The property companies, using a special purpose vehicle (SPV) known as Grand Lake will build the homes while prospective buyers would approach one of the three mortgage banks for finance that would be spread over a long period and with low interest rate.
The fine details of the partnership for housing Nigerians, as the group described it, was presented the Chief Executive Officers of Grand Lake, Mr. Adeyeye Ogunwusi; Imperial Homes Mortgage Bank Limited, Mr. Ben Akaneme; TrustBond Mortgage Bank Plc, Mr. Adeniyi Akinlusi; and HomeBase Mortgage Bank Ltd, Dr. Femi Johnson, who is also the President of Mortgage Banking Association of Nigeria (MBAN) and a Director, Nigeria Mortgage Refinance Company (NMRC).
This is the first in the nation’s history when there would be a wide collaboration between big players in the mortgage and property development companies.
According to the Chief Executive of Imperial Homes Mortgage Bank Limited, Mr. Ben Akaneme Nigerians were yet to understand that the economy of most countries is supported by real estate and mortgages, because the practice of mortgage banking is relatively new in the country.
Politics in most countries, he said is supported by the mortgage business, explaining that when a person borrows funds to buy a house, which is that person’s strongest asset, he or she becomes interested in who rules, in the sense that any change in interest rates based on policies would affect their purse.
So, they become politically aware and involved, he said, adding “what we are trying to do in Nigeria is, first of all, that people find places of refuge where they will be at peace.”
The mortgage banks that are collaborating, he said decided that houses would be available first and secondly, affordable. They are making progress in this direction and, not only in the field but also in the partnership which received a new member, HomeBase Mortgage Bank.
The Chief Executive Officer of Grand Lake, Mr. Adeyeye Ogunwusi, who represented three property development companies in the SPV, Grand Imperio Group, Ocean Springs Estate Limited and Vestril, at the presentation of the novel initiative said they were currently talking to many estate developers to come on board and that they were making progress in that area.
He said they have mobilised to site and were doing sand filling to raise the topography to a certain level so that housing construction could begin and that they were expected to begin in the middle and towards the end of this month.
The project, Ogunwusi said would be constructed in phases and that the target was to have a large stock of houses for the mortgage banks to create many products around, “and we are very excited to be part of this consortium because we can’t do it all as developers and, for the first time, mortgage banks are coming together to support us developers for us to achieve what we need to achieve. It has attracted other developers and with this we can form a stronger consortium.”
There would be a lot of site and service scheme, he said and that various developers have their design and models that subscribers would use.
The Grand Lake SPV, according to him, would be the organ that would maintain the property and that the project was about to begin.
The Managing Director of TrustBond, Mr. Adeniyi Akinlusi recalled the nation’s housing deficit put at about 17 million units, adding that bridging this housing gap was a task that was too big for a single mortgage bank or even two hence they thought about collaborating to take on the task.
Akinlusi said, “The more Nigerians that own their homes, the better for capital formation, the better for investment and the better for the economy and we will begin to see our economy grow. We have a lot of middle income people without their homes, who can afford it but the money is not there.”
He said with the takeoff of the NMRC things were being put in the right perspective and that the underwriting standards have been concluded and was now on the NMRC website. “We also know that we have a common standard for mortgages in Nigeria. That is a major development.”
He said those who wish to sign on to Grand Lake, should know that the three mortgage banks would also harmonise the lending terms to make the process easy and effective.
They are also looking at creating the mortgages in such a way that they could be refinanced by the NMRC, adding that they were committed to the project to see that more Nigerians became home owners.
Another thing they are targeting is to bring the nation to industrialised world standard where of interest would be house prices, which determines how well an economy does. “We will get to a situation where it will be no more the price of oil, but the house prices and interest rates.”
They are expecting to partner with the NMRC and the Mortgage Banking Association of Nigeria for improved service to prospective home owners.
According to the Chief Executive Officer of HomeBase Mortgage Bank Limited, Dr. Femi Jonshon, the structure of the nation’s economy would change because of crude oil price, saying theirs was one of the partnerships that would determine how the economy survived and that it would provide indications on the direction that the economy is taking.
Johnson said the partners have land of up to a million square meters and that houses that would be built on it would be more than 5,000 units.
“It may look like a small drop when we look at the 17 million housing deficit but this is just the beginning of things to come,” Johnson said.
The mortgage banks, he said were pooling resources, particularly after the restructuring of the sector and recapitalisation of the banks.
He said their partnership should be a model to other people and not just to mortgage banks but also to commercial banks.
According to him, those in the partnership have various degrees of expertise and capabilities and that they all were coming together to use their capacities to do more than each of them could do.
Besides the mortgage banks, Johnson said, “We are also throwing the weight of the NMRC behind this project,” adding that with the introduction of standards in the sector, they would have uniform offer letters for subscribers; uniform underwriting standards that they generated closer and better as a group of mortgage banks. “This is just the beginning of changes that would be seen in the sector, going forward,” he said.
The homes are being built in conformity with NMRC standards such that the loans can be refinanced by the company, he said. “The houses fall within the price limit that will be implemented in granting these mortgages. It will also flow with the underwriting standards of NMRC. People can also have low interest rates and tenor of up to 20 years for these mortgages.”
(Culled from http://www.thisdaylive.com)