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FMBN Seeks to Boost Mortgage Financing

FMBN (Federal Mortgage Bank of Nigeria) has begun work towards building up support of mortgage financing, while also looking at debt recovery methods for non-performing loans.

At a recent Banking, Insurance and Other Financial Institutions meeting with the Senate Commitee, Managing Director of FMBN, Abdulsalam Ahmed, brought up that the Apex Mortgage Bank has taken steps aimed at achieving a viable housing financing mechanism.

The FMBN boss declared that they have already commenced the process of debt recovery of non-performing loans to improve the institution’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.

Ahmed said that the nation’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 materials’ cost, absence of mortgage insurance, huge outstanding loan commitment, debt collection 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/contributors’ home ownership.

Ahmed said that the move would involve the pursuit of government’s approval for commencement of matching contributions by employers to complement workers’ 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.

“We 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. We 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.”

“Apart 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. The 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,” he stated.