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Mortgage finance in Nigeria began with the establishment of the Nigeria Building Society in 1956. This institution co-existed with the Africa staff housing scheme. The NBS had a share capital of 1.25 million pound which was equivalent to 2.25 million naira and also the ownership structure was as follows:
Colonial development corporation(CDC) 60%
Federal Govt. 31%
And eastern regional Govt. 9%
The colonial development corporation made funds available to the NBS on long term credit basis at an interest rate between 7% & 7 and a half percent. And the NBS in turn expected to lend to interested Nigerians at the rate of 8 and the half percent and 9 and the half percent per annum. Following the indigenization Act of 1972 which was aimed at promoting and transferring the ownership and control of Foreign enterprises to Nigerians, the NBS metamorphosed into the federal mortgage bank of Nigeria (FMBN) through a degree no. 20 on january 19th 1977.
The bank is jointly owned by the federal government (ministry of financing incorporated) and the central bank of Nigeria(CBN) in the ratio of 60% and 40%. Within two years of the establishment of the FMBN, its capital base was increased from 20 million when it was acquired to 150 million in 1979. The current equity base of FBMN is about 45 billion with only 50% of it paid up. The principal functions of the bank as stated in the enabling degree of 1977 includes;
• Provision of long term credit to mortgage institutions for lending to individual to acquire home of their own.
• Encourage and promotes development if mortgage finance institutions.
• Provision of long term credit facilities directly to individuals for home ownership.
• Provision of credit for housing estates commercial property and office developing purposes.
To realise this mandate or functions the degree also empower the federal mortgage of Nigeria to:
• Mobilize savings and accept deposits from individuals, corporate bodies and givernment and pay interest thereon.
• Provide credit to and or equity investment in companies producing building materials and allied products.
• Supply technical assistance and services for land development and site and services offer guarantees on loans and advances to mortgage institutions.
• Float bonds and debenture for housing development purposes.
• Undertake research studies with the aim of improving housing patterns and standards as well as financing and construction activities.
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