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Housing: Mortgage banks blast FMBN decisions on NHF

By Yinka Kolawole
Primary Mortgage Institutions (PMIs) operators under the umbrella of the Mortgage Banking Association of Nigeria (MBAN) have described as illegal the recent decisions  of the  Federal Mortgage Bank of Nigeria (FMBN) concerning the  National Housing Fund (NHF).

Housing

Recently, the Board of FMBN approved a 200 percent increase in the mortgage loan accessible by an individual contributor to the National Housing Fund (NHF) to a maximum of N15 million. It also  expanded  mortgage loan originators which on-lend NHF loan to include universal banks, insurance firms, pension funds and microfinance banks subject to their meeting the criteria and requirements laid down for Primary Mortgage Institutions (PMIs) and the provisions of their enabling laws and regulatory authorities.

The board equally increased down payment or equity contribution of property value by NHF applicants in the following proportion: N5 million loan and below, 10 per cent equity contribution; loan between N5 million and N10 million, 20 per cent; while loan between N10 million and N15 million attracts 30 per cent equity contribution.

But in a letter to the Bank, PMIs faulted these decisions as illegal saying the act establishing the NHF does give the Bank the power to take such decisions.  They said that such decisions  are only possible  via an amendment to the NHF Act.

The PMI operators demanded to know why the management of the FMBN has not been holding the quarterly consultative meeting with them since April last year.

confirming this to Vanguard, the Chief Executive of a PMI who spoke on condition of anonymity said, “Instead of chasing shadows, the FMBN should take steps to reduce to the barest minimum bureaucratic delays being encountered in the processing of NHF loans by computerising its operations and also facilitate the collection of monthly contributions from the various NHF contributors by the PMIs. These are the major problems confronting the NHF scheme.”

Meanwhile, an MBAN official confirmed to Vanguard that in response to the letter from the Association, the management of FMBN has invited MBAN executives to a meeting tomorrow to discuss the issues raised in the letter.

The NHF was established by Decree No. 3 of 1992  which  made it mandatory for Nigerian workers in both the public and private sectors earning N3,000 per annum or more to contribute 2.5 per cent of their monthly salaries to the housing fund at an interest rate of 4.0 per cent. Banks are mandated to contribute 10 per cent of their loans and advances to the Fund at an interest rate of 1.0 per cent above the rate on current account.

Financial Vanguard last week exclusively reported that only one out of ten contributors was able to access loan from the National Housing Fund in 2008.

Vanguard investigations reveal that out of total registered contributors of 3,423,056 , only 44,252 were able to secure mortgage loan from the fund in 2008, making nonsense of the purpose for which the fund was established, which is to make home_ownership more accessible to Nigerians.

The NHF decree  mandated the Nigerian Social Insurance Trust Fund (NSTIF) _ now represented by the Pension Funds Administrators (PFAs) _ and the insurance companies to invest a minimum of 20 per cent of their non _ life funds and 40 per cent of their life funds in real estate development, of which not less than 50 per cent must be channelled through FMBN, at an interest rate not exceeding 4 per cent.

Also under the scheme, the Federal, State and Local Governments are to make direct budgetary allocation of a sum not below 2.5 per cent of their revenue to the housing scheme. About 26 states are currently contributing to the NHF Scheme.

Investigations reveal that a total amount of N79.5 billion was contributed  between 2006 and January 2009 to  the National Housing Fund (NHF) scheme and approved for disbursement as at the end of January 2009, but  N41.9 billion representing 52.8 per cent was only disbursed to primary mortgage institutions (PMIs) and estate developers. Out of the N41.9 billion only N666 million or 16 per cent  was disbursed to individual contributors .

Total contributions to the NHF scheme stood at N5.8 billion from 1.8 million contributors in 2000. Total number of contributors stood at 2,876,787 in 2006, with FMBN approving for disbursement a total of N26.5 billion.


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