It’s indeed a critical time of concern, for an estimated 60 percent of Nigerian renters who are struggling to meet their rental obligations, as the impact of the covid-19 spreads, and cripples many household income.
This problem, which affects mostly renters on monthly rents, also applies to mortgagors, whose ability to pay has been terribly hit by the deadly coronavirus pandemic. Default cases are on the increase, with lenders getting more worried.
A mortgage can be said to be a loan taken out to buy a home or property, according to the law guiding this transaction, the home may be repossessed by the lender, if the borrower does not keep up or is found defaulting on repayments on the mortgage loan taken. This, obviously is a huge concern for borrowers because they would not like to lose their property.
The mortgage payment lacune created by the coronavirus pandemic cannot be overemphasized. Due to this, many developed societies have found a way around this, navigating the situation to give a hand to borrowers, such that they are protected.
In the UK, most mortgage lenders are allowing borrowers who have been financially incapacitated by the Covid-19, to take a break from paying all or part of their monthly payment for a period of time, up to 3 months.
Through the Canadian Housing and Mortgage Corporation (CMHC), the government has purchased up to $50 billion in mortgage debt, to help support banks and lenders in continuing to provide services to Canadians. These are similar measures that were done in the 2008 financial crisis to help protect the economy.
To lessen the burden of mortgage payment, the US government enacted the CARES Act. This is a law that gives mortgagors option to request for up to 180 days of forbearance on their mortgage. That forbearance allows them to pause or reduce their mortgage payments for that period of time.
Bank of America said it has so far allowed 50,000 mortgage customers to defer payments. That includes loans that are not federally backed. Reports have shown that Americans are also struggling to pay their mortgages because they have lost their jobs to the coronavirus pandemic. More than 1 million Americans were reported to have applied for unemployment wage in the past months.
Several other countries have taken actions by asking borrowers to take off one to two months to meet their obligations and the banks are not expected to take them as defaults.
To ease the burden off Nigerian mortgagors who are literally scrambling to put up, in this covid-era, there should be some amount of consideration and arrangements put in place, to curb mortgage defaults, in the country. Just like other societies are doing, Nigeria should take a cue from that, even though many believe this is not obtainable in this part of the world, however with the right structure and appropriate arrangements, this would be fairly sorted. As many borrowers and even lenders, particularly the primary mortgage banks, are simply struggling.
Reports coming from the mortgage bank of Nigeria, explains the bad state of the situation, while emphasizing the need to act urgently, as failure to do so, would result in 50 percent of mortgage banks going into extinction by the end of the first quarter of 2021.
According to the Director of the Housing Development Advocacy Network (HDAN), Bar. Festus Adebayo, he stated that “it’s necessary for government to keep its promise of intervention in the Nigeria Housing Sector, as earlier announced, so that these mortgage organizations can be saved and jobs of many Nigerians protected”.
“The federal government must direct The Federal Mortgage Bank Of Nigeria (FMBN) to come up with intervention or palliative, to help mortgage debtors and the National Housing Fund (NHF) debtors. With all these interventions, we can be rest assured that the level of poverty will not be as predicted by the World Bank and the International Monetary Fund (IMF) ” he added.
It is crystal clear that Nigeria can find a way around this, by doing the right things.
