By Nkasiobi Oluikpe, Lagos
It is a well established fact that mortgage is a fundamental requirement for housing delivery the world over. There is no developed part of the world where people are said to pay cash for housing.
And like experts have mentioned variously, the only way the ostracized low income group can ever transit into being home owners is through the availability of a proper mortgage scheme.
It is for this same reason that the National Housing Fund was established, to carry along every income earning Nigerians and make their dream of home ownership a reality. Compulsorily, monies were deducted from the monthly earnings of workers in the civil service for this purpose, provided you earn up to N3,000. Many heaved a sigh of relief and said, finally here is an Act that benefitted the assumed ‘insignificant’ in the society.
It was a huge sacrifice for people at the low income cadre to have their monies deducted at the end of every month because, even without the deduction, the monies were hardly enough. They kept on paying this money, even against their will, because going by antecedents, some were very skeptical of the sincerity of government.
Unfortunately, over two decades thereafter, that dream is yet to translate to reality. A lot have given up hope, while some still believe there could still be light at the end of the tunnel.
In order to repose people’s confidence in the compulsory deduction, the then federal government in 1992, enacted an Act, the National Housing Fund Act of 1992, which spelt out in clear terms how the funds therein contributed would be disbursed.
According to the Section 2 of the Act, the fund shall be managed and administered by the bank (Federal Mortgage Bank (FMBN), who shall ensure that the proceeds from the fund are utilized to finance the ‘housing sector’ of the economy through wholesale mortgage lending to primary mortgage institutions.
On the part of the mortgage institutions, the Section 8 of the Act spelt out how the monies disbursed to them shall be utilized and penalties in the event of a default.
The section clearly states that: A mortgage institution registered under the Mortgage Institutions Act (in this Act referred to as “mortgage institution”) shall utilise the proceeds from the Fund to finance ‘mortgage lending’ in accordance with the provisions of this Act and the Mortgage Institutions Act.
On the part of the FMBN, it shall impose the payment of a penalty of 200 per cent of the interest differential between the market rate and the fund rate from a mortgage institution that misallocates or diverts its loan. Added to which, the FMBN shall suspend the mortgage institution from further borrowing from the fund for a period of six months and cause it to remain suspended until it complies with the provision of paragraph (1)(b) of the Act and thereafter for a further period of six months.
It is enough that the Central Bank of Nigeria (CBN) and the Insurance Institutions are not contributing their quota in ensuring the viability of the mortgage sector, even though, these has also been justified by some experts in the built environment, that it is not enough to make remittance to the FMBN, they needed to come up with a blueprint on mortgage finance; but diverting the meager hard earned contributions of civil servants, disbursed to them (Primary Mortgage Institutions –PMIs) to other purposes, experts have argued, amounts to a disservice to humanity.
By the tone of the National Housing Fund Act of 1992, the primary mortgage institutions who derive their funds from the FMBN are not supposed to be engaged in any form of transaction than mortgage financing. But presently, there are reports at various quarters that the funds meant for housing finance are used for various other purposes, than housing.
A foreign researcher in his findings, recently, discovered that in Nigeria, the PMIs nature of business transactions included: commercial banking, Local Purchase Order (LPO) financing, merchandising, property agency, sales and transport.
It will be recalled that some time ago, a Federal High Court sitting in Lagos, froze all the accounts of a mortgage bank, for allegedly diverting the sum of N1,578 billion meant for police officers’ national housing fund scheme.
The facility was to serve as the 10 per cent mandatory equity contribution towards accessing the mortgage facility from the Federal Mortgage Bank for each of the participating officers under the National Housing Fund Scheme. The balance of 90 per cent was to be sourced through their appointed primary mortgage institution.
As the mortgage bank was unable to access its own balance of 90 per cent from the FMBN, rather than refund the 10 per cent, it decided to divert it, hence, the freezing of its accounts. There are several other instances that have gone, unreported.
Some critics are now asking if the derogatory ‘Nigerian factor’ must play out in every aspect of the Nigerian nationhood. One issue agitating their minds, they say, is that if the regulatory authorities do not have the moral justification to take action against defaulters, how about the government itself.
Olayemi Shonubi, an expert in the built environment has chided the PMIs for abandoning their primary responsibilities of mobilizing long term funds for housing development to trading on money market instruments which are short term in nature.
Because of the foregoing, the Managing Director of Corner Stone Construction Limited, Lanre Okupe, during an interview with a national daily stated that there was no functional mortgage bank and that housing delivery through mortgages in the country was very slim.
Okupe went further to accuse mortgage banks of engaging in LPO financing and importation of fruit juice instead of real mortgage. This, he said, has made it ‘almost impossible for the middle income group to access mortgages and impossible for the low income group as there was no basic plan to achieve house ownership in the country.’ He also made a case for the introduction of a ‘trust law’ to restrict conventional mortgage banks to their primary duties.
An Estate Surveryor and Valuer, Morgan Amakiri, in Port Harcourt, last week clarified that the operations of mortgage institutions were different from the commercial banks as they gave out loans for a longer period of time with lower interest rate, which would be within a single digit. But today, according to him, funds meant for mortgage were being diverted or misappropriated to other uses.
Morgan added: “If there must be access to funds for housing development, there must be a law that must regulate mortgage operations in the country.”
Source : Independent