By Yinka Kolawole
The performance of primary mortgage institutions (PMIs) in the discharge of their fundamental duty of providing of mortgage loans to Nigerians has been deemed woeful.
The review of the operations and performance of the PMIs in 2008 by the Nigeria Deposit Insurance Corporation (NDIC) revealed that out of the N211.156 billion loanable fundsÂ available to the PMIs in 2008, only N36.47 billion representing 17.27 percent was granted as mortgage loans, well short of the required minimum of 60 percent.
According to the NDIC 2008 Annual Report, â€œAvailable statistics revealed that the PMIs had not been meeting the expectations of Nigerians in terms of granting mortgage loans.
That was evidenced by the ratio of mortgage loans to total assets which in 2008, stood at 14.36 percent as against the prescribed minimum of 30 percent.
Also, the ratio of mortgage loans to loanable funds which stood at 17.27 percent in 2008 was far below the prescribed minimum of 60 percent.
â€œThe loanable funds available to PMIs in 2008 was N211.156 billion out of which 17.27 percent or N36.47 billion was granted as mortgage loans, N45.75 billion or 21.67 percent was grannted as commercial loans while N41.75 billion or 19.77 percent and N96.102 billion or 45.51 percent respectively represented investment in shares and treasury bills and cash/short term funds during the year.â€
It would be recalled that the deposit insuranceÂ coverage of NDIC was extended to PMIs from January 2008, to enhance the efficiency of the mortgage industry. NDIC however stated that out of the 94 PMIs that were licensed by the Central Bank of Nigeria (CBN), only 81 were in operation as at the end of year 2008.
In 2008, NDIC noted that only 59 (or 73 percent) of the 81 PMIs in operation rendered returns while about 27 percent or 21of the PMIs failed to render any returns, with analysis of the information rendered by the 59 PMIs revealing that their total assets was N253.978 billion while their total deposits was N159.73 billion.
The sum of N5.732 billion was obtained from the National Housing Fund (NHF) for on-lending, while the sum of N12.53 billion was obtained as long term loans from universal banks and other sources for estate development during the year.
The NDIC annual report also highlighted some of the challenges faced by the PMIs during the year, which militated against their performance in terms of achieving the policy objectives of acting as a catalyst for the development and provision of affordable houses to nigerians.
These challenges, according to the report, include: difficulties in accessing the NHF, delays before funds are disbursed, even after meeting all necessary conditions; inability of some PMIs to provide required bank guarantee for the NHF loan; and difficulty in mobilising deposit, with the banking public preferring to open account with the universal banks.
They also found it difficult to mobilize long term deposits to finance their housing projects which are usually long term by nature.
Other problems encountered by the mortgage banks are: difficulty in perfecting title documents, with the process of perfecting a title to landed property cumbersome, slow and costly; and the poor borrowing culture of the people, resulting in huge non-performing loans in the PMIs loan portfolio, as in other lending institutions in Nigeria.