Accessing Mortgage Loans From National Housing Fund

The dream of an average civil servant is to live in his or her own house, located in a good, serene environment with basic infrastructure, after retirement.

However, such dream can turn out to be a mirage due to some factors such as low wages, low savings and inadequate mortgage facilities, among others.

Housing experts, nonetheless, say that many civil servants and public servants are not fully aware of the opportunities existing in the National Housing Fund (NHF) for mortgage finance.

They insist that the inability of most government workers to take due advantage of mortgage finance facilities of the NHF, which was set up in 1992, is due to factors like ignorance and fear of the burden of loan repayment.

The experts note that in spite of the monthly NHF deductions from the wages of government workers, most of them are still in the dark about the intent and operations of the NHF.

Such claims are not presumption, as some workers are truly unaware of the objectives of NHF.

For instance, Ms Patience Mgbeke, a Grade Level 7 officer in the Presidency, says that she does not understand the rationale behind the monthly NHF deductions from her salary.

She assumes that the NHF deduction is one of the government’s tacit ways of imposing additional taxes on her meagre salary.

“Anyway, why should l bother about the deduction when l still have some money left to take care of my needs for at least two weeks?” she quips.

Like Patience, many other government workers are not simply interested in ascertaining what the NHF deductions from their salaries are meant for.

Mr Sunday Oghogho of the Federal Ministry of Works also appears to be indifferent to the monthly NHF deductions from his wages and their purpose.

“I am aware of the deductions quite alright; but what do you expect me to do and who do l ask for explanations? Government is always deducting money from our salaries for one thing or the other,’’ he says.

“As far as there is something left for me to keep body and soul together till the next month, why should the deduction bother me?” he asks.

Mr John Uchendu, another official of the Federal Ministry of Works, however, admits that he is aware of the purpose of NHF deductions and the procedures of seeking mortgage loans from the Fund.

He, nonetheless, says that his major constraints include how to acquire a parcel of land with a valid Certificate of Occupancy (C of O), which will enable him to qualify for the mortgage loan.

“I know the purpose of the NHF deductions from my salary but where do l get land and the necessary papers to apply for the loan?” he asks.

Uchendu says that some workers refrain from seeking mortgage loans because of the fear that their salaries are too meagre to take care of  the required monthly repayments, among others.

Such comments notwithstanding, the NHF has been in operation since 1992 and it is mandatory for every government worker earning N3, 000 and above to contribute 2.5 per cent of his or her monthly salary to the Fund.

Employers of labour in the public and private sectors deduct NHF contributions from the workers’ salaries directly from source and remit the funds to the Federal Mortgage Bank of Nigeria (FMBN), the agency in charge of the Fund’s administration.

A contributor is entitled to apply for a mortgage loan after a six-month contribution to the Fund and the loan can be used to build a house, renovate an existing building or purchase a house.

The contributors can apply for loans, ranging from N5 million to N15 million, and the loan is to be repaid within 30 years at 6 per cent interest rate.

The Managing Director of FMBN, Mr Gimba Yau Kumo, says that even though the applications for the loan are forwarded to FMBN, the loans are disbursed to the beneficiaries via Primary Mortgage Institutions (PMIs).

Yau Kumo says that the bank has persistently been conducting a public enlightenment campaign to educate the NHF contributors on how to obtain the mortgage loans.

“We have even gone further to lend money to developers in form of Estate Development Loans (EDL) to help them build houses and sell the houses to NHF contributors who are interested in obtaining the loans through the mortgage institutions,’’ he says.

Available figures indicate that from 1992 to February 2011, some 3.5 million workers have contributed to the Fund, while the amount collected during the period totalled N64.6 billion.

During the period, N50.7 billion had been approved for PMIs as loans to beneficiaries and out of the amount, N24.8 billion had been disbursed for the building of 16, 469 housing units for NHF contributors.

Within the same period, N70.4 billion was given out as EDL to estate developers and out of the figure, N36.7 billion had been used to build 27, 524 housing units

Yau Kumo says that the houses are sited in 91 FMBN-funded estates across the country.

He, nonetheless, concedes that the bank is aware of some challenges facing workers in getting the loan, adding efforts were made to address them through the review of some extant laws.

He believes that if the proposed amendments to the laws are passed by the National Assembly, the FMBN will consequently be in a better position to address the housing problems of the citizens.

Sharing similar sentiments, Dr Kayode Ogunmodede, a housing finance analyst, says that there are several factors inhibiting the average worker from accessing NHF loans to build, renovate or purchase a house.

He says that some of the factors include the lack of access to land, the workers’ inability to repay loans and the perceived mindset of the average Nigerian towards honouring long-term agreements.

Besides, Ogunmodede says that the failure to repay a mortgage loan for three months consecutively could lead to a “foreclosure’’, a situation in which the mortgage institution takes control of someone’s property for failure to pay back mortgage loans.

However, Mr Olabode Afolayan, the President of Real Estate Developers Association (REDAN), says that workers have many pragmatic options that can aid their efforts to obtain the NHF loans.

For instance, he says that workers can acquire land as a group, either through cooperative societies or as unions affiliated to the Nigeria Labour Congress (NLC).

“If they acquire land as a group or as a cooperative society, they can engage a developer and a mortgage bank to work out the modalities of developing the land through their access to the NHF loan.

“Such arrangements will also make the processing of the title documents relatively easier.

“Each of the workers who would benefit from such arrangement should be able to pay 10 per cent of the cost of the house they are proposing to build or acquire and the amount will represent their equity contributions to the property’s development,’’ he says.

Besides, Afolayan says that workers can also approach estate developers building houses to see how they can get allocations to houses as NHF contributors.

He notes that in Kwara State, for instance, many estates have been developed to cater to the housing needs of workers in the state via their contributions to NHF.

Observers, however, maintain that the first major attempt of workers to access NHF loans was during the sale of Federal Government houses nationwide a few years ago.

They recall that some workers, via the intervention of FMBN, secured loans from mortgage institutions to pay for the houses.

However, Mr Remi Makinde, the former President of the Nigerian Institute of Town Planners (NITP), insists that the number of workers, who got loans to pay for the houses through NHF, was very insignificant, if compared to the over 3.5 million NHF contributors.

He, nonetheless, says that a change in the workers’ attitude towards the NHF and the workers’ willingness to explore the Fund’s mortgage facilities will go a long way in making more workers to become house owners.

“Workers should be aware that they are entitled to apply for NHF loans after six months’ contributions to the Fund; they can also ask questions from FMBN that manages the Fund.

“Workers should also know the quantum of their NHF contributions in their respective offices, while consulting with mortgage banks on the procedures of getting the loan,’’ Makinde says.

“They should similarly liaise with estate developers, as part of efforts to overcome any seeming obstacles to their obtaining the NHF loans,’’ he adds.

All said and done, observers believe that many workers will be able to acquire their own houses if they explore the mortgage finance opportunities of the NHF to the fullest.

Agu writes for the News Agency of Nigeria (NAN)

Chidinma Agu