Experts in the housing sector are not happy with the poor state of the Nigerian mortgage sector, blaming its underdevelopment on CBN’s lack of interest despite several policy documents. DAYO AYEYEMI reports.

Experts in the real estate sector have decried the underdevelopment of the Nigerian mortgage sector, blaming it on “a clear lack of interest” by the Central Bank of Nigeria (CBN).

The experts, who took to the social media platform of the Festus Adebayo-led Housing Development Advocacy Network (HDAN) to express their displeasure, stated that the real estate industry needed a virile mortgage system for housing delivery.

They pointed out that the current state of underdevelopment has clearly revealed lack of government’s commitment to develop a vibrant mortgage system.

In his article on: “How CBN is Underdeveloping the Nigerian Mortgage Sector” that provoked reactions, a mortgage expert and one of the members of HDAN, Kola Akintunde, alleged that going by the CBN’s policies, the apex bank has not demonstrated interest in the mortgage industry.

“Everything from the policies to the body language of the CBN, including the personal attitude of its key officers show a clear lack of interest in the mortgage industry in Nigeria.

“And the key officials in CBN make no pretense about it.

“There has been a struggle in the mortgage sub-sector to place this “lack of interest” over the years,” he said.

According to him, why some have attributed it to a dearth of knowledge on the part of officials in CBN on the importance of a vibrant mortgage sector in a growing economy such as Nigeria, others have linked it to a deliberate attempt to cripple the mortgage industry and have commercial banks take over the responsibility of mortgage origination and creation in the country.

If the mortgage sub-sector in Nigeria must survive, attain its full potential and contribute meaningfully to the economy, Akintunde is of the opinion that the overall perception, treatment, and policy trust for the sector by the CBN must change completely.

According to him, CBN must develop a completely new positive, supportive and progressive outlook for the sector.

Alleged exclusion of PMBs in key policies

According to Akintunde, examples abound of how the CBN deliberately excluded Primary Mortgage Banks (PMBs) in key policies in the banking sector only to come back to make provision for them later after several appeals and protests by the banks.

“A clear example of this is the Global Standing Instruction (GSI) which was an idea conceived by the Mortgage Banking Association of Nigeria (MBAN) as a solution to the problem of non-performing mortgage loans bedeviling the sector,” he said

Under this policy, Akintunde explained that a mortgage bank with a non-performing loan could simply activate the GSI on the defaulting customer and call-up funds from all accounts held by the same customer in any other financial institution in Nigeria to clear his debt.

“The idea was novel and the mortgage banks needed approval of the CBN to implement it, being the apex supervisory body. Upon presentation to the CBN, the idea was hijacked and implemented for commercial banks only, leaving mortgage banks confused and in the cold.”

“Questions were put to CBN on the matter and they responded that mortgage banks were “not prepared” for its implementation so they adopted it for commercial banks first!

“Same is yet to be implemented for mortgage banks till date. This is just one of the many examples of the “lack of interest” or sheer disdain that exists for mortgage banks in CBN,” Akintunde said.

According to him, another example was the recent systematic exclusion of the strongest and most virile Primary Mortgage Banks from further accessing National Housing Fund Mortgage loans for Nigerians from the Federal Mortgage Bank.

This move, he alleged was initiated by the Central Bank of Nigeria to the effect that banks who have accessed NHF loans beyond a certain limit should be excluded from further disbursements.

The introduction of what he called “draconian policy” saw the exclusion of the most active Primary Mortgage Banks from processing housing loans with the FMBN.

“This automatically cut off access to affordable housing loans for millions of Nigerian workers who contribute their paltry incomes to the scheme.

“Records in FMBN have shown a sharp drop in the number of mortgages created year-on-year since the introduction of this misguided policy.

“Primary Mortgage Banks are simply treated as an afterthought by the CBN,” he said.

Akintunde said that a more recent example was in the introduction of the cashless policy by the CBN with its attendant limits placed on individual and corporate withdrawals from commercial bank accounts.

“Given that mortgage banks do not receive cash directly from CBN and as such depend on commercial banks for their cash needs, one would have expected the CBN to have made policy provisions to exclude mortgage banks from the withdrawal limit with commercial banks.

“This is in view of the fact that they also have teeming customers whose cash needs need to be met, as well as other operational needs.

“What we have presently is a despicable situation where mortgage banks can only withdraw N20,000 per day and N100,000 per week from their commercial bankers,” he said.

According to him, all appeals made to the OFISD and FPRD departments in the CBN for a waiver for PMBs on this policy and for such withdrawals to be treated as bank-to-bank transfers fell on deaf ears.

As at date, he stated that many mortgage banks could only pay out a maximum of N2,000 per customer on a daily basis.

“The Micro-finance Banks on the other hand have been swiftly granted a waiver to have access to as much as N1,000,000 per withdrawal request and are having a field day,” he said.

Akintunde said the assertion that weak corporate governance, bad loan assets, and lack of implementation of Enterprise Risk Management Framework in mortgage banks were responsible for the jaundiced state of the mortgage banks, including the Federal Mortgage Bank can’t be farther from the truth.

“A number of mortgage banks have such issues, but the greater evil is the one perpetrated by the CBN in this regard,” he said.

Other views

Former President of the Real Estate Developers’ Association of Nigeria (REDAN), Ugochukwu Chime, said there was a dire need of cohesion and collaboration in the real estate sector

According to him, “only very few people could see through the gimmick and systematic disassembling of the mortgage sector.”

“They made PMBs to join them in criticising and rubbishing FMBN. And thereafter availed them of an ‘alternate’ vehicle via NMRC.

“Today both NMRC and the PMBs are confused about what business model will sustain and thrive for the real estate sector.

“At inception when we pointed the pitfalls of double interest, they used laptop to explain that they will use ‘blended’ rate. Today both the blender and the rate are enmeshed in confusion,” he said

Decrying the state of things in the mortgage sector, Chime said the real estate sector has been mortally wounded, adding “recovery is quite difficult because of a bouquet of factors that include the universal license of the commercial banks; fintech; land administration and title issues and non-domestication of the Model Mortgage Foreclosure Law (MMFL) in most states.”

On the cashless policy, he said that both the PMBs and MFBs were sidelined in the eyes of their customers.

“How will they recover after this escapade by CBN? They are meant to serve those who are closest to the unbanked who have cash need. Why were they left out.”

Responding, former Director of CBN, AdedijiAdesemoyin, said the management of financial sector and monetary policies, and their interrelationships is often complex that “it’s difficult to appreciate by other players with backgrounds in smaller firms and sectors that is under going progressive integration in the financial system.”

According to him, issues raised by operators in the mortgage sector were not deliberate designed to down play the importance of PMBs.

In terms of outreach and direct interaction with the people at lower of the market, he explained that the branch network of 900 plus MFBs at different level of authorisation would be more than 35 PMBs.

“So this may account for reasons for currency and payment distribution for daily transactions. But PMBs are certainly part of DMBs in the system though they are not directly part of the clearing system,” he said.

Executive Director of HDAN, Festus Adebayo, said he had it authoritatively that some mortgage banks have been working to change to commercial banks because of the complaints raised.

“I can also say here that the World Bank is totally discouraged about the performance of our mortgage banks which our CBN has not been given the necessary support to thrive.

He appealed to stakeholders to support the sector, pointing out that the mortgage system is needed for housing delivery.

He said, “Double digit interest rate is a big barrier.”

Executive Secretary, AHCN, ToyeEniola, said the situation has clearly revealed lack of government’s commitment to develop a vibrant mortgage system.

He noted that the problems of mortgage in Nigeria was complex, pointing out that until the government is ready to address incessant abortions and stagnation of mortgage policies that will stimulate the development of the sector with serious commitment of both public and private practitioners, the sector will continue to move in circle.

Another expert, Fonahanmi Idris, said the CBN has failed the mortgage banks as a regulator.

According to him, the earlier the better for mortgage banks to regroup and have a common front.

He expressed concern for the mortgage banks, saying they are not as united as they used to be in the time past to push a common concern and requesting for a positive change.

He pointed out that most of the lofty ideas proposed by MBAN were stollen and implemented to the benefits of Deposit Money Banks (commercial banks).

Some of these ideas, he said included the mortgage refinancing, mortgage backed, collateral registry, Pencom funds for estates, unclaimed dividend use for mortgage, micro-mortgage, etcetera, among others.