying that Nigeria should replicate what happens in the US here, because Nigeria has its own unique characteristics which must be recognized and respected.

What the mortgage players in Nigeria should do however, is to make the US system a base-line because that system represents the global standard. Adenike Fasanya-Osilaja, a mortgage and finance consultant advises that “we have to start learning that system and adapt it to meet our own unique cultural system and unique needs”.

Nigeria needs to lay a very good foundation for mortgage industry growth to ensure that what happened in America in 2006 with sub-prime mortgage crisis does not repeat itself here. The Nigerian Mortgage Refinance Company (NMRC) is a big possibility that can change and shape the mortgage system in this country and could also be an umbrella for the industry.

One of the high points of NMRC, as a secondary mortgage institution, is its long term, low rate global funds and, because the mortgage industry here is not yet buoyant, NMRC, whether it is succeeding now or not, can be a significant tool for achieving these attributes of a working mortgage industry.

Click here to download Abuja International Housing Show Mobile App

Fasanya-Osilaja believes that the mortgage industry should be shaping NMRC and not NMRC shaping the industry, advising that the Central Bank of Nigeria (CBN), through the NMRC, should be listening to the voice of the industry. “Experience has proved to me that the CBN is quite ready to listen and learn. The problem here, however, is that the industry has been rather passive”, she noted.

This industry has to be standardized so that global players, from global perspectives, could view the local industry from the perspective of NMRC and mortgage banking association of Nigeria (MBAN) and see something to hold on to in their investment decisions. Despite the current challenges, the Nigerian economy could conveniently support the growth of the mortgage industry as the country is one of the fastest growing economies in the world where talent resource is amazing.

The mortgage consultant advises further that Nigeria needs to understand there is time for competition and also time for association and each is as critical as the other. “The only thing that will stop this industry from growing is over-regulation by people who are not in the industry and therefore will not understand the effect of their policy on the actual market”, she said, emphasizing the urgency of an active insurance industry to drive the needed growth in the mortgage industry.

As a step forward, mortgage insurance could come with a typical ‘pay-as-you-go’ premium payment, or may be capitalized into a lump sum payment at the time the mortgage is originated. For homeowners who are required to have PMI because of the 80 percent loan-to-value ratio rule, they can request that the insurance policy be canceled once 20 percent of the principal balance has been paid off.

Chuka Uroko

Using mortgage finance to tackle housing deficit

 

The housing sector is one of the indices for measuring the standard of living of people across societies.

It also plays a more critical role in a country’s welfare than is always recognised, as it directly affects not only the well-being of the citizenry, but also the performance of other sectors of the economy.

Consequently, governments designed mortgage finance to enhance its adequate delivery as housing provision requires huge capital outlay, which is often beyond the capacity of the medium income/low income earners.

Despite its recognized economic and social importance, housing finance often remains underdeveloped.

The low levels of lending reflect the small numbers who can afford mortgages because of the high cost of houses in relation to incomes.

Click here to watch weekly episodes of our Housing Development Programme on AIT

It also includes the perceptions of risk that are based on, amongst other things, the informal nature of most title deeds and property.

The National Housing Policy of 1991 created a two-tier housing finance structure with Primary Mortgage Banks (PMBs) at the first tier and the Federal Mortgage Bank of Nigeria (FMBN), the supervisor and regulator, at the second tier.

The Mortgage Institutions Act (No. 53 of 1989) prescribed the regulatory/supervisory framework for the establishment and operation of Primary Mortgage Banks (PMBs).

Later, the Banks and other Financial Institutions Act of 1991, “BOFIA”, as amended, transferred the licensing, supervision and regulation of PMBs and FMBN to the Central Bank of Nigeria (CBN).

Under the process, the PMBs are to mobilise funds for their lending operations.

Some of such loans (mortgages) can be off-loaded to the Federal Mortgage Bank of Nigeria to sustain continuous liquidity in the National Housing Fund (NHF) Scheme.

This flow has unfortunately been constrained by the provisions of the Land Use Act, which restricts access to legal title to land.

To encourage the penetration of the mortgage finance and homeownership, the National Housing Fund Law (Act No.3 of 1992) was promulgated to create an alternative and continuous flow of funds from which loans could be granted to contributors on affordable repayment terms.

The law stipulates compulsory contributions of two and a half per cent (2.5per cent) of basic salary by employees earning N3, 000.00 or above in the public and private sectors, which attracts attract yearly interest at compound rates, refundable to contributors on attainment of 60 years of age or on retirement from employment after 35 years of service.

The loan attracts a fixed interest rate of not more than six per cent and repayment is for a maximum period of 30 years while maximum amount loanable is N15 million.

In its strategic move designed to make homeownership more accessible and affordable for Nigerian workers, FMBN recently approved the implementation of a Rent-To-Own Housing Scheme, an innovative affordable housing product, which provides an easy and convenient payment plan towards homeownership for Nigerian workers.

The scheme is specifically designed to make it possible for Nigerian workers to move into FMBN homes as tenants, pay for and own the properties through monthly or yearly rent payments spread over periods of up to 30- years.

To further increase affordability, the properties will also attract a single digit interest rate of 9per cent on the price of the property on an annuity basis.

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The product will cover properties with the maximum value of N15million.

The rent-to-own housing product targets Nigerian workers who are contributors to the NHF and will be implemented in phases. About 3,000 houses are planned for the pilot phase.

To deliver on the rent-to-own housing scheme, FMBN will partner with reputable estate developers for the construction of quality, cost-effective housing stock nationwide.

Payments for the houses will be domiciled with the CBN through the Treasury Single Account (TSA).

Properties that are planned for the rent-to-own scheme are existing estates that are funded by FMBN nationwide and non-funded estates.

FMBN Managing Director/Chief Executive Officer, Ahmed Dangiwa stated that the programme is targeted at increasing access to affordable housing by Nigerian workers who fall into the low- medium income brackets.

In addition, he stated that the implementation of the scheme will totally eliminate the burden of equity contributions by workers for housing loans, complement the existing products of the bank by widening the home ownership bracket, increase housing stock, and help the bank to utilize abandoned estates that are to be transferred to the scheme.

To further deepen the housing finance, the private investors are also being enlisted to boost affordable social housing delivery for Nigerians.

Alhaji Aliko Dangote and Alhaji Abdul Samad Isyaku Rabiu, Chairmen & CEOs of Dangote and BUA Groups of Companies respectively plan to partner the FMBN.

While on a joint courtesy call on the bank’s Board of Directors, they entered into partnership agreement and lent their support to the proposed N500billion recapitalization of the bank, stating that it is a much needed development that will help power FMBN’s efforts to more effectively discharge its mandate.

The Chairman, Dangote Group commended FMBN for the renewed aggressive drive to provide affordable housing for Nigerians.

Additionally, he said that his company is ready to collaborate with FMBN towards lowering the housing deficit by increasing the tempo and scale of social housing provision across the country.

His words: “Count me as a friend of FMBN. We are open to collaborating and supporting the good work that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria.”

In the same vein, the Chairman, BUA Group of Companies, Abdul Samad Isyaku Rabiu also said that he is committed to a close partnership with FMBN.

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“I am committed to forging a partnership that will add value to FMBN’s work and look forward to further engagements in this regard,” he said.

In his response, the FMBN Board Chairman, Dr. Adewale Adeeyo on behalf of the board and management thanked and applauded the two distinguished business moguls for their visit and good intentions to partner with FMBN.

He said that FMBN will work closely with them towards the consolidation and implementation of the partnerships.

Another boost to housing development is currently underway through a strategic collaboration between FMBN and leading labour unions, aimed at addressing in a structured and sustainable manner, the housing requirement of their members currently estimated to be about 3,750,000 housing units.

The FMBN in conjunction with the Nigeria Labor Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA) plans to commence the implementation of a national affordable housing delivery programme for Nigerian workers.

This includes fast-tracking the provision of safe, decent, quality and affordable housing to registered members of NLC, TUC, and NECA that also contribute to NHF, which the FMBN manages.

The pilot phase of the program aims to deliver 2,800 housing units in 14 sites across the country. This includes 200 houses in each of the six zones in addition to Lagos and Abuja.

FMBN Group Head, Corporate Communications, Mrs. Zubaida Umar said the key features of the housing program are the emphasis on affordability and the focus on low and middle-income classes of workers.

Planned house types therefore include fully finished semi-detached bungalows and blocks of 1 bedroom, 2 bedrooms, and 3 bedrooms.

She revealed that the designs of the houses are based on local and international social housing models that have been tested and proven to deliver housing units that are structurally strong, livable and at cost effective rates that fit the income of the targeted beneficiaries.

“To ensure successful execution of the program, the design and implementation plan was based on extensive deliberations and recommendation of housing experts.

They drew from the theoretical and practical experiences of housing stakeholders, varied inputs, and consultations with developers, private sector players, research and analysis of housing projects locally and abroad,” she said.

Chinedum Uwaegbulam

Saudi refinance firm plans Islamic bond issues to fund mortgage drive

 

Government-owned Saudi Real Estate Refinance Co (SRC) plans to begin issuing Islamic bonds in coming months to finance its drive to expand the kingdom’s home mortgage market, its chief executive said on Monday.

Founded in 2017 by the Public Investment Fund (PIF), the country’s top sovereign wealth fund, SRC has so far operated with financing from the PIF and short-term deals with banks.

It will now begin issuing sukuk to raise money, first in Saudi riyals but eventually in foreign currencies to attract international investors, Fabrice Susini said in an interview.

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Initial issues will be private placements but SRC aims to make its first public sukuk issue in late September or early October, probably of at least 300 million to 500 million riyals ($80 million to $133 million), he said.

SRC is part of a government-backed effort to solve one of Saudi Arabia’s biggest social and economic problems, a shortage of affordable housing, by developing the market for home loans, which is small by international standards.

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The company aims eventually to refinance 20 percent of Saudi Arabia’s primary home loans market, which authorities hope to expand to 500 billion riyals by 2020 and 800 billion riyals by 2028 from 290 billion riyals now.

So far, SRC has signed memorandums of understanding to provide banks and home finance companies with slightly less than 6 billion riyals of financing, through portfolio acquisitions and short-term deals.

Susini said increasing the availability of long-term, fixed-rate residential mortgages (LTFRs) would be key to growing the market. This month SRC began offering LTFRs of 15-20 years through banks and other finance firms.

So far, banks have generally offered such mortgages only to employees of major companies and other people with stable cash incomes. Susini said that with SRC’s intervention, LTFRs could ultimately account for half or 60 percent of the mortgage market rather than their current level of a third.

“We want to create a situation in which access to LTFRs is no longer restricted and they are available to the mass of people,” he said.

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Another goal of SRC, which models itself partly on U.S. housing finance firms Fannie Mae and Freddie Mac, is to jump-start a securitisation market in Saudi Arabia by packaging home loans into mortgage-backed securities for sale to domestic and international investors.

Susini, previously global head of securitisation at French bank BNP Paribas, said technical and legal preparations and other work on the project could take two or three years.

Andrew Torchia & Andrew Roche

FHA targets low income earners in new N27bn housing scheme

 

The Federal Housing Authority (FHA), Nigeria’s housing development agency, is targeting low income earners in the Federal Capital Territory (FCT) Abuja in its new housing project valued at N27 billion.

On completion, the scheme will deliver 1,650 housing units of different configurations. This means that the staggering housing deficit in the country will be reduced by that number while a corresponding number of low income earning households will be taken off the property market.

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Nigeria has a heavy housing deficit burden which the World Bank in one of its reports estimated at 17 million units, a figure experts say has become not only trite, but also untenable, citing population growth, rising urbanization and increased number of school leavers that have attained home-owning age.

The FHA scheme comprises 550 homes located in Zuba, Kwali and Lugbe axis of the FCT. The buildings range from one-bedroom flats to five bedroom luxury apartments and it is expected that these projects would be delivered soon, though at different times.

“Zuba is almost completed while the one in Kwali is ongoing and Lugbe phase II has just started”, Mohammed Al-Amin, FHA managing director, disclosed, adding that there were also on-going projects in Apo, Guzape area of the FCT for the high-income earners which was 90 per cent completed.

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In its determination to serve every strata of the society, the housing authority is also planning to begin another scheme in Maitama area of Abuja which will consist of villas, duplexes and luxury houses.

Mohammed explained that the housing initiative, which was aimed to make houses affordable to the low-income earners was under the social housing scheme, adding that locating houses far away from the main city does not go well with the government, hence the initiative of building houses in the fringes of the city.

“The demand for the houses is high. None will be above five million and there are one to five bedroom houses. The good thing is, if you are going through the government mortgage system, you don’t have to pay what is called equity. You don’t have to pay 30per cent of the money before a house is given to you,” he assured low income earners who are scared of affordability.

The FHA boss advised buyers not to negotiate with anyone who is not a staff of the FHA. He assured that the digitization initiative engaged by FHA would eliminate double allocations, forgery of documents and ensure quick services.

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“There exist cartels who lie to potential buyers that they have land to give them. We keep telling Nigerians not to negotiate with anyone who is not an FHA staff. Even if the person is from FHA, you should ask him if he is from estate department. Only people in estate department and, to some extent marketing department, are allowed to interact with the public”, he warned.

CHUKA UROKO

AG Mortgage Bank promotes affordable housing in Enugu

AG Mortgage Bank Plc., a Primary Mortgage Bank in the country, has enabled no fewer than 89 subscribers in Enugu to become home owners under the Federal Mortgage Bank of Nigeria (FMBN) National Housing Fund (NHF) Scheme designed to promote home ownership across the country.

The keys to the houses, according to the Managing Director and Chief Executive Officer , AG Mortgage Bank Plc, Mr.  Ngozi Anyogu, were delivered to the happy home owners recently in Enugu.

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According to the Chief Executive Officer, the houses were developed by the COPEN group, a reputable property development company with projects across the country.

All the houses are within the Jedidiah Gardens Enugu which provides a good ambience for home owners

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AG Mortgage Bank “is an active operator of the NHF Scheme, and has disbursed in excess of N3 billion to over 390 NHF beneficiaries” he said.

Access to mortgage loan under the Federal Mortgage Bank of Nigeria – National Housing Fund Scheme, according to the Chief Executive is open to all Nigerians with verifiable stream of income who are contributors to the NHF scheme.

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Anyogu urged Nigerians in all spheres of endeavour to take advantage of FMBN/NHF scheme and AG Mortgage Bank’s other mortgage products namely: The Tenant – Owner -Mortgage (TOM); a rent to own programme, Leap Into Mortgage (LIMO) product, an incremental mortgage arrangement, that fits home buyers at different income levels.

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