Some experiences with Primary Mortgage Institutions or Banks can be terrible and the ones we have today or years back, maybe, they don’t know what they are doing. The reason for this may be that even if they are regulated by the government, there should be some sort of servitude, respect for customers or clients must be enhanced. Customers must be treated better.
It will make more understanding to know what PMIs are created for. First, PMIs have significant influence on a nation’s economy if they can efficiently carry out their responsibilities, which include the provision of financial services for the productive sectors of the economy and timely disbursement of NHF / EDL loans.
Someone who is a National Housing Fund Contributor came to you and paid his money to open an account with your primary mortgage institution and had asked for a process of getting a facility from the Federal Mortgage Bank of Nigeria [FMBN]. He opened an account because, he is expecting services for what he paid for. However, if there are hiccups along the way, a service provider is mandated morally to report to that client that has made payment and is expecting quality service delivery. Some primary mortgage institutions in Nigeria are guilty in this regard, they are very poor when it comes to good service delivery. Once they collect money from you, they become very negligent with the rest of the services they are mandated to render. This is a problem.
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Most of them don’t mind withholding the money sent to them by the FMBN, mostly using the money as a fixed deposit and start bringing you several questions that they know will be very difficult for a beneficiary of a loan to come through with. The intention may be to keep this money long in their custody, thereby, making more money out of it.
If one is paid for NHF into any of the primary mortgage institutions, they should stop charging additional 14 percent interest apart from the FMBN’s 6 percent. They charge you 10 percent perfection fee, 3 percent administrative fee, 1 percent insurance which makes it 14 percent, added with the 6 percent from FMBN, it takes it to 20 percent. So, how does one expect a beneficiary as a low income earner who is looking for mortgage to cope with these interest rates? A Mortgagee will find it difficult to meet all these conditions and eventually, the mortgage will collapse and will not meet its main objective which it was planned for.
I believe the FMBN is supposed to checkmate this and some government regulations concerning primary mortgage institutions may need to be revisited. Sometimes, you need to consider that there might be some government regulations that also nullify them. With some of these charges imposed, if the government want to do some regulations, at least, they should inform the apex institution which is the FMBN so that they will inform the PMI because, they are customers to the FMBN.
The FMBN will now be in a pole position to regulate the activities of the PMI to force quality service delivery from them.
Someone who is paying 10 percent interest on a mortgage should be when he has finished paying for his house, he should be given the opportunity to pay the amount of money at that time, after the completion of payment for the house.
As a beneficiary who has gotten a loan, should not be charged another 10 percent for perfection at the initial stage, it should be after the payment for your house is done.
Secondly, the 3 percent that financial institutions are charging, should not be because, out of the 6 percent already charged by the FMBN, 2 percent already goes to the primary mortgage institution, 2 percent goes to the beneficiary after he finishes, his NHF contribution will be calculated with 2 percent interest on it. Then, the balance of 2 percent is what is goes to the mortgage.
So, if the PMIs are benefitting 2 percent from FMBN, why are they still charging another 3 percent again? The government should put in place a trustee who will not charge as much as these PMIs are doing. There are some other charges beneficiaries of these mortgages are getting and they add more burdens on the beneficiaries. It is like a loan to death because, you cannot finish paying until you die. These charges and negligent acts by these PMIs are indirectly increasing the housing deficit gap the country is presently facing.
Estate developers are also suffering from the negligence of the PMIs, most of them find it hard to get back their money on time if they chose not to continue with the loan anymore, the refunding takes more time than it should. Developers that manage to come through these charges, having completed their buildings, try to recover their costs or get back their money. This is one of the reasons that make buildings very expensive because of the interest rates charged while developing.
There is a primary mortgage institute in Abuja the nation’s capital, they do whatever they feel like, once your money enters there, that is it, they do not care. This same primary mortgage institute has been reported to some anti-corruption bodies and the CBN’s Consumer Protection Department but, they always find their ways out.
Having seen some primary mortgage institutions deregistered by the Central Bank, regularization measures should also be carried on some primary mortgage institutions because, this will be a means of checkmating their acts and will indirectly reduce housing deficits we have in the nation.
They should be compelled to focus more on the provision of housing facilities than diversifying into non-housing businesses/transactions. Also, they should redirect their loanable funds to building and renovation of residential buildings than concentrating on commercial buildings and neglecting residential properties.
In addition, they should focus on the provision of housing and enhance their contributions to real estate development towards improving the Nigerian economy. The government should recapitalize the PMIs for better and improved mortgage services, and review or repeal the Act to enable easy land acquisition by individuals.
Conclusively, PMIs should increase their level of participation in the NHF. Non-Vibrancy of some PMIs has led to the loss of focus in favor of non-core activities such as trading as well as the slow disbursement of NHF. There is need for constant re- engineering of the capital and money markets in order to cope with the renewed challenges of provision of some mortgage financing. The restructuring and strengthening of the FMBN has become imperative for it to remain a viable financial institution with the capacity to enhance efficient housing finance development in Nigeria.