Legal and Regulatory Framework for the Mortgage Industry in Nigeria

This article examines the legal and regulatory framework for the mortgage industry in Nigeria. The article examines the concept of housing as a global need and provides an overview of the Nigerian Housing Market with a population of 183 million people and increasing rapidly, a huge housing deficit of around 17 million units. This is further compounded by a rapid rising need for housing by about 20 per cent a year in cities like Lagos, Ibadan, Kano, and Abuja. At least 700,000 housing units across different segments are needed annually to keep up with demand, whereas, production was around 100,000 units, resulting in an accumulated deficit. The article also discusses the regulatory framework for Mortgages in Nigeria. Furthermore, the article examine factors responsible for low mortgage penetration in Nigeria on the on the supply side include: maturity mismatch, limited capacity by primary mortgage banks, high interest rates, tedious enforcement procedures, and the Land Use Act, 1978; and on the demand side they include: exorbitant registration costs, high rate of unregistered titles, the challenge of “double perfection†, low mortgage literacy and shrinking disposable income for housing. The article also identify steps taken by NMRC to mitigate these challenges to include: the model mortgage and foreclosure model law key provisions of the model law are: establishment of a mortgage registry; empowers mortgagee to register mortgages; significantly shortens perfection period; introduces the concept of deemed registration; eliminates requirement for “double consent†; pegs perfection costs; introduces alternative dispute resolution for mortgage matters; introduces the concept of “strata title; and non-judicial foreclosure. The article explores specific areas that require legislative and administrative reforms like: States should push for passing of Model Mortgage and Foreclosure Model Law; Land registries should be digitised; CBN should push more mortgage-friendly regulations and policies; Land registries across states should drastically reduce the timeline for Perfection; and the Land Use Act should be amended.