Posted: 2022 | Pages: 93 | Format: MS Word | Chapters: 1-5 | Others: Questionnaires & References

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ABSTRACT

The Federal Mortgage Bank of Nigeria (FMBN) has contributed immensely in alleviating housing problems by providing credit facilities to citizens through the primary mortgage institution. This research therefore examines the impact of federal mortgage bank on real estate development in Enugu state. The study adopted survey research approach. Data collection for the study was through structured questionnaires administered to 191 respondents drawn through Taro Yamane model. Stratified random sampling technique was used to select the sample. Data recovered from 180 completed questionnaires was subsequently presented in frequencies and percentages. Findings revealed that contributions to National Housing Fund is not encouraging, the Federal Mortgage Bank has been helpful in tackling the problem of housing deficit in Enugu state, method of loan repayment is convenient, there is a need for review of loan policy and proper monitoring of the activities of the Primary Mortgage Banks to reduce setbacks faced by the mortgage institution. However, recommendations include; introduction of flexible measures to monitor activities of the Primary Mortgage banks, collaboration with other professionals to enhance the contributions to National Housing Fund and reduction of bureaucracy by staff of the Primary Mortgage Banks in disbursement of funds. It concludes that adequate guidance be extended to customers on modalities for securing credit facilities.

CHAPTER ONE

1.0 INTRODUCTION                    

1.1 BACKGROUND OF THE STUDY

The problem of housing has become an everyday discussion in all quarters of the public and private services of the developing countries of Africa. It has become increasingly glaring especially in Nigeria that most of the urban population live in dehumanizing housing environment while those that have access to average housing do so at abnormal cost (Onibokun, 2002). However, both the public and private organizations in a country all have various roles to play in the provision of adequate housing for the citizens. The problem of housing is that most Nigerians find it difficult to afford or pay for accommodation due to low income and high rents (Pius, 2012). It was due to these challenges that mortgage banks and other financial institutions were set up to provide adequate housing for the people. The mortgage banks were designed to assist Nigerians by giving out loans and to help them acquire accommodation (Pius, 2012). Before the establishment of the federal mortgage Bank of Nigeria (FMBN), the semblance of a mortgage institution in Nigeria was the Nigerian Building Society (NBS) which was incorporated in December, 1956 and Jointly owned by the common wealth corporation and the federal Government of Nigeria. Towards the end of its existence the operations of the Nigeria Building Society became extremely neglected. It’s (NBS) major problem included:
Accounting and book-keeping backlog of nearly 12 months of operation,
inadequate and inconvenient working space, Inadequate and incompetent staffing at the middle and senior management level. Cross errors in accounting data high proportion of delinquent mortgage accounts. Their condition for granting mortgage loans, favored only the upper and the middle classes while the low income earners did not benefits much from its operation. Finally, lack of deliberate fixed assets in form of office and residential accommodation were available, deliberate neglect and disposal of most of such assets. The federal mortgage Bank of Nigeria (FMBN) was then established in 1977 as the federal Government fully owned bank under Decree No 7 of 20 January 1977. The establishment followed the dissolution of the Nigerian Building society (NBS) whose assets and liabilities were taken over by the new bank (Acha, 2007). The authorized capital of the Federal Mortgage Bank of Nigeria (FMBN) was at its establishment #20 million, which was divided into 200,000 shares of N100 each. The transition period of transforming the Nigerian Building society (NBS) to a mortgage Bank, witnessed the management of the Bank in the hand of a firm of foreign consultants-Beneshot Moret Boshoom (BMB) of Holland, with a 3 year contract running from July 1977 to June 1980. The BMB team involved itself in minute details of the operations of the bank and so did not have sufficient time to analyze the existing system and problems which would have helped to make long-term operating plans for the Bank. Furthermore, lack of direction and coordination among the various operating departments of the Bank impaired the efforts made by the BMB team during its management period. In June 1979, the federal government appointed the members of the Board and the managing Directors of the bank. The inauguration of the Board also witnessed a change in the capital structure of the ownership of the Bank. The authorized capital of the Bank was increased from #20 million to #50 million jointly owned by the federal Government and the Central Bank of Nigeria (CBN) in proportion of 60% and 40% respectively. Ughanadu (2000), opined that Housing finance is in extremely short supply and costly in Nigeria. This lack of credit and high cost of finance for housing is recognized increasingly as a major impediment to the provision of shelter. The shortage and high cost of financing can be felt at every stage in the housing development, but it requires long-term mortgage credit. It is clear that housing ownership is a large investment for a family, often the largest it would ever make. There is therefore every need to augment household saving with long term loans for the purpose of housing development (Isiwele, 2004).

Consequently, the Federal Mortgage Bank of Nigeria (FMBN) being the mortgage institution in the country has contributed in reducing the severe housing problems by providing financial assistance to the citizens of the nation so they could at least be able to own houses of their own without saving or amassing the funds required. However, despite these efforts, the problem of housing still persists. It is no news that one of the major challenges of the Nigerian economy is that of developing a sustainable housing and mortgage finance system befitting of a dynamic, competitive and equitable economic and financial system (Guidelines for PMI, 2003).