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Lagos mortgage law underway with public hearing

Yinka Kolawole
The Lagos State House of Assembly has held a public hearing to herald a bill aimed at regulating mortgage practice in the state.
In his welcome address, Chairman, House Committee on Finance, Hon. Adeola Olamilekan, said that when passed into law, the bill will encourage the growth of mortgages in property, regulate various aspects of consumers loans for acquisition of property and realisation of securities and other connected matters.

He noted that invitation w

Lagos State Governor
Lagos State Governor

as extended to members of the public in order to have a robust contribution and discussion on the bill, tagged ‘Lagos State Mortgage Board Bill 2009’, adding that even though the House is not constitutionally bound to hold public hearing prior to passing the bill, such has become its tradition because in a democracy people should have a say in formulating laws that govern them.

“It has become the tradition of the House to invite members of the public to this type of gathering, not because we are constitutionally bound to do so but to have a robust discussion and have the views of all the stakeholders and the public that voted us into power,” he stated.

Speaker of the House, Mr. Adeyemi Ikuforiji, who was represented by majority leader, Mr. Kolawole Taiwo, noted in his keynote address that the public hearing was necessary to discuss possible ways of tackling the housing crisis in the state, adding that the proposed law is expected to encourage mortgage loan that will ultimately accelerate housing delivery in the state.

The bill, according to the Chairman, House Committee on Judiciary, Mr. Babatunde Ogala, encompasses different aspects, such as: the administration of the state Mortgage Board; functions and powers of the board; creation of mortgage interests; regulation of mortgage transactions, which include sale of mortgaged property in action for redemption, leasing powers of mortgagor and mortgagees, penalty for violation of mortgage laws, among others.

The house invited memoranda from members of the public within two weeks to assist it fix the grey areas of the proposed legislation.
Stakeholders at the hearing called for adequate protection for mortgage borrowers (mortgagors) to ensure that mortgage lenders (mortgagees) are not unnecessarily exploitative in their transactions, advocating that the bill should stop a trend where mortgagors were always at the receiving end.

They also condemned the high interest rates charged by mortgage institutions and called for simplified version of bills so as to carry the average man on the streets along.

Mr Kayode Omotosho, who represented Mortgage Banking Association of Nigeria (MBAN), the umbrella body of primary mortgage institutions (PMIs) in Nigeria, called on the assembly to give more time so as to consider inputs from all stakeholders, adding that a memorandum reflecting the position of the PMIs would be forwarded to the committee after due deliberations among members.
In his contribution, an estate surveyor and valuer, Mr. Olusola Enitan, submitted that the bill should ensure that mortgages in the state do not exceed 20 to 33 percent of household disposable income in line with best global practice, noting that several aspects of the bill that need fine-tuning to prevent future ambiguities.

He disagreed with the provision in the bill that empowers the mortgagee to dispose of mortgaged property at any price it deems suitable without consideration of the mortgagor’s interest, but argued that such mortgaged property should be put on auction to win highest bidder and not just sell the property at any price that suit the mortgagee.

Enitan also has called for the removal of Land Use Act from the constitution, arguing that through it the government has converted people’s capital to state capital thereby compounding the difficulties associated with accessing loans from financial institutions.

“The government has converted the capital of the people into state capital. The government in this country is structured in such a way that we tend to be implying that we are a capitalist society but our capitalism is grounded on communism. It is a mismatch. If land is not a mortgage-able asset as it is now in Nigeria, then, there tends to be problem in accessing loan from banks,” he stated.

Mr Yomi Fawehinmi, a private practitioner, said that the legislation will amount to a waist of time and public resources if it does not lead to cheaper and affordable mortgages. He also queried section 63 of the law which mandated the board to spell out amount to be paid as mortgage which according to him should be based on principle of demand and supply.


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