Is model mortgage system a fading dream?
Talk, it is said, is cheap, but one thinks that dreaming is even a lot cheaper which is why individuals and institutions never cease to dream.
At individual level, dreams can be as frivolous as they can be ludicrous and serious depending, however, on the subject. But overall, dreams are elevated, especially at institutional level, where organizations set goals and work hard to see such goals through to fruition.
The dream of every adult Nigeria is to own a home he or she can call his own. But for reasons of finance and others, these dreams are largely unrealized, leading to the desire by those wishing to build or buy homes that there are functional mortgage institutions that can create a model system that will respond to their dreams and desires.
When therefore, the Nigerian Mortgage Refinance Company (NMRC) was set up as a secondary mortgage institution, expectation was high that it could be part of a systematic approach to creating a model system that would help solve the country’s intractable housing problem.
Essentially, NMRC is Nigeria’s private sector-led secondary mortgage institution with public purpose. It may not have been a smooth sail for the company in terms of meeting people’s expectations, but the it is not resting on its oars. Riding on the relative successes it has achieved in the past couple of years of its establishment, the company went out on an aggressive drive towards the adoption of a model mortgage and foreclosure laws.
The company is said to be driving a legislative reform in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.
According to one of its directors, whose primary mortgage bank (PMB) is a major shareholder in the company, NMRC is out to get various states houses of assembly to pass foreclosure laws as a prelude to a mortgage-backed affordable housing delivery.
This is good news for home seekers who need mortgage facility because foreclosure law, upon adoption, aims to fast tract the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.
But there are concerns now. This very good initiative seems to have become a mere dream because not much is being heard about it, hence the question as to why it is a fading dream. Experts are of the view the initiative is commendable but much needs to be done.
According to the authorities of the mortgage refinancing company, the model mortgage and foreclosure law is in its final form for engagement with 21 pilot states committing to the implementation of an enabling environment for the development of the mortgage market. But the market is becoming impatient.
“We will be embarking on an aggressive drive towards the procurement of an ICT infrastructure for the mortgage industry, the completion of our second tranche equity capital raise, and most importantly the completion of our first round of mortgage refinancing; we will work hard to meet our mandate to revolutionize the Nigerian mortgage landscape”, Charles Inyangete, former CEO, assured.
Arguably, the company has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage institutions including Imperial Mortgage Bank Limited whose existing mortgages were refinanced to the tune of N1 billion.
Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage’s managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria, and assured that the bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.
NMRC seems to be conscious of the demands and obligations inherent in the Nigerian business environment and says it will continue to anchor all its services on global best practices, good corporate governance and strict risk management practices.
NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company is private sector-led, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.
“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, the former CEO once told BusinessDay, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.
Right now, the company is working under market conditions hoping that, over time, as the market deepens and grows, the issue of single digit interest rate will be expected. It assures that whatever the rate is today, its desire is to drive the rate down to single digit.
Chuka Uroko