Mortgage bankers in Nigeria have advocated for an on-lending structure for the new Ministry of Finance Integrated (MOFI) Real Estate Fund (MREIF) rather than a credit line which the promoters of the fund are rooting for.
The bankers, under the aegis of Mortgage Banking Association of Nigeria (MBAN), explained that the on-lending structure ensures more direct and sustainable access to financing for mortgage banks which is crucial for creating affordable housing opportunities.
This advocacy followed a meeting of chief executives of mortgage banks on the fund, and subsequent discussions between MBAN President/MREIF committee and the Fund Managers (ARM).
According to them, MREIF represents a significant opportunity for the mortgage banking sector with the aim of enhancing liquidity, reducing borrowing costs, and increasing homeownership through long-term, affordable financing for residential housing projects.
The bankers, therefore, advocated increased lending limit, explaining that the current proposed funding allocation is insufficient to allow mortgage banks to create an adequate number of mortgages.
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“Discussions are ongoing, and MBAN is pushing for an increase in this limit to ensure banks can effectively meet housing demands,” the bankers said in a statement signed by Adedeji Ajadi, MBAN Executive Secretary and chief executive.
MBAN is pushing for an interest margin of 4 percent which is critical to ensuring that mortgage banks can operate viably within the proposed lending structure, adding that in terms of eligibility and transparency, all mortgage banks duly licensed by the Central Bank of Nigeria (CBN) must be eligible to participate. Additionally, the process for onboarding mortgage banks should be transparent and equitable.
Another thing which is of interest to the mortgage bankers is collateral and title perfection for which they seek further clarity from ARM regarding the collateral arrangement and the process for the perfection of title, as these are crucial elements in ensuring the security of the loans.
How developers are to be onboarded on the new fund is also crucial to MBAN and, according to them, flexibility in this process is essential. This is because the process would allow mortgage banks to work with a wider range of developers to increase housing stock and promote affordable housing initiatives.
On legal fees, MBAN recommends that the fees currently associated with the process be scrapped, as they add unnecessary costs that reduce the overall effectiveness of the programme.
The association encourages all eligible mortgage banks to begin the onboarding process for mortgage bankers, advising that no member signs off on the Term Sheet until a unified position is reached with the MREIF team. This ensures that all concerns are adequately addressed and that the final agreement serves the best interests of the industry and all stakeholders.
“As we continue to engage with the MREIF team, we will keep you informed of any further developments. It is critical that we approach this opportunity with a unified voice to ensure that the MREIF product is structured in a way that benefits all mortgage banks and advances the growth of the housing sector,” the statement assured.
