‘Non-Passage Of Foreclosure Law Retards Housing Development’

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While addressing shareholders at TrustBond Mortgage Bank Plc’s 7th yearly general meeting in Lagos on Monday, the Chief Executive Officer of the bank, Adeniyi Akinlusi, has said that failure by the National Assembly to pass the foreclosure law has contributed to the unprecedented housing deficit in the country. He added that the non-existence of an effective foreclosure mechanism in Nigeria is constituting a disincentive to housing investors.

According to him, the National Assembly must expedite action on the passage of the law affecting the legal and regulatory framework of the Mortgage sector; especially related to foreclosure to motivate the mortgage bank to increase their loan portfolio.

“Foreclosure law” is a legal mechanism, which allows the lender to take possession and sell the secured property (foreclosure” or “repossession) to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms.

‘The major challenge is the issue of foreclosure. There is no effective foreclosure mechanism put in place, if you go to court, it would take donkey years’, said Mr. Akinlusi.

And at such, if mortgage banks find out that people who default are not paying their loans they can not sell their houses, they are not motivated to increase their loan portfolio or give more people loans because the ones you have, you are having more problems with it.

“The foreclosure law needed to be passed by the state and National Assembly so that we can have more people owing their own home. Until we have a lot of Nigerians own their homes, it will be difficult to address the issue of economic disempowerment because when you own your home, you can be empowered to attract capital from the banking system.”

He emphasized the need for each state to come up with an effective law that will make foreclosure easy in the state to attract the needed funding and capital from the mortgage bank.

“The major stakeholder, Nigeria Mortgage Refinance Company (NMRC), in collaboration with the Federal Mortgage Bank and Central Bank of Nigeria, are going round the states to tell the states to pass their own law. Each state can simplify the law by coming up with an effective law that will make foreclosure easy in the state.

“Once you have a state that pass this, it would attract funding and capital from the mortgage bank because you can use it as an example. There are one or two states that have passed it and we are engaging with some other states so that once you have good examples in this regard, more funding will go to people in those states and they can own their houses.”

Mr. Akinlusi further explained that the bank recorded gross earnings of N1.1 billion, an increase of 35 per cent over N844.8 million achieved in the corresponding period of 2014. Profit after taxation stood at N90.8 million, representing 429 per cent rise, when compared to loss position of N27.6 million in 2014.

He added that the bank would continue to focus on consolidating its capacity to access long-term funds from NMRC and other sources to grow the business.