WORKS & HOUSING

March 14, 2020

POLICIES & IMPLICATIONS

The new policy aimed at removing the impediments to the realization of housing goal of the nation. The goal of the policy is to ensure that Nigerians own or have access to decent, safe and healthy housing accommodation at affordable cost”. This goal is similar to that of the 1991 policy except that the fulfillment of the policy is not tied to a specific period. The scope of the policy objectives has also been widened to include some of the issues put under the 1991 policy strategies. The policy objectives are:

Develop and sustain the political will of the government for the provision of housing for Nigerians.
Provide adequate incentives and an enabling environment for greater private sector (formal and informal) participation in the provision of housing.

Strengthen all existing public institutions involved in the housing delivery at the federal level.

Encourage and promote active participation of other tiers of government in housing delivery.
Create necessary and appropriate institutional frame work for housing delivery.
Strengthen the institutional frame work to facilitate effective housing delivery.

Develop and promote measures that will mobilize long term sustainable and cheap funding for the housing sector.
Government shall by patronage, develop and promote the use of certified locally produced building materials as a means of reducing construction cost. ix. Ensure the use of relevant and fully registered Nigerian professionals to provide appropriate designs and management in housing delivery.

Develop and promote the use of appropriate technology in housing construction and materials production.
Make land for housing development easily accessible and affordable.
Develop and promote a national housing market.

Enact laws and make regulations to prevent and control fire incidence in Nigeria.
Improve the quality of rural housing, rural infrastructure and environment. The main policy thrust is on institutional reform, capacity building, and increased financial mobilization to the housing sector, local building material production and adequate access to building land.

In order to achieve the policy objectives, 22 strategies were specified in section 2.3 of the policy, some of which are:

1) Strengthen and sustain the federal ministry of Housing and Urban Development to harmonize and monitor housing delivery in Nigeria.

2) Maintain and strengthen the department in the standard organization of Nigeria responsible for monitoring and setting minimum performance standard in the building industry.

3) Restructure and adequately capitalize the following institution to effectively perform their statutory roles: the federal mortgage bank of Nigeria (FMBN), Federal Housing Authority (FHA), Federal Mortgage Finance Limited (FMF) and Urban Development Bank (UDB).

4) Restructure and adequately fund the Nigerian Building and Road Research Institute to perform its statutory role.

AREA OF FOCUS & EXPERT OPINION

FEDERAL MORTGAGE BANK OF NIGERIA”

Federal Mortgage Bank of Nigeria (FMBN) was established to provide the following functions ;

Provide long-term credit facilities to mortgage institutions in Nigeria.
Encourage the emergence and promote the growth of viable primary and secondary mortgage institutions to service the need of housing delivery in all parts of Nigeria.
Mobilizing both domestic and offshore funds into the housing sector.
Link the capital market with the housing industry.
Establish and operate a viable secondary mortgage market.
Collect and administer the National Housing Fund in accordance with the provisions of the NHF Act.
Do anything and enter into any transaction which in the opinion of the Board is necessary to ensure the proper performance of its functions under the FMBN Act..In fulfilling its mandate, the Bank is to also float capital market instruments such as Mortgage-Backed Bonds and Mortgage-Backed Securities for sale to institutional investors, such as pension funds, insurance companies, securities companies and banks, to raise long term funds for its secondary mortgage lending activities. This is to ensure a sustainable supply of liquidity to finance first home mortgage loan originations.Following the reform of the Nigerian housing sector, FMBN was restructured into a Federal Government-Sponsored Enterprise (FGSE) with more focus on its secondary mortgage and capital market functions. FMBN is shifting operational emphasis to expand its functions from solely social housing on-lending under the NHF, to other areas of business including commercial on-lending for housing, refinancing of commercial mortgages created by mortgage loan originators, mortgage purchasing and warehousing and mortgage-backed securitization.
The Bank’s current business model targets partnerships with local and international organisations with financial and technical capacity, interested in delivering affordable mass housing for the low income end of the market.

NATIONAL HOUSING FUND

The NHF scheme is for Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans e.g. civil servants, traders, artisans, commercial drivers etc. Any intending beneficiary must be a registered contributor and up to date with his/her contributions.

AIMS & OBJECTIVES

Mobilization of funds for the provision of affordable residential houses for Nigerians.

Commercial and Merchant Banks to invest 10% of their loans and advances portfolio.
Insurance Companies are mandated to invest 20% of non-life and 40% life funds in the housing sector with 50% of these directly in the funds.
Financial contributions of the Federal Government.

FUNDING

Mandatory contribution of 2.5% of monthly income of Nigerians earning =N=3000 and above per annum.

Commercial and Merchant Banks to invest 10% of their loans and advances portfolio.
Insurance Companies are mandated to invest 20% of non-life and 40% life funds in the housing sector with 50% of these directly in the funds.
Financial contributions of the Federal Government.

BENEFITS

Housing loan of up to 90% of the cost of the house.
Interest on loans remains fixed throughout the life of the mortgage at 6% p.a.
Long period of repayment of up to 30 years.
Contributions can serve as additional old age security.
Up to N15 million can be borrowed.
Refunds with 2% interest on retirement.
Loan repayment is about the same as a typical monthly rent.
Every contributor has: a lifetime registration number, a passbook for personal recording of contributions and the account statement.

ELIGIBILITY

Registration via NHF 1 (employer) and NHF 2 (employee) forms.
Deducted monthly contributions remitted to FMBN promptly (At least 6 months contributions should be made)
Passbook to be updated by employer and is transferable from one employment to the other.
Yearly statement of cumulative contributions plus accrued interest
Apply through any accredited Primary Mortgage Bank(PMB)
Applicant must provide satisfactory evidence of regular income.

PROCEDURE FOR REGISTRATION

All Nigerians in employment, whether self-employed or in paid employment, are required by the NHF Act No.3 of 1992 to contribute 2.5% of their basic salary/income to the fund. The Procedure for registration is as follows:
The Federal Mortgage Bank of Nigeria (FMBN) will supply Employer Registration Form (NHF1) to employers.
Employers will complete form NHF1 and return to the nearest branch of the Federal Mortgage bank of Nigeria.
Federal Mortgage Bank of Nigeria will register the Employer and issue an employer’s registration number.
Federal Mortgage Bank of Nigeria will issue form NHF2 to employers for completion by employees or directly to self employed or individual.
Employee will complete the form NHF2 and return to the employer.
The employer or self-employed individuals will return completed form NHF2 to Federal Mortgage Bank of Nigeria.
Federal Mortgage Bank of Nigeria will register Employees on Form NHF2 and allocate employees participation number to each employee/self-employed individual.
Federal Mortgage Bank will issue a passbook to each of the registered employees where the monthly deduction of his/her 2.5% basic salary will be posted by the employer
At this point, an employee is now a registered participant of the National Housing Fund.
Employer will commence deduction of contributions at source. Such deductions/contributions are remitted to Federal Mortgage Bank of Nigeria with schedule of payment indicating the amount contributed by each employee and the period covered.
Self–employed contributors will also commence monthly remittances of contributions to FMBN.
Federal Mortgage Bank of Nigeria will accept contributions and issue receipts for payments.

CONDITIONS FOR REFUND

Refund is made to a contributor who has attained 60 years of age or has put in 35 years in service.
Refund is also made to a contributor that has obtained a loan, liquidated the loan and has attained the age of 60 years or have put in 35 years in service.
Retired from employment and becomes incapable of continuing the contribution to the Fund.
For applicants from the underlisted professions, the retirement ages are as stated below:
Professors, Judges and Medical Consultants – 70 years of age
Academic, Non-Academic Staff, Judicial Staff – 65 years of age
Military Officers – 62 years of age
Refund is made to the next-of-kin of a contributor in case of a deceased contributor.
Documents required for refund of contribution
Application letter requesting for refund of contribution.
Letter of offer of appointment.
Birth certificate or Declaration of age certificate.
Completed NHF Contribution withdrawal forms.
Bank Account details through which refund would be paid.
Medical report of incapability to continue contributions due to failing health
Letter of administration & Death Certificate (in case of a deceased contributor)
Evidence of contribution. (Receipt for self-employed contributor)
Biometric Verification Number (BVN)

PRODUCTS OF FMBN

NHF Mortgage Loan

This facility is granted at 4% interest to accredited Primary Mortgage Banks (PMBs) for on-lending at 6% to NHF contributors over a maximum tenor of 30 years, which is secured by the mortgaged property. A contributor can access up to ₦15million from the Fund through an accredited and licensed PMB as a mortgage loan to build, buy, improve or renovate own home after 6 (six) months of continuous contributions. This lending conditions make the NHF unequalled as a vehicle for affordable housing delivery in Nigeria.

Estate Development Loan

The EDL is a facility granted to private developers, State housing corporations and housing cooperatives to bridge the housing deficit through mass production of houses for ownership by NHF contributors. The facility is granted at 10% interest with a maximum repayment period of 24 months. It is a facility devised to facilitate large scale production of houses for sale to contributors at affordable prices and thereby, expand the availability of affordable housing in Nigeria. As a general policy of the Bank, houses produced through the EDL window should not exceed ₦15million in price and must be sold only to NHF contributors.

Capital Market Window

Capital Market is a critical pillar for long term fund mobilization needed in generating necessary capital to facilitate increased Mortgage Financing and Home Ownership in the Country. The Nigerian Capital Market has performed relatively well in the area of Bond Issuance. In 2007, the first Mortgage Backed Security worth N100 Billion was floated by the Federal Mortgage Bank of Nigeria (FMBN) to support the Sale of Federal Government of Nigeria (FGN) Non-essential residential houses under the FGN Monetization Policy

Internal Records Office (IRO)

The FMBN Internal Record Office (IRO) was established by the Bank and began operations in July 2011. It admits and records equitable mortgages from Primary Mortgage Banks (PMBs) as security for NHF loans, on the basis of which the loan is disbursed pending perfection of the mortgage and its assignment to FMBN.

WHAT WE DO

The IRO provides a platform for an alternative security which is achieved by creating and accepting equitable mortgages for NHF loans.
The IRO accepts original allocation letters, executed Deeds of Assignment, Deeds of Legal Mortgage and Sale and Administration Agreement (equitable mortgages) of properties from NHF applicants on the strength of which the loan is disbursed to the NHF contributor, through an accredited PMB, pending the perfection and Assignment of the mortgage to FMBN.
We entertain request for search queries for NHF customers and the general public through a computerized process.
Provide digital archives of NHF title and supporting documents.
Enhance perfection of mortgages.
We liaise with land authorities to safe guard the interest of FMBN over concerned properties.
We scrutinize documents submitted and provide standardized template for use.

CONSTRUCTION LOANS

The loan is to afford Nigerians an opportunity to access mortgage loans for the construction of homes. The product is specifically designed for Nigerians who are contributors to the National Housing Fund and desire to construct properties which are personally owned by them or through family ownership.

INVESTMENT OPPORTUNITIES

In every government policy and establishment lies investment opportunities. As business entrepreneurs it is important that you make efforts to look out for opportunities inherent in every sector of the economy and identify your areas of strength to explore.

The 2.5% of monthly basic salary contribution qualify you to access the loan. The pool of funds created by the contributors nationwide becomes available to any contributor to borrow from, after contributing for a minimum of six months.

A contributor interested in obtaining NHF loan applies through a registered and duly accredited mortgage loan originator (e.g. Primary Mortgage Banks), who packages and forwards the application to FMBN.

The loan amount is determined by the applicants affordability. This entails his/her income level that will enable repayment of the loan.

Documents required to process a loan include:

Completed application form.
Photocopy of title documents
Current valuation report on the proposed house to buy or bills of quantities (BOQ) for the house to build.
Three years tax clearance certificate.
Evidence of NHF participation
Copy of pay slips for the previous three months.
Equity contribution or personal stake of 30%, 20% or 10% depending on the loan amount applied for.

It is important to note that NHF housing loan are repaid on monthly installments from the income of the beneficiary. This mode of repayment has the advantage of being both affordable and convenient.

A prospective applicant can liaise with a mortgage loan originator (e.g. PMB etc.) in Nigeria to process a loan application without being in the state.

There restrictions as to where a contributor can build his/her house as long as the property can be located anywhere in Nigeria. The applicant must however provide acceptable title documents to the land.

The only collateral is the property to secure the loan for. No other collateral is needed for the loan. It is important to note that a contributor can only obtain NHF loan facility once in a lifetime. A contributor is eligible to access a maximum loan amount of =N=15 million repayable over a maximum period of 30 years at an affordable interest rate of 6%.

A prospective applicant who wishes to obtain a loan to build a house is expected to have his/her land as well as an acceptable title to the land prior to the application for NHF loan.

A contributor can apply as an individual for NHF loan to develop a land or buy directly from government consort

RECOMMENDATIONS

In keeping to the essence of this project which is to x-ray each government sector in order to expose the intrinsic benefits to the citizenry as well as identifying investment opportunities that can be explored by the private sectors,

Consequently, the following recommendations