NREH was in an interview with Mr. Odukwe Emmanuel, the head of mortgage banking services at Citicode mortgage Nigeria.
This interview addresses the things you need to know about the National Housing fund scheme. Things like the criteria needed, those that are eligible to apply, frequently asked questions and how long it takes to process.
Mr. Odukwe: Criticode is one of the mortgage banks licensed by the CBN to carry out mortgage activities in Nigeria. One of our responsibilities as a mortgage bank is to help eligible Nigerians both home and abroad own affordable homes through the national housing fund scheme. This is our mission.
NREH: How many Nigerians have you helped so far?
Mr. Odukwe: I can’t give you an actual number.
NREH: How about those that got NHF approvals this year?
Mr. Odukwe: We’ve gotten over 2.5million from Federal mortgage bank.
Last year, we had disbursement close to N3billion naira and our plan this year is to get up to N10billion mark.
So far with the recent approval, before the end of this month, we expect to have gotten approval for 3-4billion. By the end of the year, If we don’t get 100%, we should get at least 80%.
There has also been a remarkable improvement from the federal mortgage bank in accessing these loans. There are still windows for improvement but compared to where we are coming from in the last 3 or 4 years, there has been tremendous progress. Based on the recent approvals, I can see that Nigerians are beginning to have some belief in the system.
We now noticed a lot of organisations have started applying for these loans and a good number of them are getting it.
NREH: What is the success rate so far?
Mr. Odukwe: For our success rate, I will tell you more than 95% of those who have applied through us have all gotten approvals of these loans. We have people from all sectors like banking industry, oil and gas sector, construction, businessmen, e.t.c.
As I stated earlier, there are also rooms for improvement. One of them is the turn around time of these national housing fund scheme. Although there has been improvement I would implore the federal mortgage bank to try and do more.
The turn around times takes between 6months to 9months but you and I know that anyone who wants to sell his property won’t wait for 6 or 9months before selling to someone applying for the loan. This is one of the challenges we are experiencing from the FMBN.
NREH: What calibre of people can have access to these loans?
Mr. Odukwe: The loan is for every eligible Nigerian who is at least 18years of age, have regular source of income and have been committed to the scheme for a minimum period of 6months. We have people coming from all sectors to apply.
There is an argument that the workforce from the civil service contributes a larger percentage to the funds in the FMB but they have not been able to access these loans. The truth of the matter is, how many of them have applied?
Maybe they feel the scheme does not work or they tried in the past and it didn’t work but I can categorically tell you there has been a lot of improvement in the scheme.
The government and the present administration are doing a lot to reduce the housing deficit in Nigeria and this is the easiest means to own your own house.
NREH: Why do you think mortgage is necessary?
Mr. Odukwe: One of the reasons you need to mortgage is that the inflation rate in Nigeria does not support the saving culture.
What I mean is this, if you have a target plan over a period of time to buy a house, you discover that the property keeps on appreciating while you are saving so you might end up saving forever but if you save a little amount, you can take advantage of the NHF scheme and buy a property. By doing that, you’ve locked down the property at that price. We all know the value of property appreciates. This loan at 6% is one of the cheapest you can get in the whole of Africa. You can find out yourself. South Africa is about 9% while other countries are double digits that is why a lot of people are taking advantage of the scheme. Even those from the oil industry that we believe are earning so much still come to apply for the N15million bracket.
NREH: What are the criteria needed for these National Housing Fund?
Mr. Odukwe: One of them, as I mentioned earlier, is to be a Nigerian. It is not meant for foreigners. The person must also be 18years of age and be enlisted in the National housing Fund Scheme. You must have been committed for at least 6months.
Other requirements include your payslip in the last 3months. The essence of the payslip is to confirm your affordability. We all know there is a rule in Nigeria that you cannot service a loan with more than 1/3 of your earning so the 1/3 rule still stands here and we look at standard net pay of your earning.
We also need your bank statement for the last 6months. This is to confirm
1) What you have in your payslip.
2) We know for some organisations, some other incomes like housing, upfront, e.t.c do not reflect in their payslip. We believe these are also sources of income that can be used to access a customer to know how much they can have access to.
We also need your birth certificate to confirm your true age.
We need to carry out a valuation and search on your property which means the property must have a good title document. What I mean by a good title document is that, any document registrable which we can confirm the authenticity of the true owner. The popular one is the CFO but there are other registered titles like the deed of assignment, deed of sublease, deed of conveyance and the rest. As long as it is registered and we can confirm that it can be used.
We also need to do a search on the property to know the authenticity of the owner of the property. Someone has been living in a property for 30years does not convey the ownership to him so a search needs to be carried out to know who the true owner is.
Furthermore, we need to confirm if the property is suitable for mortgage purposes and also carry out a valuation.
For valuation, there is a difference between price and value. The amount offered to the customer as the price for the property is different from the true worth of the property. So, an independent valuer will be given the task to value the property to be sure that the value of the property is above the price of the property. This means if the value is above the price, it can be used otherwise we advise the customer to renegotiate or look for another property because he is trying to pay more than the value of the property. I’m sure nobody wants to waste money.
NREH: What are the kinds of property that are not suitable for mortgage purposes?
Mr. Odukwe: Any property that has a lien on it i.e any property that has been used for mortgage purposes or has encumbrances. The implication is that the property is under mortgage somewhere else or the right of ownership of that property does not lie in the hands of the person selling it to you. He can’t sell what he does not have. That is the essence of the search.
We have seen scenarios where the property belongs to the father of the seller. If he does not have the letter of administration, by law he cannot sell and you do not want to go into family matter. That is why all these things are necessary and why people prefer to go to the bank or see a lawyer when buying a property. We all know once the money gets into the wrong hands, it is difficult to get back so it is necessary to do the preliminaries at the initial stage and ensure all the documents are correct before we proceed with the transaction.
NREH: What are the frequently asked questions about National Housing Fund?
Mr. Odukwe: Some of the frequently asked questions are the issue of Price of the property. We have to be sincere with ourselves because it has to do with people’s perception. Some are saying you can’t buy any good property with N15million. While we appreciate what the federal government is doing, we will also try and see if there is a way they can increase it to meet the realities on ground but, on the other hand, in all sincerity, there are other properties we can buy within that range. You just have to cut your coat according to your material.
The fact that FG is offering N15million doesn’t mean you can’t buy a property of N30million. The scheme did not say you must buy a N15million house. The implication is that you should be able to provide additional N15million or get a loan depending on what you earn. We noticed most people prefer to live in some of the choice or good areas and that comes with a price.
I keep advising my customers, you need to start from somewhere. If you cannot buy a property of 30 or N40million, there are still some areas you will get lesser. It might be outskirt. Some of these choice areas were outskirts 20years ago; that’s what development brings and once you key into it, it begins to appreciate with time. Properties are good source of investment.
Another FAQ is the time frame. People keep asking why they have to wait for 6months to get the loan.
Everything has a process. We have had approvals within 4months and I can show you the evidence but people are looking at 30-60 days maximum time frame. As I mentioned earlier on, there has been great improvement from the FMBN in the aspect of processing and the rest. There were times it takes forever to get this loan that’s if you even get it at all but things have changed so I believe with time we might get there because Rome was not built in a day. Coupled with the changes currently going on in the FMBN. They are trying to change all their manuals to digital which would help speed up the process so hopefully with time the processing time frame of 6months will be reduced.
Then another issue people raise is the cost of perfection which is not at the FMBN level but has to do with the governors. The cost is very high, especially in Lagos. For lagosians, they tell you their oil is land and this is an issue because there is no way we can create a mortgage without perfecting the document. I know it is a form of revenue for the Lagos State Government but if there is a way they can look at the general masses and cut down the cost it would help a great deal.
Another one is the time of getting a registered title document because the essence of National Housing Fund loan is for you to buy, build or complete an existing structure. So for whatever purpose, you must have your registered title document.
Now, most people prefer to buy not because it is their first choice but because they have the land but could not get the title document because of the bureaucracy involved in getting it; that’s aside from the cost implication. When they look at the whole process and the time it takes, they opt for buying. The issue of land use act is also there so most people just save themselves the stress of building.
If the federal government can look into these issues, it would bridge the gap of the housing deficit.
There is the issue of getting the right collateral too.
Apart from National Housing Fund, when you process a loan there must be collateral and that collateral must have a title document. Once the land does not have a title document even if you have built on it, it cannot be used as collateral.
These are some of the frequently ask questions and the challenges we face.
NREH: Thank you very much sir. We believe with the points you have highlighted, people will begin to look at the NHF scheme in another perspective