By Yinka Kolawole
The Federal Mortgage Bank of Nigeria (FMBN) has commenced moves aimed at enhancing its capacity to support mortgage financing in the country, even as it embarks on debt recovery of its non-performing loans.
Managing Director, FMBN, Mr. Abdulsalam Ahmed, speaking recently with the Senate Committee on Banking, Insurance & Other Financial Institutions in Abuja, noted that the apex mortgage bank is taking some steps aimed at achieving a viable housing financing mechanism.
Ahmed said that the nationâ€™s primary mortgage lender is faced with a long list of challenges such as low capital base, under_subscribed National Housing Fund (NHF) scheme, high building materialsâ€™ cost, absence of mortgage insurance, huge outstanding loan commitment and low income of prospective borrowers. He noted that some short, medium as well as long_term measures are being adopted to turn the fortunes of the organisation around.
According to him, FMBN plans to, within the next six months, issue subsequent tranches of its N100bn bond to refinance the sale of Federal Government houses in Abuja and other parts of the country while supporting legal and regulatory framework review which includes amendment/replacement of unfriendly housing_related laws to ease mortgage transactions.
This, he said, is in addition to seeking to consolidate National Housing Fund (NHF) collection and funding operations to improve efficiency and effectiveness of financing workers/contributorsâ€™ homeownership.
Ahmed said that the move would involve the pursuit of governmentâ€™s approval for commencement of matching contributions by employers to complement workersâ€™ contributions and compliance with statutory contributions by banks and insurance companies as provided by the NHF Act.
He said that FMBN is being re-branded and repositioned so as to be better able to function as the foremost secondary mortgage institution in the country and create awareness about its products and services.
The FMBN boss declared that they have already commenced the process of debt recovery of non_performing loans to improve the institutionâ€™s profitability and financial position, adding that within a year and six months, as a medium-term measure, the organisation plans to issue mortgage bonds that will hopefully diversify its resources in order to meet its mandate.
â€œWe will attract foreign funding and investments into the Nigerian mortgage sector through the securing of facilities from international financial and multi lateral institutions as well as private international investments once the global financial crisis eases up.
â€œWe will likewise commence liquidity facility provision for mortgage originators as an expansion of its secondary mortgage operations. Under this arrangement, loans will be bought off originators on recourse or non-recourse basis as a means to providing liquidity to the primary mortgage market.
â€œApart from introducing mortgage and title insurance as new products to mitigate mortgage-related risks and ensure affordability, we plan, in the medium term, to expand mortgage financing to the non-salaried informal sector that has been long neglected due to the lack of property titles, formal income and non-affordability.
â€œThe long-term objective is for commercial loans, which are suitably adjusted for risk and market pricing, to serve as more acceptable underlying assets for the issuance of financial securities in local and international markets,â€ he stated.