MORTGAGE ARRANGEMENT IN DEPRESSED ECONOMY

ABSTRACT

This research project is a very crucial study of Mortgage Bank of Nigeria.The study was motivated by the necessity to identify the economic depression and mortgage management in Nigeria.  This form of banking system has been in existence since the banking industries is concern based on given loan and advances.

To sources research problem secondary data were collected.  The research instruments used in collecting the data were through textbook libraries professional and trade organizations and internet services.

Data analysis and interpretation gave the following findings:

1.                  Most of the respondents requires interest rate structure.

2.                  Most of the respondents companied about rate of payment

3.                  Loan disbursement/ approval

4.                  It was also discovered loan rescheduling/foreclosure.

Based on the findings we recommend that

1.                  Government should provide adequate funding.

2.                  Government and central bank should create secondary/ intermediary mortgage institution

3.                  The central bank should review the interest rate structure.

4.                  There should be a review of payment terms

The conclusion of the study is that depression in economy is the problem of mortgage banks in Nigeria.  But if the recommendations will be considered and improved the hidden large potential for the development of mortgage bank in Nigeria will be achieved.

TABLE OF CONTENT

CHAPTER ONE

Introduction

Background of the study

Statement of the problems

Purpose/objective of the study

Significance of the study

Limitation of the study

Definition of terms

CHAPTER TWO  Review of related literature

Types of mortgage and their rights

Mortgage institution in Nigeria

Conditions precedent to the grant of loans

Types of mortgage arrangement

References

CHAPTER THREEResearch design and methodology

Sources of data

Location of data

Method of data collection

CHAPTER FOURFindingCHAPTER FIVE

Recommendation and conclusion

CHAPTER ONEINTRODUCTION

A prominent feature of real property investment is that, it involves the expenditure of large sums if money.  As a result, investors in real property hardly fund their projects alone instead they borrow part or all of their capital requirement form  financial institutions.  Lender usually require collateral securities form their borrower before granting loans to them. this provide an avenue through which loan made to borrower could be recovered in the event of unfavourable business condition or a default by the borrowers.

In mortgage transaction a person who borrows money with a property as security for the loan is know as a mortgage while mortgage is a person who lends money to another under the condition stated above.

The lest in respect of which the property is created is called mortgage lest.

Generally mortgage transaction involves the acquisition of a loan with an interest in property as security. The mortgage transfer  his read property to the mortgage to declare his willingness to repay a loan and also provide means by which such loans could be indirectly recovered.  The mortgage terms also empower the mortgage to reclaim his property after repaying his dest. Mortgage transaction arises due to lack of trust and uncertainties in the business world.

BACKGROUND OF THE STUDYHistory of mortgage

Mortgage is  a Norman French term which originated form the various modes of operation of pledges (Walmsely p.56).

A destor in the olden days pledged his farm-land to a creditor by transferring the physical enjoyment to him if the revenue were large enough they repaid the loan immediately but if not the money for repayment had to be raised separately.  The former arrangement was called a “phle pledge” (mortgage) while the late a “dead pledge” (mortgage thus the word “mortgage was formed form dead pledge”) (mortgage) which represent a situation where the preceded form a security property could not repay the loan borrowed.  Resulting in a search for alternative mean through which repayment could be made.

As  the practice of mortgage developed father, it because usual to transfer the destros land outright the creditor on the ground that the destors could redeem it if the debtor defaults the land automatically becomes the creditors.  The principles is effective till date and maintain that the property serves as a security only and should therefore be released whenever the loan is repaid.

In Nigeria today there is large-scale default in mortgage repayment by mortgage due to the adverse economic circumstances.  Lenders thus resort to auction sales of mortgage securities in order to cover their operating cost.  This practice however is usually against the intention of most financial institutions in Nigeria because of the harsh picture it paints of such an establishment in the eyes of the society.

STATEMENT OF THE PROBLEM

This research study is intended to look into problem facing mortgage arrangement in our economy. The problems facing mortgage are as follows:

Into problems facing mortgage arrangement in our economy. The problems facing mortgage are as follows:

1.   Problem of widespread unemployment high rate of default by mortgagors low production and a high rate of business failures.

2.      Depression in nation- wide or world- wide

3.       Inflation in economy and high cost of construction.

4.      Neglect of mortgage commitments by mortgagors and a general decline in real estate activities.

5.      Because activities fails to lowest phase during a period of economic depression

6.      Large scale mismanagement and computation in the pubic sector.

7.      Shortage of foreign exchange to off set the house import bills for individual raw materials.

8.      Increased importation of foodstuff.

OBJECTIVE OF STUDY

Realizing the role of mortgage arrangement in our national economic development it is the view of this study to find out the factor inhibiting the development of mortgage in our economy.  The study will therefore do the following.

i.                    Identify the variables that influence mortgage development in our society.

ii.   Examine the Nigeria mortgage banking and show to what extent economy and policy discourages the emergence of vibrant mortgage banks

iii.  And offer suggestions aimed at crating enabling environment for the development of mortgage banking in Nigeria   

SIGNIFICANCE OF STUDY

This study provides an opportunity any person who may read it to appreciate what mortgage means.  There is no gain saying that it will proffer an immense assistance to potential mortgager through an in-depth analysis of the expected problems that may seem a hindrance. And to those already managing mortgage banks for another offer possible solution to their problems.

The study therefore provides a useful guide future researchers who may want to embark on a study like this.  It also provides or sources awareness to federal government concerning economic depression on our society.

DEFINITION OF TERMS

Mortgage:      This can be described as transfer of legal or equitable interest in property of the borrower to the lender as a security for loan with a promise for redemption.

Mortgages:     Is a Peron who lends money to another under the condition stated above?

The dest:        In respect of which the property is created is called mortgage dest.

Mortgage transaction:          Is a person who borrows money with a property as security for the loan is known as a mortgagor.

Mortgage transactions:         Involves  the acquisition of a loan with an interest in property as security.

Mortgage transfer:    His real property to the mortgage to declare his willingness to repay a loan and also  provide means by which such loans could be indirectly recovered.

Mortgage terms:        Also empowered the mortgage to reclaim his property after repaying his dest.

Lend:              It is the process of giving or granting loans or advances by banks to the customers who wishes to or for his personal investment with his property as securities.

Redemption:  Is the ways of returning back the loan on agreed time to the bank who gives the loans.

Lender:          Is the person who borrowed the loans for his personal projects.

Mortgagor:    Is a person who gives a mortgagor on his property.

Economic depression:           Refers to a period of general downswing to the business cycle.