GROWING THE MORTGAGE MARKET TO ENABLE BROADER ACCESS TO HOME OWNERSHIP IN NIGERIA

CHII AKPORJI, PH. D DIRECTOR, POLICY, STRATEGY & PARTNERSHIPS

OUTLINE

• Key$Stats$on$Nigeria$• Overview$of$the$Mortgage$Market$in$Nigeria$

• Enter$NMRC$

• Business$Overview$• Market$Development$Ini@a@ves$

• Conclusion$• Q$&$A$

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NIGERIA:-KEY-STATISTICAL-DATA

Exchange)Rate:)US$)1) Nigerian)Naira)197)(22nd)Oct.)2015))

Major$Ci@es$ Lagos,$Abuja,$Port$Harcourt,$Kano$

Popula@on$ 173,615,$345$m$

Popula@on$Growth$Rate$ 2.79%$

Urban$Popula@on$(%$of$Total)$ 46.09$

Urbanisa@on$Growth$Rate$ 4.68%$

GDP$Growth$Rate$ 5.39%$

GDP$per$capita$(US$)$ 3.005.51$

Mortgage$as$%$of$GDP$ 0.58%$

Prime$and$Minimum$Lending$Interest$Rate$ 16.90$

No.$of$Mortgage$Ins@tu@ons$ 40$

No.$of$Commercial$Banks$ 21$

Ease$of$Doing$Business$(WBG$_$2014,$2015)$ 175$(2014);$170$(2015)$3$

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ENTER-THE-NIGERIA-MORTGAGE-REFINANCE-COMPANY

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NMRC-HIGHLIGHTS

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-BUSINESS-OBJECTIVES-- •  To$encourage$financial$ins@tu@ons$to$increase$their$mortgage$lending$by$providing$them$with$long$term$funding;$

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•$To$increase$the$maturity$structure$of$mortgage$loans$and$assist$to$reduce$mortgage$rates;$

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•$To$increase$the$efficiency$of$mortgage$lending$by$taking$a$lead$role$in$proposing$changes$to$the$enabling$environment$for$mortgage$lending$as$well$as$by$standardising$mortgage$lending$prac@ces$of$financial$ins@tu@ons;$and$

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•$To$introduce$a$new$class$of$high$quality$long_term$assets$to$the$pension$funds$and$other$investors$

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SIGNIFICANT)MILESTONES)

•  Drawdown$On$Ida$Subordinated$Loan$

•  Model$Mortgage$And$Foreclosure$Law$

•  FGN$Guarantee$

•  Review$Of$Legacy$Loans$Porfolio$$

•  First$Bond$Issue$ •  First$Set$Of$Refinancing$Of$Mortgages$

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•  FMDQ$Lis@ng$

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MARKET/BUSINESS-DEVELOPMENT-INITIATIVES-;-1 UNIFORM UNDERWRITING STANDARDS •  NMRC$has$spearheaded$the$development$of$industry$lending$standards$to$promote$efficiency$and$mi@gate$the$legal$and$opera@onal$risks$inherent$in$mortgage$lending$by$ensuring$quality$collateral,$adequate$property$@tle,$proper$registra@on,$enforcement$of$legal$mortgages,$and$maintenance$of$efficient$collec@on$processes.$

•  NMRC’s$Uniform$Underwri@ng$Standards$for$Eligible$Mortgage$Loans$was$published$in$January$2015.$$

•  All$mortgages$to$be$refinanced$by$NMRC$must$conform$to$the$Uniform$Underwri@ng$Standards$as$published$or$amended$from$@me$to$@me.$$

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•  The$Uniform$Underwri@ng$Standards$act$as$industry$standards$for$gran@ng$home$mortgage$loans$to$borrowers$that$will$qualify$for$NMRC$refinancing$facility,$thereby$promo@ng$efficiency$and$mi@ga@ng$the$mortgage$financing$risks$in$the$markets$well$as$lead$to$more$affordable$home$ownership$in$Nigeria.$

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MARKET-DEVELOPMENT/BUSINESS-OBJECTIVE-;-2 •  Reach$out$state$governments$as$key$partners$in$the$set$up$and$opera@onaliza@on$of$the$NMRC,$as$well$as$cri@cal$to$the$growth$of$the$mortgage$and$housing$sector$in$Nigeria.$

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•  21$State$Governors$have$commiked$to$suppor@ng$the$NMRC$ini@a@ve$and$to$collabora@ng$to$create$the$enabling$environment$for$mortgage$origina@on$to$be$refinanced$by$NMRC$in$key$areas$under$their$jurisdic@on.$$

! Property$Registra@on$! Enforcement$of$Mortgage$Property$

! Access$to$Serviced$Land$

•  A$framework$dral$Memorandum$of$Understanding$is$usually$agreed$to$by$both$par@es$to$govern$the$partnership$between$the$state$and$the$NMRC.$$

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•  MoU$with$Kogi$State$formalized$$

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MARKET)DEVELOPMENT/BUSINESS)OBJECTIVE)M)3)•  A$cri@cal$developmental$role$set$for$NMRC$on$its$establishment$is$the$promo@on$of$legisla@ve$reform$by$proposing$a$Model$Mortgage$and$Foreclosure$Law$for$adapta@on$by$frontline$states$to$fast$track$the$process$of$crea@ng$legal$mortgages,$ensuring$@mely$resolu@on$of$disputes$and$crea@ng$efficient$foreclosure$processes.$$$

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"  The$Model$Mortgage$&$Foreclosure$Law$calls$for$the$crea@on$a$state$Mortgage$Board$as$a$one_stop_shop$to$facilitate$accessible$and$affordable$mortgages$for$the$benefit$of$residents$of$the$State.$$

"  Other$func@ons$to$be$undertaken$by$the$Board$under$the$supervision$of$the$Commissioner$for$Housing$in$the$first$Phase$of$roll$out$are$as$follows:$$

—  Advising)the)state)on)the)funding,)administraVon)and)structure)of)the)State)mortgage)finance)programme;))

—  ImplemenVng)and)honouring)on)behalf)of)the)State)all)obligaVons)in)any)agreement)made)between)the)State)and)other)parVes)with)regards)to)any)mortgage)scheme)for)the)provision)of)funds)for)land)ownership)or)development)of)real)estate)in)the)State;))

—  Encouraging,)promoVng)and)coordinaVng)all)forms)of)research)concerned)with)the)mortgage)lending)industry)as)it)relates)to)economic)wellMbeing)of)the)State)and)its)residents,))

—  The)stamping)and)registraVon)system)relaVng)to)mortgages)in)the)State,)the)mode)of)applicaVon)for)Governor’s)consent)or)the)consent)of)the)appropriate)Local)Government)Area)relaVng)to)mortgage)transacVons,)and)generally)to)disseminate)same)to)the)State)government)and)the)public.))

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MARKET)DEVELOPMENT/BUSINESS)OBJECTIVE)M)4)MMFL – A PLATFORM FOR POLICY DIRECTION ON HOUSING IN THE STATE •  Provide$a$plaform$for$the$priori@za@on$of$housing$in$the$state.$The$crea@on$of$a$separate$mortgage$registry$dis@nct$from$the$land$registry$(or$a$specialized$unit$within$the$current$land$registry)$will$assure$ci@zens$of$the$government’s$commitment$to$providing$housing$in$the$state.$

•  The$MMFL$will$create$a$framework$for$the$state$government$to$set$housing$policy$agenda$going$forward$as$the$mortgage$board$to$be$created$under$the$Law$will$con@nually$make$progressive$policies$that$will$be$pro$affordable$housing.$

INVESTOR PROTECTION •  The$bill$will$foster$proprietary$rights$of$poten@al$investors$in$the$state$by$providing$security$of$assets$and$land$@tles$

•  This$is$possible$because$of$the$op@on$provided$to$investors$under$the$MMFL$for$enforcing$land$related$obliga@ons$without$the$current$uncertainty$around$foreclosure$in$the$extant$law$on$mortgages$(i.e.$the$Conveyancing$Act)$

REVENUE FOR THE STATE •  The$MMFL$provides$for$a$global$fee$for$perfec@on$of$land$and$mortgage$transac@ons.$This$global$rate$will$be$a$reduced$rate$rela@ve$to$the$current$cost$of$perfec@on$in$most$states$

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MOVING-FORWARD

•  Second$Equity$Raise$

• No$of$Mortgages$to$be$Refinanced$

• Mortgage$Pipeline$

• New$Products$Development$

• MoUs$with$states$signed$and$MMFLs$Passed$

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