Six years after it suspended the grant of Estate Development Loan (EDL) to developers due to loan defaults, the Federal Mortgage Bank of Nigeria (FMBN) is considering reactivation of the housing construction facility. According to the Managing Director/Chief Executive Officer of FMBN, Ahmed Dangiwa, the management was in the process of reactivating the EDL by adopting a business model to guide against abuse and loopholes associated with loan before its suspension.
EDL is an estate construction facility granted to governmentowned investment/property development corporations and pri-vate estate development firms at a fixed rate of 10 per cent for a 24-month tenor.
The loan window was created to increase the stock of mortgage-ready houses. It has however, been under suspension since 2012. Represented by the Lagos Zonal Coordinator of the bank, Mr. Abiodun Fashina, at the housing fair in Lagos, Dangiwa described EDL as the “cheapest housing construction loan in the country for estate developers”, adding that its repackage and re-activation would ensure its usage is no longer being abused He pointed out that the loan was suspected in 2012 due to backlog of loan defaults by developers and mortgage bankers, amounting N100 billion.
The managing director said that though some of the loans had been recovered, efforts are at advanced stage to reactivate the EDL to enhance home ownership among Nigerians.
Hitherto, many estate developers had taken on FMBN on decision that led to the suspension of EDL. They stated that though it was obvious that some developers defaulted in loans repayment, while others diverted the loans to other usage, but that the bank should not have suspended the cheapest construction facility because of few people that owed it.
Managing Director, HOB Estates Limited, Chief Olusegun Bamgbade, said that if the nation is serious about bridging the 17 million housing units’ deficit, cheap construction finance such as EDL should be encouraged.
He called on the Federal Government to recapitalise the FMBN to the tune of N500billion so that it can perform its functions of mortgage and housing finance effectively. In order to integrate the non-salaried informal sector, which constitutes over 80 per cent of the Nigerian population into the NHF Scheme, he stated that individuals have been mobilised to contribute to the fund through cooperative societies so that they could access individual mortgage loans “while the cooperative society can obtain estate construction loans to build houses for their members.”
In furtherance of the potentialities of NHF, Dangiwa said the management had been working to retool the scheme to be able to expand its coverage to capture the potential 50 million market size.
Besides, he said the scheme is been worked on to contribute significantly to the target of creating one million new mortgages on an annual basis, while maintaining the single-digit interest rate the country.
He said: “The management is working to retool NHF to further reach the down-market beyond the lower medium income bracket; to increase mortgage sector contribution to national GDP. “And to meet the changing mortgage landscape and remain relevant in the face of other mortgage financing developments in the Nigerian Housing sector.”
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