We’ve delivered 35,077 housing units worth N227.49b between 1992 and 2022
As of 2020, FMBN has funded the delivery of 28,550 housing units
Seeks repeal of NHF and FMBN Acts for stronger NHF Scheme
Madu Hamman, who was appointed by President Muhammadu Buhari in April this year as the Managing Director of the Federal Mortgage Bank of Nigeria, can be described as the right fit for the position given his pedigree in the banking sector in general and mortgage banking in particular.
He can be rightly described as an authority in the banking sector with over 30 years of experience in mortgage banking and eight in commercial and merchant banking, making him eminently qualified for the current position.
Appointed as the MD of Abbey Mortgage Bank Plc, one of Nigeria’s leading mortgage institutions in 2020, Hamman effectively coordinated the restructuring, recovery and growth of the bank into one of the fastest-growing in the industry.
Before reaching the apex of the bank, Hamman had served in various capacities, including Executive Director of Finance and Administration from 2008 to 2020, General Manager, Human Resources and Corporate Resources from 1998 to 2008. Since his appointment by Mr President, Hamman has been spearheading many strategies and policies to reposition the FMBN with a view to meeting its core mandate of helping to increase housing stock for Nigerians and helping to boost the nation’s infrastructural development.
In this interview with Soni Daniel and John Alechenu, Hamman speaks of the strides FMBN has so far recorded and what it is planning to do in order to make more houses available for Nigerians. Excerpts:
MANY Nigerians are just wondering what it takes to get loans from the Federal Mortgage Bank to build their houses at this time when taking loans from commercial banks may not be an attractive option. What is your response to this?
The Bank does not grant loans to hire or rent a house but provides Construction Loan to those who want to build. The requirements for accessing the loan are that one must be a Nigerian of at least 18 years and must have registered with the National Housing Fund Scheme and contributed for at least six months, have a verifiable means of income, a valid land title, preferably, a Certificate of Occupancy, which must be same as the name of the applicant, an approved building plan, while the construction work must be phased and documented in a work plan consisting of 30-30-40.
What specific documents are required by the bank at the time of applying for loans?
The point is that applicants are to note that under the National Housing Fund Construction Loan, they need to go through any Primary Mortgage Bank, PMB. The documents required are: a completed application form, a valid land title (C of O) which must be in the name of the individual, evidence of National Housing Fund participation, proof of identity, which could be a driver’s license, international passport, etc., three months recent pay slips, a building plan approved by the relevant authorities, phased construction work plan and the payment of a non-refundable fee of N100,000.
What specific amount does a person need to put in place before qualifying for a building loan?
Well, in order to be able to access the Construction Loan, which is utilized for building, an individual applicant does not require any initial deposit to qualify for it, but a personal stake of 10 per cent of the cost of construction. This must have been utilized on the project before applying for the Construction Loan and must have been confirmed by the bank-built professionals.
But we also understand that if a Nigerian contributes 2.5 per cent of their basic salary, they are qualified for building loans. To what extent is this true sir?
What I can tell you is that the 2.5 per cent monthly contribution only qualifies one to access the NHF Loan. It is, therefore, the pool of funds created by the contributions nationwide that become available to any contributor to borrow from after contributing for a minimum of six months. An individual contribution does not actually translate to the amount that can be offered to him as a loan. It is the applicant’s monthly income, that is affordability, that determines the amount of what he gets as a loan from the bank.
The ability to pay back the loans obtained by Nigerians may not be possible by all who secure loans from the bank. What happens in the case of default when the debtor is unable to pay as specified in the loan agreement?
The mode of repayment depends on the type of loan the contributor takes. For instance, for the Home Renovation Loan, deductions are made directly from the beneficiary’s salary by his employer. However, for other loans like the Individual Construction Loan, Rent-to-Own or NHF loan, the repayment method depends on the beneficiary.
The beneficiary either gives his banker a standing order to deduct from his salary on a monthly basis and remit to FMBN/PMB or he personally takes the responsibility to pay by himself. In case of default, the property’s title document that is presented as security for the loan will be withheld until the final liquidation of the loan is secured. If that is not done, foreclosure processes will be instituted to recover the bank’s investment. I can say that we have many safeguards in place to ensure the successful repayment plan and sustainability of the bank.
Can a contributor obtain NHF Loan if a Mortgage Loan originator is not in his state? Are there restrictions as to where a contributor can build?
Of course. A contributor can obtain NHF Loan even though there is no existing Mortgage Loan originator, MLO, or Primary Mortgage Bank in his state of residence.
A contributor can liaise with any neighbouring Mortgage Loan Originator nationwide that is accredited by the Bank to package NHF Loans. In case of building restriction, there is no restriction as to where a contributor can build provided the land to develop is within Nigeria and has a valid title document preferably Certificate of Occupancy, C of O, or Right of Occupancy, R of O, that can be used as security for the loans.
All these provisions appear to be in favour of those who earn big money that can build houses. How can a low-income earner get collateral for the loan?
It will interest you to know that the only collateral that is required for the loan is the property in question. No other collateral is needed to secure the loan.
Does that, therefore, mean that self-employed individual can access the services of the Bank? What about non-public sector organisations?
The various loan products in the Bank are available to all Nigerians aged 18 years and above who have a steady income irrespective of whether one is in the public or private sector or even self-employed.
For those who may have started a housing project, can they obtain loans to complete it?
Yes, that is possible through the Construction Loan window, under which the Bank offers Construction Loans to qualified contributors to complete or even start a new housing project.
What documents will be required to access the loans?
Depending on the type of loan being sought; some of these documents are normally required from contributors applying for FMBN Loans: Completed application form, photocopy of title documents, evidence of NHF participation, three months’ most recent pay slips, payment of required equity contribution, copy of the letter of appointment/confirmation, certified guarantors, letter of undertaking from employer, applicant’s bank details/BVN printout and three months’ tax clearance certificate.
Are there other loan offers at the Bank that Nigerians have not fully taken advantage of?
No doubt, many Nigerians have benefitted from our NHF loan to own houses either directly financed by the bank or funded by other private estate developers.
From 1992 to June 2022, the bank has delivered 35,077 housing units at the cost of N227.49 billion, created 23,791 mortgages in the sum of N133.75 billion and disbursed the sum of N73.13 billion as Home Renovation Loan, HRL, to 89,257 beneficiaries nationwide. However, the only loan windows that Nigerians have not adequately taken advantage of include the Individual Construction Loan and the recently introduced Non-Interest Rent-to-Own product; the reasons being that the products were recently introduced to the market.
In view of this, the bank is using various platforms to sensitise the general public on these products. As a bank constantly innovating in the area of new product development, we have come up with a Diaspora Mortgage for Nigerians living abroad to enable them to acquire houses in Nigeria. The new product is to be launched soon.
How much has the Bank expended in helping to provide houses for Nigerians in the past ten years?
The total amount expended by the Bank from 2010-2020 was N201, 423,600,792.62. This amount was expended in the areas of Estate Development Loan (N46.656 billion), Home Renovation Loan (N30.153 billion), Ministerial Pilot Housing Scheme (N19.409 billion), NHF Mortgage (N88.562 billion), Cooperative Housing Development Loan (N8.154 billion) and Public Private Partnership (N5.499 billion). As of 2020, FMBN has funded the successful delivery of 28,550 housing units.
How has the bank fared given the state of the economy and your operating business environment?
Actually, it has not been easy to sail through these turbulent waters. In spite of the prevailing economic challenges confronting the country, particularly skyrocketing prices of general goods and services including the cost of building materials, the Bank is striving to maintain its position in providing affordable mortgages to contributors who are desirous of owning houses. As a strategy to reduce the high cost of building materials resulting in the high cost of houses, the bank is emphasizing the use of cost-effective building designs and encouraging the use of locally produced building materials by stakeholders in the building sector. Similarly, we seek the assistance of State Governors to provide the Bank with free land and infrastructure to lower the cost of houses for their people.
What are the challenges the Bank is grappling with in meeting its set target?
As I speak to you now, there are two major challenges confronting the bank as the apex Mortgage Institution in the country. One is the inadequate capital base to create and accommodate the increasing need for mortgages by our stakeholders, and two, the need for repeal of the National Housing Fund Act and FMBN Act for a stronger NHF Scheme, which will be in tandem with the prevailing economic realities of the 21st century.
Those familiar with our challenges would agree that FMBN would have recorded greater achievements and impacted the housing sector more if the institution is empowered in these areas mentioned.
The other challenge relates to the difficulty in perfecting land titles with state ministries of Land and other relevant agencies.