Mrs Ethel Matenge-Sebesho, Head, New Markets Home Finance Guarantors African Reinsurance (HFGARe) of South Africa, has advised the Federal Government to introduce Foreclosure Law to boost mortgage lending.
She said that such a law would enable Nigerian mortgage banks to recover monies from defaulting borrowers.
Foreclosure law assists a lender to recover the balance of a loan from a defaulting borrower by forcing the sale of asset used as collateral for the loan.
She explained that Foreclosure Law allows banks to foreclose all the borrower’s properties and auction them to recover outstanding loans.
According to her, in South Africa, mortgage banks are not afraid of giving out loans because they have legal backing.
This, she said, made it easier to register a bond and for banks to collect title deeds at the point of providing mortgage services.
She also noted that the mortgage market in South Africa was well developed unlike in Nigeria where it was faced with lots of challenges.
She said that the absence of foreclosure law compounded the challenges by making it difficult for banks to foreclose properties of defaulting borrowers.
“Nigeria Mortgage Refinance Company should wake up; I think they should draft mortgage and foreclosure laws and send to various states so that it can be enacted into law.
“If this law is in place, it would make it very easy for mortgage lenders to foreclose when someone is defaulting.’’
She further explained that lack of long-term funding, especially by primary mortgage lenders was another problem hindering mortgage loans in Nigeria.
She noted that most mortgage banks in the country had only enough money for few clients because they depended on the Federal Mortgage Bank of Nigeria for assistance.
She also noted that mortgage banks in Nigeria were very slow in providing mortgage to their clients and were usually cash constrained.
“In South Africa, banks do not seem to have such problem; most of the banks there do not have that problem of long-term funding constraints.”
According to her, another problem facing the Nigerian housing sector is the developers, who most times develop houses for high income earners without considering the middle and low income earners.
Matenge-Sebesho, said it was regrettable that with Nigeria`s current housing deficit estimated at 17 million, most middle and lower income earners needed loan but were not considered by developers.
“Most of the housing developers here are just developing houses for the high income earners; they do not really look at the middle and low income earners.
“You find out that even though the housing need is so high in Nigeria, a lot of people who need loans are the middle and low income earners.
“And the developers do not seem to have stock for them because they are looking at the profits.
“They forget that if they produce a lot of stock for the low and middle income earners, they can still make money from it,’’ she said