The National Housing Fund (NHF) scheme was established in 1992 to address the constraints to the mobilization of long term funds for housing finance and ensure that every Nigerian has access to housing loans at affordable interest rate through participation and contribution to the National Housing Fund.
The overall objective is to provide cheap source of loanable funds to nurture and sustain the mortgage industry and eventually facilitate affordable home- ownership for the low and medium income groups in the country.
Section 14(2) of the National Housing Fund Act Cap N .45 of 1992 stipulates that a contributor to the Fund can access a loan from the Fund for the purpose of building, purchasing or renovation of existing homes /houses.
To achieve this, FMBN has developed concessionary loan windows to enable Nigerians access mortgages for home ownership.
However, the realization of this objective has been hampered by several challenges to housing finance in Nigeria, which include, amongst others:
a) Lack of access to land.
b) Inadequate funding for the housing sector
c) Inaccessibility of mortgage loans due to lack of proper title to properties.
d) Low income of prospective borrowers which affects affordability.
e) Cumbersome procedures for obtaining Governor’s consent to land transactions which is also costly.
These challenges have limited the number of contributors to the NHF who have benefitted from the Scheme. As a result, although there are currently about 4 million Nigerians that are registered and are contributing to NHF, FMBN has – been able to provide mortgage loans to only about 60,000 contributors.
This seemingly dismal number has created a negative image for the Bank from the public who perceive the Bank as not having effectively delivered on its mandate.
It has therefore become necessary for FMBN to develop some quick-wins that will allow a greater number of Nigerians access to the National Housing Fund.
It is in view of the foregoing that a new product is being proposed to be introduced by the Bank.
The product shall be called the FMBN HOME RENOVATION LOAN (FHRL). This product will afford Nigerians an opportunity to access mortgage loans for the renovation or improvement of their existing homes.
The product is specifically designed for Nigerians who are contributors to the National Housing Fund and desire to renovate or improve existing properties which are personally owned by them or through family ownership.
It is proposed that FMBN will approve and disburse the Home Renovation Loans through the Federal Government Staff Housing Loans Board (FGSHLB) for Federal Civil Servants and through the Office of the Head of Service or any other body recognized by the Bank at the State level, in the case of State civil servants,
At the federal level, applications are to be aggregated by the FGSHLB while at the State level applications are to be aggregated by the relevant authority (as stated above) and forwarded to FMBN through the State Controller of the particular State. In the case of employees in the organized private sector (including other government agencies and parastatals not covered by the activities of FGSHLB) the applications shall be aggregated by the Permanent Secretary or Chief Executive of the organization.
The applications shall be received and assessed at the respective State Offices, to accord a level of ownership for effective management of the loans and broaden the Bank’s risk asset origination platform.
For applications emanating from State Offices, the loans shall be approved and disbursed directly to the accounts of the beneficiaries after receipt of consent to disburse from the relevant authority (as above) through which the applications were submitted.
a. The applicant shall be a contributor to the National Housing Fund
b. The maximum loan amount shall be Nl,000,000.00 (One million naira only), subject to the income limit of the beneficiary as well as the ultimate cost of renovation.
c. Applicants will apply through the Federal Government Staff Housing Loans Board (in the case of Federal Civil Servants) and through the Office of the Head of Civil Service of the State or other relevant authority recognized by FMBN (in the case of State civil Servants)
d. Approved loan amount shall be disbursed in lump sum to the Federal Government Staff Loans Board (FGSHLB) (in the case of Federal Civil Servants) and directly to the account of beneficiaries in the case of State Civil Servants and employees of the organized private sector, after acceptance of offer and the fulfillment of conditions precedent to draw-down.
e. The loan tenor shall be a maximum of three (3) years or employee’s remaining years of service, whichever is less.
f. Repayment of the loan shall be through monthly repayments for a tenor not exceeding three (3) years, via direct deductions by the FGSHLB and the respective Head of Service/ accounts office of the States.
g. Monthly repayment shall not exceed 331/3°/o of applicant’s monthly salary/ income.
h. The interest rate shall be 8% for the duration of the loan. This is because of the high risks involved as well as the less cumbersome process and documentation required.
i. The facility shall not be available to any contributor who has enjoyed an NHF loan to buy or build a house.
j. The facility could be taken jointly by a couple, subject to the income assessment of both parties.
k. The loan can only be taken once in five (5) years.
l. Beneficiaries may however, be eligible to apply for NHF loans for home purchase after fully liquidating a Home Renovation Loan earlier taken.
m. Applications are to be submitted with certified Bill of Quantities indicating the amount required for the renovation.
I. The security for the loan shall be the following:
II. Letter of Undertaking from the Federal Government Staff Loans Board (FGSHLB) to deduct and remit the monthly repayments to FMBN;
III. And that in the event of resignation, death or disengagement from service, the FGSHLB shall be responsible for liquidation of the outstanding loan balance through the beneficiary’s terminal benefits.
IV. Applicants shall provide two (2) guarantors with verifiable sources of regular income; in case the beneficiary’s terminal benefits may not be sufficient to offset the loan.
V. Applicants shall take out a Reducing Term Assurance Policy which guarantees the outstanding loan and covers death, incapacitation and loss of job.
b) In the case of State Civil Servants
I. Letter of Undertaking from the Office of Head of Service to deduct and remit monthly repayments to FMBN;
II. And that in the event of resignation, death or disengagement from service, the MDA shall be responsible for repayment of outstanding loan balance through the beneficiary’s terminal benefits.
III. Applicants shall provide two (2) guarantors with verifiable sources of regular income; in case the beneficiary’s terminal benefits may not be sufficient to offset the loan.
The Scheme, if properly implemented, has the potential to impact very positively on the NHF Scheme as well as the overall corporate image of the Bank.
Mr. Lawal Isa Head of Department, Corporate Affairs, FMBN.