Retail mortgage and dearth of wealth-building products

The dawn of each day heightens the fear among mortgage industry stakeholders that the Nigerian Mortgage Refinance Company (NMRC) may end up another great expectations after Charles Dickens’.

Increase in liquidity in the mortgage system which is part of the mission of the refinance company was expected to enable the primary mortgage banks (PMBS) whose mortgages are being refinanced to activate their retail bank units and start churning out wealth-building products for consumers.

A number of these PMBS have their mortgages refinanced and expectation is that they should be originating products, especially consumer products, that can enable home ownership or ownership of house-hold items, or products that can help subscribers raise equity from their homes.

Activities in the mortgage market before the banking sector reform was quite interesting. The foray of many commercial banks into retail mortgage after the banking consolidation and recapitalisation led to the evolution of a competitive business environment, and a culture of efficiency and innovation among the operators.

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Institutions had to develop competitive spirit not only to remain in business, but also to increase and make good returns on shareholders’ investment such that innovative ideas, especially in product origination, became the norm.

The market was awash with products, especially those that would enable consumers have easy access to homeownership. Some of the mortgage institutions took it a step higher with the creation of products that would enable property owners build wealth from their property and yet enjoy the comfort of such property.

Consumers look back to those days in the market and are asking where these products from which they could build wealth and make a difference in their investment or assets. They have not forgotten such products as First City Monument Bank’s (FCMB) ‘Unlock your Cash’ and former Bank PHB’S ‘Home Owner’s Advantage’ which are the kind of products that they need today in the face of the downturn in the economy.

FCMB’S Unlock your Cash, a variant of the bank’s flagship mortgage product, ‘Myhome’ is one of the most popular refinance products in Nigerian mortgage market. This gave opportunity to people who had worked hard to build or buy their homes to let those homes work for them by releasing the funds comparative to the value of the property towards meeting other life needs.

Some customers who had been forced, in the past, to borrow short tenured loans of 3 to 5 years now have the opportunity, through this refinancing option, to access the product where the bank pays off the loan owed the financial institution and provides more manageable repayment amounts that ease the customer’s cash flow through the bank’s longer tenors.

For existing home owners, the bank allowed them to unlock up to 70 percent of the value of the property if they lived in it and 60 percent if they didn’t. It also provided home owners the opportunity of registering their titles making their properties mobile and ensuring that they were working for them just like share certificates made stocks fluid.

Ladi Balogun, then group managing director and chief executive officer of the bank, remarked then that they had been able to impact positively on tenured loans in the market by providing longer tenure.

“We have been able to offer long tenured loans to the Nigerian mortgage market. Our observation before we entered the market was that only short term loans were available, making mortgages very unaffordable to the average salary earner.

“Now, with a longer pay back period, repayments are more manageable, with the option of reducing one’s principal outstanding when his economy improves or even leveraging more funds as the property value appreciates”, he said. This kind of statement is rare in the mortgage market of today.

The Home Owners Advantage floated by the defunct Bank PHB was another wealth building product that, by its name, gave advantage to homeowners to build wealth on such homes.

The product was different from traditional mortgage financing in the sense that it allowed those who own their homes and had valid legal titles to them to raise finance out of their property for a fixed period. The finance they have raised could be used to buy new assets or create new investments, grow their wealth and live better life.

Over all, these are the kind of products that both home owners and those who want to own one are longing for. According to them, mortgage products should be able to meet the needs of its consumers. What obtains in the market presently are generally unaffordable and do not give any advantage to existing or prospective homeowners.

Mortgage operators, however, insist that they have ‘something for somebody’ in the market.

In all these, Resort Savings and Loans’ RIMPLAN, an acronym for Resort Investment Plan, and Trustbond Mortgage Bank’s Homeplan stand out. According to the authorities of these banks, subscribers to the RIMPLAN, they explain, is a well thought out product aimed to encourage savings towards homeownership and it facilitates timely and favourably priced mortgage delivery to the subscribers.

Source: Businessday

Millions of mortgage, loan documents were exposed online in massive security lapse

A massive online data leak reportedly involving more than 24 million mortgage and bank loan documents exposed sensitive consumer information from several major U.S. lenders, according to a tech news website.

The security lapse was first reported by Zack Whittaker of TechCrunch Wednesday afternoon. An unprotected online server that didn’t have a password is the cause of the leak, leaving millions of pages of sensitive documents accessible to anyone online, TechCrunch reported.
The exposed data included mortgage and loan mortgage agreements, amortization schedules and other sensitive financial documents that revealed borrowers’ names, addresses, phone numbers, and Social Security numbers, and birth dates, among other data, according to the TechCrunch report.

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Additionally, TechCrunch found that the data came from loans and mortgages from back to 2008 (or earlier), and included files from CitiFinancial (formerly a lending finance division of Citigroup), HSBC Life Insurance, Wells Fargo, CapitalOne and some federal agencies, including the U.S. Department of Housing and Urban Development.

Although the information was online for just two weeks, independent infosecurity researcher Bob Diachenko was able to find the stockpile. In a blog post about his discovery, Diachenko writes that he found the exposed data on Jan. 10 in random parts (not in single reports), and immediately alerted one of the lenders to investigate. By Jan. 15, the database had been secured, Diachenko writes.

“These documents contained highly sensitive data, such as Social Security numbers, names, phones, addresses, credit history, and other details which are usually part of a mortgage or credit report,” Diachenko writes on his blog. “This information would be a gold mine for cyber criminals who would have everything they need to steal identities, file false tax returns, get loans or credit cards.”
TechCrunch assisted Diachenko in tracing the security lapse to Ascension, a data and analytics firm for the mortgage servicing industry based in Fort Worth, Texas. In addition to custom data analysis, Ascension converts paper documents into electronic files, which is where Diachenko said the leak originated.

“Sandy Campbell, general counsel at Ascension’s parent company, Rocktop Partners, which owns more than 46,000 loans worth $4.4 billion, confirmed the security incident to TechCrunch, but said its systems were unaffected.

“On January 15, this vendor learned of a server configuration error that may have led to exposure of some mortgage-related documents,” he said in a statement. “The vendor immediately shut down the server in question, and we are working with third-party forensics experts to investigate the situation. We are also in regular contact with law enforcement investigators and technology partners as this investigation proceeds.”

An unspecified portion of the loans were shared with the contractor for analysis, the statement added, but couldn’t immediately confirm how many loan documents were exposed.”

What to do if you suspect your personal info has been exposed

Data breaches can become a major financial and personal headache. To protect your finances, take these five steps if you think your information has been compromised.

1. Don’t hesitate: Freeze your credit

A credit freeze may protect you if someone tries to apply for credit in your name using information that they accessed during a breach. Every data breach is another reminder that you should take advantage of this free service. Each the three major credit bureaus has procedures for freezing your credit.

2. Monitor accounts and your credit

Being proactive about monitoring your credit and your financial accounts allows you to see if there is any unusual activity. You can get a free credit report from Bankrate.

Because some credit card numbers and expiration dates may have been compromised, you may want to talk to your financial institution about getting a new credit or debit card number issued. At the very least, it’s smart to have text, email or mobile notifications of purchases and to monitor your accounts on a daily basis for potential fraudulent activity.

3. Add new layers of security

Safeguard your accounts by enrolling in two-factor authentication, which would require you to log on using both a password and a one-time code sent to your smartphone. That would make it more difficult for a criminal to gain access.

You’ll also want to set up a PIN code with your wireless provider, so a customer service agent wouldn’t be tricked into allowing a hacker to commandeer your phone. Establish a system with financial advisers who have  access to your investment accounts so it would take more than just a simple email from you to get them to wire money from your funds.

4. Be careful with your taxes

Identity thieves don’t stop with credit cards. In 2017, the IRS received 242,000 reports from taxpayers of identity theft. One way to remain vigilant when it comes to protecting yourself from identity theft is to file your return as early as possible, and change your withholding to lower a potential refund.

If you think you’re the victim of fraud, file the identity-theft affidavit, Form 14039, with the IRS.

5. Watch your emails and snail mail

Hackers also may use stolen information to send you a phishing email – a note that looks legitimate but contains links to malware. It’s usually better to go right to the website and type in the address in your browser, rather than clicking on a link – if possible.

Fraudsters can use these emails to get you to click on encryption ransomware, which can block you out of your photos and sensitive files until you agree to pay a ransom to regain access. Backing up your data on a hard drive is key.

Read your email carefully before responding, paying special attention to the sender. A scammer might hide behind a name that looks familiar, but the spelling will be off by a letter or two.

Source: Deborah Kearns

How Mortgage Brokers Can Win More Business in 2019

The end of the year is a good time to reflect on the success you experienced in 2018 and game plan for how 2019 can be even better. Figure out your goals and determine what you’ll do to grow your business–whether that’s doing a couple more loans in a month, growing your team, and so on.
As the purchase market continues to thrive, competition between lenders is strong for every loan. Mortgage Brokers are in a great position to win more loans because of the loan options, service, and technology they can provide. The wholesale channel is growing, and every Mortgage Broker should have the mindset that they can dominate their market next year. Brokers need to figure out how they’re going to use their advantages to take their business to another level in 2019.
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Win over real estate agents, win business
In a purchase market, building and strengthening relationships with real estate professionals is essential. Real Estate Agents are actually very aligned with Mortgage Brokers–they serve the client, not a lender.

The first step to building those relationships is recognizing what’s most important to real estate professionals. Hitting a contract date is at the top of the list. This is a huge competitive advantage for Mortgage Brokers because they have wholesale partners with faster turn times than retail banks. Real Estate Agents can be confident that when they write a 30-day purchase agreement, their loan will close on time–and that means they get paid faster.
Brokers can also offer real estate professionals an advantage at the closing table by working with a lender who funds instantly. Funds are available before a closing takes place so a borrower can get their keys and a Real Estate Agent can get paid once they sign with no further waiting. This takes a lot of the stress out of the closing process and makes a real estate agent look like a hero to their clients.

The more they know, the more successful they’ll be
A recent survey showed that once a Real Estate Agent uses a Mortgage Broker, 90 percent would recommend that Broker to other homebuying clients. The same survey showed that, once a Real Estate Agent worked with a Mortgage Broker, they were 35 percent less likely to recommend a national bank to future clients.

The two biggest reasons why real estate professionals use Mortgage Brokers are their ability to shop around and the high level of service they provide. If a Mortgage Broker has access to five lenders, they have the ability to pick the best of the five. It’s a no-brainer. And because a Broker’s reputation is on the line with every loan, they have to deliver great service or they won’t get more business.
The survey also revealed that only three percent of real estate professionals recommend Brokers because of their speed. This is a misconception Brokers need to educate their real estate partners on and could be a contributing factor as to why they’re having a tough time building those relationships.
Real estate professionals need to understand that Brokers can close loans just as fast, if not faster, than online lenders because of all the technology they have access to through their wholesale lending partners. It’s up to Brokers to educate real estate professionals on the benefits they provide, and why those advantages are important.

Embrace technology
Technology will continue to be the biggest disruptor in the mortgage business. It makes closing loans a faster, easier and more seamless process. A Mortgage Broker can now close a loan without ever having to pick up a pen or print a sheet of paper. As 100 percent virtual e-closings have become available in roughly half the country, borrowers are able to complete a closing anywhere that has Wi-Fi access.

Brokers have the opportunity to deliver a fully digital mortgage experience, from application to closing, to their real estate partners and borrowers alike. You don’t have to use all the tools that are out there, but having access to them is a nice selling point.
Of course, as valuable as technology is, it’s only as good as the people behind it. Brokers should know their clients and remember that, without great service, technology is simply a tool. With it, technology is a true game-changer.

Enhance your online presence
Mortgage Brokers need to be where their audience is. Having a presence on social media and engaging in conversation with your followers is something you can do that doesn’t take much time, but can help you get an edge. One study found that 77 percent of Millennials use social media during the homebuying process. Posting valuable content on Facebook and LinkedIn is an opportunity to get in front of potential clients. If you need help, work with a lender who can teach you how to use social media to your advantage.

It’s also important to pay attention to online reviews. Eighty-nine percent of Millennial borrowers rely on online reviews and recommendations. If you’re going to a new restaurant, you’re probably going to look it up online beforehand to see what people are saying about the food. It’s no different when it comes to getting a mortgage–especially when you’re talking about one of the biggest financial transactions of someone’s life.
Mortgage Brokers should use online reviews to their advantage. Ask borrowers who had a good experience to post a positive online review. That should be done soon after a closing while it’s still fresh in a client’s mind. Having a strong online presence can help brokers build their brand and get more business.

Dominate by being different
Mortgage Brokers should always be thinking about ways they can differentiate themselves. Offer something different than the competition. When the market shifts, Brokers know there’s a lender out there that fits, whereas a retail lender has to fit a certain product set.

Brokers need to leverage the wholesale lenders they work with and the different options they can offer their borrowers. Maybe it’s different choices on mortgage insurance, a great jumbo program or reliably fast closings. Know your lenders and take advantage of their strengths.
Brokers can also make themselves stand out by not giving into the mindset that higher rates means business is going to slow down. We are still in a historically low period for interest rates. Refinance opportunities will still be out there and brokers can find them by staying in touch with past clients. Mortgage Broker market share is actually up to 16 percent and is continuing to grow because Brokers don’t use the market as an excuse. Business is out there. Opportunity is out there. Brokers can control their own destiny by taking advantage of it.

Mortgage Brokers aren’t just making a comeback–they are back! Every day, more loan originators are realizing that an independent mortgage company is the best place to work because it’s the best place for a consumer to get a loan. The wholesale channel will continue to grow in 2019 and Brokers need to find new ways to compete for loans. As the New Year approaches, Brokers should be thinking about how they grow their business long-term, not just short-term. What you do this year will lay the groundwork for 2020, 2021 and beyond.

Source:  Mat Ishbia

Here’s what some mortgage lenders are doing to help Americans affected by shutdown

As the government shutdown stretches on, mortgage lenders and others in the housing industry are beginning to step up to help those most affected by the inability of the president and Congress to agree on a budget to fund the government.

More than one month ago, President Donald Trump and Democrats in Congress disagreed over funding for a border wall between the U.S. and Mexico – Trump wants $5.7 billion for the wall and the Democrats don’t want to give him anything.

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There are approximately 800,000 federal workers who are either furloughed or working without pay due to the shutdown. The Federal Housing Administration has already asked the mortgage industry to help those workers with their mortgages, but a group of nearly two dozen congressional Democrats want more protection than that.

Earlier this month, a group of 22 Democrats introduced legislation in both the Senate and the House of Representatives that would protect federal workers and their families from foreclosures, evictions, and loan defaults during a government shutdown.

And now, some lenders in the mortgage industry are responding to the FHA’s call for help.

Ally Financial,announced it is expanding its assistance program to provide aid and resources for customers affected by the shutdown. Some of these assistance programs include transaction refunds, waivers and payment deferrals, and are used during critical times such as natural disasters and economic crises.

“Our hearts go out to any individual experiencing financial challenges and, given the extended duration of the partial shutdown, we want to assist our customers who are burdened by this as best as we can,” said Diane Morais, Ally Bank president of consumer and commercial banking products. “Our focus is on truly being an ally in these uncertain times and providing relief that, if needed, can help.”

Some of the assistance those affected by the shutdown can utilize include refunds of transaction fees, refunds of non-sufficient funds fees, CD early withdrawal penalty waivers, expedited check fee waivers, wire fee waivers, late charge waivers and payment extensions.

Homesnap, a multiple listing site, announced it is launching a program to pay the mortgage or rent payment in February of 10 government workers or contractors affected by the shutdown.

Those affected by the shutdown can take a photo or video or write a few words about what their home means to them through social media using the hashtags #MyHomeMeans and #ShutdownStories. The company will be accepting submissions through Jan. 31, 2019.

First Financial Northwest, the holding company for First Financial Northwest Bank, announced it will also help its customers who have been affected by the shutdown.

The bank announced that its customers who are current federal employees who have been furloughed may be eligible for help with payments on existing loans or may qualify for temporary relief loans in an amount up to twice their net monthly pay direct deposited to a First Financial Northwest Bank checking account, interest free for 90 days. Customers currently in the process of obtaining a loan may be eligible to receive an additional 30-day rate lock at no additional cost.

“We are proud to step in and help our hardworking, dedicated customers affected by the federal government shutdown,” said Joseph Kiley, First Financial president and CEO.

“We are committed to supporting our customers in any way we can to find solutions to ease their financial burdens during these uncertain times and encourage them to reach out so we can get them assistance as soon as possible,” Kiley said. “We are grateful for the opportunity to serve our communities every day.”


Minority Mortgage Seekers Pay More Fees To White Brokers

Mortgage seekers from minority groups may pay more in fees than similarly qualified white borrowers, report researchers.

In a study, the researchers found that when minorities seek mortgages they pay about 8 percent more—or $400 more—than white borrowers when they seek loans from white mortgage agents. Mortgage agents can assess fees, such as the broker origination fee, which are negotiable, or can even be waived.

Earlier studies had tended to focus on the race of the borrower, not the broker, according to Brent Ambrose, professor of real estate and of risk management at Penn State, and an associate of the university’s Institute for CyberScience (ICS).

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However, because the dataset, which contained information from more than 25,000 different mortgage brokers, included broker last names, the researchers were able to use a statistical method to infer the broker’s race based on their last names and give them a better understanding of the role race played on both sides of the mortgage-buying process. By matching the brokers’ surnames with a list of last names from the US Census Bureau, the researchers were able to infer race and ethnicity. The method is similar to the ways that regulators and courts infer race and ethnicity.

“All the previous studies that have looked at race and mortgage lending have only been able to observe the race of the borrower, so it’s never really clear what’s driving the results,” says Ambrose, who worked with James K. Conklin, assistant professor of real estate at the University of Georgia, and Luis A. Lopez, doctoral student in business administration at Penn State.

The researchers, who presented their findings at Singapore Management University’s Conference on Urban and Regional Economics in December, also found that minority borrowers do not receive preferential treatment when they seek loans from minority brokers. Whites working with minority brokers pay about the same fee as their minority counterparts.

To determine whether there was a correlation between race and the fees borrowers paid, the researchers controlled for several other factors using data in the mortgage data, including financial literacy, fee transparency, and the selection process of both borrowers and brokers. None of these factors had a significant impact on pricing the fees.


The researchers also investigated what was causing the discrimination. They tested whether the white brokers demonstrated overt racism—or animus—toward minority groups, or whether it is the result of statistical discrimination, a form of racial profiling.

In a first test, the researchers examined whether fees minorities paid varied across credit scores, which would be a sign of statistical discrimination. In the second test, they investigated whether the use of Google search terms with racially charged language in specific areas correlated with preferential loan treatment in those areas. The results from both tests were inconsistent with the hypothesis that the observed differences in fees arose from animus on part of the white brokers.

According to Ambrose, the results suggest that statistical discrimination is behind the higher mortgage fees, rather than actual animosity toward minorities.

Brokers have a high degree of discretion on the fees they assess, which can cause borrowers to pay more or less for their mortgages, says Ambrose, who also serves as the director of the Institute for Real Estate Studies. For example, they can assess front-end fees, such as application fee, underwriter fee, mortgage brokerage firm fee, and points. Borrowers usually pay these fees at closing. There are also back-end fees, including yield spread premium and correspondence premium.


The researchers also examined how recent regulations of the mortgage industry may affect the ability of brokers to charge different fees. The results suggest that regulations put in place following the Great Financial Crisis did reduce the ability of brokers to vary fees across borrowers. However, the researchers also found that this outcome comes at a cost in the form of reduced access to credit.

“There’s a cost and benefit to regulation, which is the point we’re trying to make,” says Ambrose. “The good side is you reduce disparities, but the bad side is you generate potential credit rationing.”

The researchers used data from applications for brokered, first-lien, residential loans that New Century, a subprime lender, approved between January 2003 and March 2007. Researchers performed computations for this research on the Penn State Institute for CyberScience Advanced CyberInfrastructure (ICS-ACI).


Opinion: I refused a consent order, Now regulators want my mortgage license

In May of this past year, the Connecticut Department of Banking conducted an examination of my mortgage company, 1st Alliance Lending. The auditors arrived unannounced, made no document requests prior to arrival, and declared “this is the new process.” They made those representations to multiple of members of our executive management team, as well as some of the company’s vice presidents. They were on site for multiple days, and our staff who participated found the entire examination to be highly unusual.

The Connecticut Department of Banking then proposed a consent order based on an interpretation of the Secure and Fair Enforcement for Mortgage Licensing Act that the DOB had not disseminated through regulation.

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The premise of the SAFE Act is simple: every borrower should be entitled to work with a licensed, professionally trained and tested mortgage loan originator as they go through the mortgage application and loan closing process. The SAFE Act was designed, in the wake of the financial crisis, to eliminate unsupervised originations; thus reducing fraud and unethical origination practices such as steering. The SAFE Act has done a lot of good.

But 1st Alliance refused to sign the proposed consent order with the DOB for three reasons. First, it required us to apply Connecticut’s interpretation across all 46 states in which we lend. It also required an admission of liability even though we, in good faith, dispute the DOB’s interpretation. And lastly, it imposed a gag order worded as follows:

“1st Alliance shall not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any allegation referenced in this consent order or create the impression that this consent order is without factual basis.”

This was offered as a take it or leave it proposition. We declined, and were told: “The department will proceed accordingly.”

Soon thereafter, the meaning of those ominous words became apparent.

Our decision was not made out of disrespect. It was done solely to protect the company by retaining our rights to defend our position, especially with other regulatory bodies. Even though we refused to enter into the overbroad consent order, it is important to note that out of deference to the DOB, we implemented the DOB’s interpretation for Connecticut borrowers immediately when they communicated their position.

The Connecticut DOB then deployed, with a vengeance, an attack unlike anything I’ve ever seen in my 20 years in the industry. They attempted to enlist the Multi-State Mortgage Committee in their action, not as a policy advocate, or an unbiased arbiter to find a solution, but as leverage. Fortunately, the Connecticut DOB’s motives were discovered, and the said MMC member declined to join the DOB’s action. They made it clear they reserved the right to seek more information, and we stand ready to comply. To date, no further request for information has been received.

In the coming weeks, 1st Alliance Lending will begin the administrative hearing process.We do not look for sympathy or support, as we are competent, acting in good faith, and right on the law. The fact that SAFE creep currently represents an existential threat to 1st Alliance may not matter to most readers; but the fact that an independent mortgage banker, with a 13-year track record of consumer care that makes us proud, without any record of consumer abuse or complaints besides the typical anger about loan denial, is currently being accused of not having the “fitness and character” for mortgage banking licensure, should concern all readers.

Despite our good-faith disagreement, we applied the DOB’s interpretation as soon as they communicated it to us, absent a shred of prior regulatory guidance to licensees. We didn’t sign the proposed consent order for valid reasons. There is no question we are compliant today, yet DOB is demanding our license; and they are trying to twist this dispute into questions about our character and fitness.

Source: John Dilorio

Mortgage Warehouse Funding Limited: Providing Support To Nigeria’s Mortgage Sector

Tuesday, October 10th 2017 marked a remarkable milestone in the history of mortgage finance in Nigeria with the launch of the Mortgage Warehouse Funding Limited (MWFL); a Special Purpose Company set up with the sole objective of providing short-term local currency, competitively-priced funding to Mortgage Banks in a bid to enhance their mortgage origination capacity.

The Asset Backed Commercial Paper Conduit was incorporated in December 2014, and is initially sponsored by a group of 8 Member Mortgage Banks (MMBs); as mobilised by Mortgage Bankers Association of Nigeria (MBAN), as well as certain other carefully selected parties each of which bring a critical element to the success of the Company including: the Nigeria Mortgage Refinancing Company Plc. (NMRC) as Liquidity & Off-Take provider, CitiHomes Finance Company Limited (“CitiHomes”); a CBN-licensed financial institution as Program Manager, Lion’s Head Global Partners, London through its African Local Currency Bond Fund; as the Initial Subordinated Commercial Paper Subscribers, and Dunn Loren Merrifield Advisory Partners as Financial Adviser and Arranger.

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The activities of MWFL are aimed to complement those of NMRC in that whilst NMRC is licensed to provide long term matching funding and liquidity to the mortgage sector via secondary market refinancing from the bond market, MWFL will serve to provide short term/interim funding for mortgage origination financing to the Mortgage Banks. MWFL will provide this short-term financing, through the issuance of high-quality investment grade rated Senior and Subordinated Commercial Paper Notes under an initial N20Billion Naira Program currently undergoing registration at FMDQ OTC. The proceeds of which will be used to fund a percentage of its Member Mortgage Banks’ pipeline of pre-qualified NMRC conforming mortgage loans.

The MMBs may then from time to time apply for short-term funding from MWFL under the terms of a lending agreement executed between each MMB and MWFL to fund booked mortgages at origination closing. These mortgages are then allowed to season on the balance sheet of the mortgage bank for a minimum period of 6 months before they become eligible for refinancing by NMRC in accordance with the NMRC’s Master Purchase Refinancing and Servicing Agreement.

In attaining its primary objective of providing liquidity to its Member Mortgage Banks to originate NMRC conforming mortgages, a signing ceremony held on Thursday 28th September 2017 where the parties executed all necessary agreements. The highlight of the signing ceremony was the execution of the Liquidity Asset Purchase Agreement between NMRC and MWFL under which NMRC undertakes to refinance NMRC UUS conforming mortgages pre-financed by MWFL.

Introducing Mortgage Warehouse Funding Limited during the launch event in Abuja, Director OFISD at Central Bank of Nigeria Mrs. Tokunbo Martins commended that “Mortgage Warehouse Funding Limited is a welcome idea. It is expected to address the drought of funds available for mortgage origination.

In addition, Head Nigeria Housing Finance Program, CBN, Mr. Adedeji Adesemoye said “the introduction of MWFL into the mortgage eco-system is a laudable development that will help both the mortgage banks and the construction industry”.

According to Mr. Niyi Akinlusi, President MBAN and Director on the Boards of both NMRC and MWFL, “Mortgage Warehouse Funding Limited is expected to significantly increase the fire-power available to mortgage banks for their daily operations”.

With the successful completion of this landmark issue, MWFL will connect the Nigerian mortgage market currently plagued with low deposits level and high cost of alternative sources of funds, to the money market by efficiently inter-mediating short-term funds from the money markets towards the provision of housing finance in Nigeria.

Global Credit Rating Company, an internationally recognised and fully accredited rating agency accorded the indicative ratings of ‘A1(NG)(sf)’ to the Senior Notes of the ABCP, and an ‘A1-(NG)(sf)’ to the Subordinated Notes of the ABCP both with positive outlooks. The ratings underscore the confidence reposed on the credit enhancement of the Transaction.

With its very high investment grade ratings, affirming the underlying credit strength of the CPs, MWFL Papers are expected to be competitively priced at relatively tight spreads above comparable treasury bills, introducing a new asset class that will diversify the portfolio of money market investors.

In a statement confirming the synergy of member stakeholders in MWFL, the Chairman Mortgage Warehouse Funding Limited (“MWFL”), Mr. Sonnie Ayere, said “the launch of this conduit will see us begin to de-risk construction finance as MWFL becomes the funding source of the off-take often required by commercial banks to fund developers”.

Dunn Loren Merrifield Advisory Partners is the Transaction Structure Adviser and Sole Arranger. The company is a member of the Dunn Loren Merrifield Group, a full-service investment house with its headquarters in Lagos and is generally seen as an intermediary that links key sectors of the Nigerian economy such as Micro finance, SMEs and housing to the capital markets.


Housing advocates call for halt on foreclosures during government shutdown

It’s only fair the foreclosure process is shut down while the federal government remains on a partial shutdown, housing advocates urged.

Fifteen organizations from across the country urged the U.S. Department of Agriculture (USDA) in a letter to pause all foreclosure proceedings during the shutdown for its home loans where borrowers are behind.

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Though better known as the federal agency that sets farming policies and inspects the nation’s food, the USDA also runs a home loan program focusing on rural homeownership. When borrowers fall behind, the program allows for alternatives to foreclosure. But a servicing center that’s key to helping struggling homeowners has stopped operating while the shutdown grinds on, the letter noted.

“Without access to the process, homeowners will face avoidable foreclosures,” said the letter submitted on the shutdown’s 27th day. The housing advocates insisted a “comprehensive stay” is justified.

The advocates noted the USDA hasn’t publicly said what its current stance is on foreclosure activities — so there’s “no reason to believe that foreclosure filings, motions, and sales have completely stopped at this time.”

The USDA did not immediately respond to a request for comment. Numbers on USDA-issued loans in foreclosure were not immediately available.

Geoffry Walsh, a staff attorney at the National Consumer Law Center, said there were about one million participants in the USDA’s direct home loan program, and another million in its insured loan program.

Some rural homeowners are still seeing foreclosure cases unfold, Walsh said, including one instance where a house sale in the South is still slated for next month. “Nobody told them not to do it,” Walsh told MarketWatch.

A similar servicing centre at the Federal Housing Administration is also shut down, Walsh said.

The federal funding impasse is rooted in President Donald Trump’s demand for a wall along the Mexican border. More ripple effects are accumulating as the now record-setting shutdown wears on.

The White House is saying the shutdown would shave first quarter domestic product by .5 percentage points if the halt goes through the month. Meanwhile, furloughed federal workers are trying to figure out ways to make ends meet — one contractor has resorted to making Star Wars models.

Unpaid federal workers are also getting pinched on their housing costs. Zillow estimates the roughly 380,000 furloughed employees and 420,000 people working without pay could owe about $438 million in mortgage and rent payments this month.


AUHF urge African governments to stimulate long-term mortgage

No fewer than 12 commitments were made recently in the Cote d’Ivoire capital, Abidjan, where more than 29 countries including Nigeria met to shape the development of housing finance across the African continent.

The forum – 34th Annual General   Meeting African Union for Housing Finance (AUHF) produced an ‘Abidjan declaration’ that called on governments at the regional, national, state or provincial, and local levels to actively support the vision for adequate, decent and affordable housing for all across the continent, by instituting measures that stimulate long-term finance on affordable housing as an investment target.

Africa is an environment marked by stark mismatches between housing demand and supply in the affordable housing submarkets, which manifest   in   housing backlogs that force the majority of low and middle income dwellers into substandard and informal dwelling conditions; but which also offers insights into innovation as low and middle income residents seek to meet their own housing needs independently outside of the traditional housing delivery channels, and through incremental housing construction.

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It is estimated that half of global population growth between now and 2050 will occur in Africa, with an   estimated   additional 1.3   billion people. At the same time, growing rates of urbanization are shifting  the population of the continent   from   one   that   has   been   predominantly   rural   to one that is increasingly urban. It is expected that by 2035, about half of the Africa’s population will be living in urban areas.

Specifically, the AUHF delegates appreciated the critical function played by housing in the economy, as its own sector and through its contribution   to social and economic growth and development of primary, secondary and tertiary sectors; and the   opportunities presented by this fact. While acknowledging inherent opportunities emerging through innovations in technology, communication and financing and payment systems and their potential for revolutionizing the affordable housing sector; they recommended the automation of deeds registries.

They said governments should strengthen property and collateral   registration   and   foreclosure   mechanisms, improving transaction time frames, and to ensure the transparency of the collateral registry through free access to record-level data. Other demands on governments include ONE: To use incentives to encourage innovation in both mortgage and non-mortgage lending for housing that explicitly targets  lower   income   earners   including   youth   and   women  in   the   affordable   housing   sector.

TWO: To insist, through regulation, on credit information-­‐sharing and the development of an effective and   comprehensive   credit   reference   system   that   covers   all   financially   active   consumers   and   stimulates   market transparency.   THREE: To   assert   the   critical   role   that   macro-economic   policy   and   financial   regulation   play   in   realising   effective housing markets.  Measures that reduce policy interest rates, lower maturity premiums and credit risk premiums,  and  leverage  the  utilization  of  collateral  value  will  all  stimulate  investment  and   the   availability   of affordable   housing   finance.    They   are   fundamentally   driven   by   macro-economic policy and should be a priority of Central Banks.

The three day talks also encouraged and urged international development finance institutions and other development agencies specifically, target   affordable housing   with   capital   that   is   patient   with   time, promoting blended   finance   arrangements   that   manage   risk   sustainably, and explicitly pursue   innovation that shifts investor focus towards affordable housing.

•Provide targeted technical assistance:  operational development and support towards effective public-private   partnerships, as well as the   development   of   viable   social   enterprises   and   commercial   undertakings that explicitly target affordable housing.
•Engage with and develop financing interventions for the full housing delivery value chain, providing   support for sector development and promoting   effective linkages  between  public, private  and  NGO   sectors along   each   link   in   the   chain   from   land  through  to  infrastructure,   housing construction,   and   financing.

•Invest in strong data and market analytics systems, active market tracking and longitudinal analyses that support a growing understanding of the housing financing dependencies, and which track market growth and progress.
• Recognise and support in their broader efforts, a diversity of   housing   financing   mechanisms   not   limited   to   mortgage finance for end users but also   including   housing   micro   finance, rent‐to-­own schemes,  home-ownership  savings  plans, homeowner led  construction and other   end user finance  products,  the  critical need for construction finance,   affordability supports and risk management interventions, and capital  market development in support of affordable housing, and
•To   support   efforts   to   integrate   the   growing   and   expanding   youthful   population   of   Africa   in   the   affordable housing discourse as a way to breaking the generational housing challenges in Africa.

AUHF pledged to engage with respective governments at the regional, national and sub-national level   on both macro and micro-economic issues,  including  interest  rates,  tax  and  monetary  policy,  and  housing   and  land  policies  as  they  influence  the  growth  and  performance  of  housing  markets.
In it, the Union committed themselves to actively   engage   governments   and   regional   bodies   in   the   pursuit  of  policy, regulatory,   and other interventions  that  support  tthe  growth  of  affordable  housing  markets;  promote  best  practice  in  the  affordable  housing  industry ;  actively  seek  projects  and  investments.

b) develop  products  and  services  that  engage  with  the  particular  needs  and  capacities  of  youth  and   women,   recognising   also   the   important   opportunity   that   the   housing   sector   itself   may   offer   for   their  professional  development  as  participants  in  the  housing  sector,  for  example,  as  small-­‐scale   landlords,  contractors  or  labourers;

c)think   more   carefully   about   risk   and   how   we   price   for   this   in   the   microfinance   and   mortgage   sectors,   engaging   in   our   pricing   and   underwriting   mechanisms   with   the   characteristics   of   low-­‐ income  households,  youth  and  women,  how  they  earn  their  income and  how  they  manage  their   housing  investments;

d)uphold   ethical   business   practices,   championing   sustainable   impact   together   with   financial   return.    In   the   delivery   of   products   and   services   to   our   clients   we   are   committed   to   sound   and   effective  consumer  education  to  support  their  sustainable  entry  into  the  property  market;

e) work  effectively  in  the  development  of  strategic  partnerships  with  each  other,  our  governments,   and  the  wider  housing  sector  in  our  cities,  countries  and  regions;  and

f)tracking   these   commitments   with   clearly   defined   key   performance   indicators,   to   which   we   will   each  contribute,  and  will  report  back  on  these  at  our  next  AGM.

REAL ESTATE Adopting the Singaporean model for Nigeria’s mortgage system

After much motion without movement in its mortgage system, the next best step for Nigeria is to seek what is working in other climes that it can adopt in order to grow that segment of its economy.

The Singapore model readily comes to mind here. This involves creating a pool of funds into which everybody contributes monthly and from which everybody borrows to buy a flat or house.

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Singapore, a once poor island in Southeast Asia, evolved from a third to first world economy between 1965 (when it gained independence from the British) and 2000. Under Lee Kuan Yew, the country’s first Prime Minister, the government transformed huge swathes of urban sprawls and slums into well-planned cities that spurred economic dynamism and growth.

Their mortgage model succeeded not by an act of magic but because the government was determined, through a deliberate policy, to make that model work.

Conversely, the national housing fund (NHF) scheme in Nigeria can only be described as a failure because the vision is not there to drive the scheme. For too long, the mortgage system in Nigeria has failed to grow and the obvious effect is the low home-ownership level in the country and widening gap between housing demand and supply.

The Federal Government’s intervention in the housing sector was the setting up of the Federal Mortgage Bank of Nigeria (FMBN) followed by the establishment of the NHF scheme which was aimed to make mortgage affordable for contributors to the scheme at 6 percent interest rate for upwards of 20 years, depending on the age of the borrower.

This scheme has failed, hence the need for the remodeling of the entire mortgage system in the country. The Federal Government is expected to ‘top up’ contributions into a remodeled NHF with, at least, N10 billion every year to make it affordable.

If the entire system is modeled after that of Singapore, Nigerian citizens will be able to obtain 20 to 30-year low interest mortgage to acquire houses through a pool of funds into which all workers must contribute 20 percent of their salary.

It should be noted however that the NHF scheme attempted the Singapore model but failed because contributors couldn’t access the loans as they couldn’t afford the deposit for the houses. The scheme also failed because one effect of inflationary policies is high interest rates charged on mortgage loans.

Anywhere in the where, non-inflationary fiscal policy, flexible, sustainable exchange rates and hence, low interest rates, are important for attaining a mortgage system that will also attract foreign investment into mortgage market. Those are the kind of things Nigeria needs at the moment to grow its mortgage sector.

Nigeria’s mortgage system as it stands today is incapable of supporting a housing policy that will deliver houses to Nigerians. This is why the country should imitate other countries with mortgage systems that have delivered housing for both the rich and the poor.

Nigeria needs an efficient housing policy whose aim is for the government to assist millions of citizens to obtain lower-interest mortgages. This is how most citizens are helped to acquire houses in many countries with successful housing policy such as Singapore, South Africa and Malaysia.

The housing sector also has suffered slow growth over the years and this has blamed on high mortgage rates with short tenures, a difficult business environment, high inflation, and unstable policies that have together hampered the growth of the housing sector in Nigeria.

As a result of this, there is an estimated deficit of 17 million housing units. FMBN estimates that the country needs to build 720,000 units per year to bridge this gap.

Housing development experts say there is always a link between transformational housing policy and the economy. They explain that a housing policy that works for all Nigerians, including the rich, the poor, civil servants, small business people, artisans, informal sector workers and entrepreneurs, young graduates, young people with limited formal education, banks, construction companies etc, will boost construction activities and make a significant contribution to economic development.

The need for an efficient mortgage system is critical to providing accommodation for most Nigerians and this is because house is the single biggest investment an overwhelming majority of people will ever make in their life time.

It is on record that less than 3 percent of Nigerians acquire their homes through mortgage. Yet millions of them invest in building houses of different costs and quality without any help whatsoever from the government. This is the reason about 90 percent of the country’s housing stock are described as ‘dead assets’ because they are not in any formal mortgage.

Source: Chuka Uroko

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