Lenders, developers and false partnerships
In a mortgage environment where accessibility and affordability are rare privileges of a few, lenders could be anything but interesting and friendly. Frequently high interest rate and demand for high equity contribution are cited as reasons for slow mortgage industry growth. But that is not all.
Least considered is the stress and pressure which mortgage lenders pile on borrowers through false partnerships with estate developers and this is posing a greater threat to the growth of the industry than the afore-mentioned reasons.
Part of the statutory functions of primary mortgage banks (PMBs) and mortgage institutions generally, is the provision of housing finance to those who need same to build, buy or renovate existing houses.
In many cases, those who apply for loans from these lenders hardly get them and where they do, they are subjected to harrowing experience through difficult requirements that leave the borrowers stressed out and almost frustrated.
Israel Okafor, a staff of an oil company who applied for mortgage loan from one of the PMBs has a bitter experience. According to him, “My experience with one of these lenders is better imagined than expressed”, he said.
Okafor explained that he was “deceived” by one the of PMBs into believing that it was in partnership with a developer who was building over 500 housing units of various house-types at relatively low prices for mid-low income earners.
“The PMB told me that it was also financing and marketing the estate and, at the same time, providing mortgage for prospective buyers. My attraction was not much in the financing and marketing as it was in the comparatively low interest rate of 17 percent and 10-year loan repayment period which the bank dangled to me,” he said.
According to him, the bank demanded just 20 percent equity contribution from him for any of the housing units that he wanted to buy from the estate selling for between N5 million and N8 million, adding that as a demonstration of his readiness to take up the mortgage and buy the house, he made an equity contribution in excess of 30 percent of the cost of the house.
“Over six months down the line, the developer, the mortgage bank and I have been on a Round Robbin, occasionally stopping at the middle of nowhere only to discover that, in all of this, it has been motion without movement. It has been one story after another”, he fumed.
Okafor is not alone in this as Ayodeji Adediji, is an ex-banker who worked with one of the big names in the industry, but resigned because “I want to do my own thing and see what impact I can make on the economy from this point”.
Adediji also has his experience, differing only in the approach adopted by his own lender who, he said, has kept his N5 million which he paid as equity for the house he wants to buy from a developer who is also in another pretentious partnership with the same mortgage bank.
“As I speak to you, my money has been with the mortgage bank since the past eight months; I am told it is in escrow account in which case it is not yielding any interest for me; the developer is very slippery and insincere with delivery date for the estate. Every day, like a fraudulent referee, he shifts the goal post. By the last count, he has shifted the delivery time three times and still counting”, he lamented.
This is not an isolated story as many other cases abound. Many prospective home owners wishing to buy their homes through mortgage have found themselves trapped in this spider web that has denied many the opportunity of owning their dream homes. The slippery nature of both the developer and the mortgage lender raises questions as to the sincerity and honesty of the housing delivery partnerships between them.
A banker, who does not want to be named, reveals that, on three main occasions, he came close to losing his money to developers over unrealistic delivery dates, lamenting that on each occasion, his money was given back to him after he had nurtured and came close to realising a home ownership dream.
Chuka Uroko
