L-R:Director, Special Insured Institutions Department, Nigerian Deposit Insurance Corporation (NDIC), Mr. Etopidiok Joshua James; Director,Other Financial Institution Supervision Department, Mrs. Agnes Olatokunbo Martins; and Head, Nigeria Housing Finance Program/ Deputy Director, Central Bank of Nigeria (CBN), Mr. Adedeji Jones Adesenoye, at the workshop on Nigerian housing finance programme in Lagos PHOTO: ETOP UKUTT
With eye on extending affordable home ownership opportunities to the low and middle income earners, the supervisory organ for mortgage banks, the Central Bank of Nigeria (CBN) has released guideline for the uniform underwriting standards for the informal sector, which will throw up valuation jobs in the real estate sector.
The standards spelt out formalities for the mortgage banks to offer loans to those in self-employment activities and employees, categorised under the micro, small and medium-sized enterprises. The informal sector contributes more than 58per cent to the nation’s economy.
In the issued guideline, licensed and independent valuers who are members of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) are supposed to be prequalified by the 34 licensed mortgage banks to value property to be listed in the scheme.
Essentially, the participating valuers will carry professional indemnity insurance from an insurance firm under the NAICOM; adopt international appraisal standards and methods as well as uniform appraisal process and use open market value/ fair market value in assessing property owned by eligible borrowers.
Under the scheme, mortgage loans to be granted may be used to finance the purchase or refinance an existing mortgage loan while the eligible borrower may also use the loan to purchase a single family home or an apartment in a multi-unit building. The maximum loan is pegged at N50million. The repayment period is between five to 20 years.
The document was released at a two-day workshop for mortgage banks on the Nigeria Housing Finance Programme, organised by CBN at the apex bank’s office in Lagos. The forum was also used to review significant sections of the Mortgage Foreclosure law and validate the draft Mortgage Underwriting Standards for the Non-Interest sector.
Speaking on the unveiling of the Mortgage Underwriting Standards for the informal sector, the Head, National Housing Finance Programme, CBN, Mr. Adedeji Adesemoye, said the initiative would give those without structured income access to mortgage loans for property acquisition.
Adesemoye charged the banks to enlist the housing cooperatives and associations in the new initiative. He said the new standards will not work without capacity building, and pledged to tinker with the World Bank’s technical assistance to include mortgage banks.
Adesemoye said in the next six months, the CBN would be able to evaluate the number of mortgages created in the informal sector.
He urged the banks to develop mortgage counseling classes, which have been successful in other climes to educate borrowers on their rights and obligations of homeownership as well as legal consequences of default. “Every borrower must receive homebuyer counseling prior to closing on their loans,” he added.
The MBAN President, Niyi Akinlusi, said the event was historic, as the initiative would be a game-changer for the industry and economy.
He urged MBAN members to redouble their efforts in providing mortgage loans to Nigerians.
The NDIC Director, Special Insured Institutions, Joshua Etupidiok, urged the mortgage industry to be cautious in venturing into the market. He urged them to market the benefits of the loan to eligible borrowers and learn from the micro finance banks that have been working with the informal sector.
NMRC representative and Head, Business Development Unit, Mrs. Dorothy Obata, said the mortgage sub sector is losing market without the informal sector, adding that the property industry is looking forward to the product. She pointed out that the market is huge and includes those without structured income.
The Executive Director, Business Development and Portfolio Management, FMBN, Umar Abdulahi, said he was impressed by the standards which he said was “all encompassing”.
He said: “We have a large market in the sector but we need social inclusiveness in the area of housing. Under the National Housing Fund (NHF) Scheme anyone who earns up to N3,000 and above is entitled to a mortgage loan but a lot of people, especially outside the formal sector, are not benefiting.
“The informal sector contributes a greater percentage to the economy, the mandate of the FMBN is to provide housing for all Nigerians”, he added.
