The central Bank of Nigeria (CBN) in a recent announcement, spoke about the introduction of mortgage guaranty companies.
This will reduce credit risk in the various mortgage finance sectors and ease access to mortgage loans and services.
The Central Bank has said the objective and aims of the MCGs are to lend supportive hands to the mortgage originators (primary mortgage and commercial banks are to benefit from this).
The scheme will in no doubt increase mortgage lending and guaranty no losses from borrowers. CBN as set the minimum capital requirements of N6billion for the smooth running of MGCs over the country.
This will deepen the mortgage banking sub sector via market access to mortgage finance loans the basic requirements as stipulated in the regulation for lenders is based on security residential mortgage assets, requirements of paid up capital, requirement of permissible investment of liquidity.
On the other hand, MGCs are barred from acceptance of demand, savings and time deposit such as financing real estate, construction or management of pension (funds and schemes), granting consumer or commercial mortgage loans.