By Chas Gwam
The MD/CE of Federal Mortgage Bank of Nigeria Alh Gimba Ya’u Kumo in his effort to encourage increased access to the National Housing Fund (NHF) has unveiled an initiative to better lots of existing and prospective house owners. The gesture was part of deliberate measures put together by the Bank not only to increase shelter but for individuals who needed fund to renovate their homes. The initiative is known as the FMBN Home Renovation Loan (FHRL).
The service is expected to afford Nigerians an opportunity to access housing mortgages solely for the renovation or improvement of their existing houses or family owned properties.
Basically, it is designed for people who are contributors to the NHF. So, with the contribution, NHF contributors can be granted maximum loan to the tune of N1million. Interestedcontributors can thus, have access to the facility as long as they remained committed to the scheme.
According to the Head of Department, Corporate Affairs, FMBN, Mr. Lawal Isa “applicants must be a contributor to the NHF while the maximum loan amount shall be N1, 000,000.00 (One million Naira only), subject to the income limit of the beneficiary as well as the ultimate cost of renovation.”
It’s accessible to every individual whether civil servants at the Federal, State as well as workers in the private sectors.
On the loan repayment period, it is considered a maximum term of four years or employee’s remaining years of service, whichever is less. More so, with eight percent interest rate, the repayment of the loan will be done through monthly deductions within the maximum stipulated period by the Federal Government Staff Housing Loans Board (FGSHLB) and the respective Heads of Service or account office of the states.
However, in a situation of inability to repay the loan, death or disengagement from service, the FGSHLB would be responsible for liquidation of the outstanding loan balance through the beneficiary’s terminal benefits. This is most applicable to federal civil servants. For state public servants, they will adhere to almost the same requirement except that the State Government shall be responsible for repayment of outstanding loan balance through the beneficiary terminal benefits.
More so, there must have been an approved letter of undertaking from the office of Head of Service to deduct and remit monthly repayments to FMBN. Applicants are also required to provide two guarantors with verifiable sources of regular income; in case the beneficiary’s terminal benefit was insufficient to offset the loan.
“Applicants will take out a Reducing Term Assurance policy which guarantees the outstanding loan and covers death, incapacitation and loss of job,” Isa said.
As regard private sectors, “letter of undertaking from the chief executive of the employing organization to deduct monthly repayment of the loan from the employee’s monthly salary and remit directly to FMBN.
“And that in the event of resignation, death or disengagement from service, the organization shall be responsible for repayment of outstanding loan balance through the beneficiary terminal benefits.
“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.
“Applicant shall take out a Reducing Term Assurance Policy which guarantees the outstanding loan and covers death, incapacitation and loss of job.”
He went further on the loans conditions, “the facility shall not be available to any contributor who has enjoyed NHF loan to buy or build a house. It could be taken jointly by a couple, subject to the income assessment of both parties while the loan can only be taken once in five years.
“Beneficiaries may however, be eligible to apply for NHF loans for home purchase after fully liquidating a home renovation loan earlier taken. Also applications are to be submitted with certified Bill of Quantities indicating the amount required for the renovation.”
While the loan is meant for every worker irrespective of public or private sector, applicants are required to present letter of undertaking from the FGSHLB, HOS or an organization head to deduct and remit the monthly repayments to FMBN.
So, it is proposed that FMBN will approve the sum and disbursed the home renovation loans through the FGSHLB for 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 laid down conditions.
Moreover, at the federal level, applications will be administered and accepted by the FGSHLB while at the State level applications are to be compiled by the relevant authority 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 through which the applications were submitted.”
Principally, the NHF scheme was established in 1992 to address hurdles to accessing long term loans for housing finance. It was aimed to ensure that every Nigerian has access to housing loans at affordable interest rate through participation and contribution to the fund. The overall objective was 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.
More so, section 14(2) of the legal framework that sets up the Fund, NHF Act 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. Perhaps, in order to realize this mandate, the FMBN developed concessionary loan windows to enable people access mortgages for home ownership.
It was on this presumption that the FMBN deemed it necessary to develop some windows that will enable greater access to the NHF. So the initiative was designed for all NHF subscribers who are willing to renovate or improve existing properties which are personally owned by them or through family ownership.
It is anticipated that proper implementations of the scheme is capable of addressing housing need of the people as well as improve public perception of the institution.
•Gwam is a Financial Affairs Analyst based in Abuja.