CRITICAL APPRAISAL OF MORTGAGE FINANCE

CHAPTER ONE
1.0 GENERAL INTRODUCTION
Since the creation of man, he has been faced with three basic problems via: Food, Shelter and clothing.

Man in an attempt to solve these problems has undergone serious of trials to which no end is tat sight.

The problem of food is still the problem of mankind.

The problem of shelter and clothing is still paramount to any given society. Shelter is universally accepted, as essential human needs that man cannot do without. Some people rank it second to food in the hierarchy of man’s needs.
Shelter is also paramount in the mind of every man that he is prepaid to give up other needs to have one, having one at least is seen and rightly too as a mission accomplished.

In the bid to solve these problems, more and more problems are being encountered.
In any give society, the government takes it upon them to see that three basic needs of nature are handled so as to pose at least a minimum problem to the society.

In Nigeria like any other developing nation, housing a monstrous problem.

Particularly in our urban towns.

Since independence in 1960, government policies have been directed towards effective housing delivery in order, to make life better and increase productivity, but the achievement are below expectation because of many other demands on the government resources.
The persists increase in population, devaluation of Naira through foreign exchange market, hyperinflation rural – urban migration have resulted into over crowded homes ,increasing pressure non infrastructure facilities, thus accounting for the regularly deteriorating environment and usually collect savings and deposits from the public but mainly depends state government budget allocation for direct housing development, local thrift institution are usually not mortgage finance institution as properties are rarely accepted as collateral.

Thus mortgage banking, as specialized development banking becomes obvious.
Between 1987 and November 1993, the federal mortgage Bank of Nigeria licensed 251 primary mortgage institutions.

Although, most of the PMIS were concentrated in the urban centre especially Lagos, this could however, finance landed properties in any part of the country.
This study shall discover how far the FMBN has been able to achieve its objectives, consider its contribution to the economy so far, its problems, way of solving them, its prospects and also recommend ways to improve its services or keep its existence.
1.1 OBJECTIVES OF THE STUDY
The reason behind the study of this type centers on the environment and the quality of human existence, which has a direct relationship with the environment in which we lives.

This environment comprises mainly the devilling houses it is the intention of this research work to look into the finance of housing/ shelter, which should be the priority of every government, most especially where its supply is inadequate.

The study of this topic is very essential considering the fact hat the mortgage institution are the pillar of the construction industry which of not well handled in an economy like our will lead to a downfall of the construction industry which if not well handled in an economy like our will lead to a downfall of the construction industry.
Housing, as a capital intensive project without private sector participation in provision of finance and other infrastructure to complement the efforts of the government made the achievement so significant until 1989 when primary mortgage institutions (PMIS) Decree 53 of 1989 was promulgated.
The major reason for the promulgation of decree 53 of 1989 and Decree 3 of 1992 were to address the paucity of long term work for housing delivery of segmentation in housing finance system, high cost of borrowing and of building materials.

From available facts, 70% of Nigerian fall within the poor and, low income bracket, while, 5 million housing units were established to be required to meet the existing and future need of the urban area, 3 millions housing units estimated for people in the rural area up to the year 2000 A.D.
Decree investment in property can take several forms.

The invested can invest in different types of property, it could be informed by factories, warehouses, moreover, in residential property, it could be in form of houses flats or agricultural.
Mortgage bank or institutions specialized in mortgage banking creation; they provide loans for this purpose.

Mortgage Banking institutions can accept only interest inland as a security.

Housing cooperative are housing finance institutions but not mortgage banking as they do not spending by the people, one is tempted to say that the mortgage institutions will have a difficult time in carrying out those objectives.
It is the intention of research work to study the following:
i. The effect on loan repayment with regards is the unfavorable economic condition of our economy
ii. To appraise the operations of then federal mortgage bank of Nigeria in order to know whether there is nay operational Nigeria in order to know whether there is any operational charge in loan disbursement since inception.
iii. To appraise the need of mortgage finance and favourable conditions of the federal mortgage of Nigeria.

1.2 HYPOTHESIS FORMULATIONS
Based on the complexity of our economic society historical background and interactive review three hypotheses will be derived and tested alternatively by the study.
Ho: The contribution of housing by FMBN is not well known to the people
Hi: The contribution of housing by FMBN is well known to the people
Decision rule: Accept Ho and reject Hi, if calculated value is greater than tabulated value.
Hypothesis II
Ho: The terms of mortgage loan by FMBN is not suitable to it customers
Hi: The terms of mortgage loan by FMBN is suitable to its customers.
Decision rule: if the calculated value is less than the tabulated value, accept Ho and reject Hi.
Hypothesis III
Ho: Disbursement of mortgage loans has no impact on mortgage in Nigeria.
Hi: Disbursement of mortgage loans had impact on mortgage finance in Nigeria.
Decision rule: if the calculated value is less than the tabulated value accept the null hypothesis and reject the alternative hypothesis.