Real properly development is the
application of capital managerial skill and entrepreneurial activities to the
economy of land resources development whose form is subordinate to the
constraint imposed on it by nature.
The research carried out during project
work revealed some of the problems facing the financial institutions in real
property development which are problems arising from the mortgagor side which
include non-repayment of borrowed loan by the mortgagor. Secondly the problem
arising from the mortgage sides are financial problem and government policy.
The major role of financial institution
is to examined based on the provision of home construction loan to individual
and estate developers. Recommendations were given in order to alleviate some of
the mentioned problems which include the enlighten of the public of function of
financial institutions, the enforcement of government regulation, monitoring of
mortgage loan and lastly good human relationship should be encouraged.
TABLE OF CONTENTS
of Figure (If Any)
of Plates (If Any)
1.1 State of Problem
1.2 Aim and Objectives
1.3 Significance of the Study
1.4 Scope of the Study
1.5 Limitation of Study
1.6 Study Area (Historical Background)
1.7 Definition of Terms
2.0 Conceptual Framework
2.1 Concept of Real Property Development
Types of Real Property Development
2.2 Nature of Real Property Market
2.3 Sources of Finance in Real Property
Non – Institutional Sources
2.4 Role of Financial Institutional in Real
2.5 Nigeria Monetary Policy in Relation to Real
Objective of the Monetary Policy
Instrument of Monetary Policy
2.6 Determinants of Financing Institution
Performance in Nigeria Monetary Market.
3.0 Research Methodology
3.1 Research Design
and Types and Sources
3.3 Instrumentation for Data Collection
3.4 Sample frame, Sample size and Sampling
3.5 Method of Data Analysis
INTERPRETATION AND ANALYSIS OF RESULT
Analysis of Oral Interview Conducted
4.2 Categories of Loan Beneficiaries
4.3 Purpose for which loan is obtained
4.4 Current rate of Interest on saving for a
Sources of Bank Funding
4.5.1 Recession Period
Sources of Bank Funding
4.5.1 Recession Period
4.6 National Housing Policy
4.7 Problem Facing Federal Mortgage Bank in
Financing Real Property Development
5.0 Summary, Conclusion and Recommendation
1.0 BACKGROUND OF THE STUDY
As it generally known that shelter is as important as food
and it is one of the basic necessities of life for human being. As this result,
the main motive of man is therefore to own a house on earth where he and his
family will be secured and protected against any external forces.
To secure a house, it requires lump amount of capital
which is not easily available to the investors no property and as a result,
made the dream to be realized by just few people, they therefore rely on
external source of finance to carry out such project since the personal savings
and income are not enough to execute the development. Hence, the purpose of
this study is to asses the roles and problem f financial institution in the
provision of capital needed by the investors in real property development.
Real property development is the
application of capital managerial skills, and entrepreneurial activities to the
economy of land resources development whose form is subordinate to the
constraint imposed on it by nature. Illinois (2001) define it.
In Nigeria today, the demand and supply
of real property in case of land and building are inelastic relative to price
changes. Some of the factors resulted to these are:-
growth and development of the community
in taste, fashion and general standard of living.
The institutional frame work for housing is very
rudimentarily developed to carter for the dare need oof individual and groups.
In the past, few decades, the federal government has direct it effort toward
encouraging every Nigerian to own a decent and affordable house. Also, in
alleviating this problem, government has come out with an enactment and
launching some decrees on construction policy etc. All these need stern
implementation in real property market. The financial institution is the last
resort to remove the friction by provoking mortgage finance. This is used to
finance real property that can be offered as a security for the loan. Such as
owner occupied houses, commercial properties, industrial outlet, agricultural
building and undeveloped land.
It is therefore, important to emphasize that this study is
concerned with critical analysis of the activities of federal mortgage. Bank of
Nigeria with a view to examine the activities of the bank as well as their
problems. Identifying their problems with regard to granting of mortgage loan
and making recommendation.
OF THE PROBLEM
From the point of view of the significant event of the oil
boom in 19770 and Udoji award of 1976, investment in real property increases
greatly due to availability of capital for development. The promulgation of
land use Decree No.6 of 1978 caused a turning in the segment of property
market. From the early 80’s landed properties vested in each state of land and
making and supply relatively scarce. This resulted into a great problem in
properly development. This study is meant to look into how these problems can
be reducing by examining the roles of such financial institution in property
The aim of this study is to asses the roles and problems
of financial institution in real property development with special focus on
federal mortgage Bank of Nigeria.
achieve the above aim the following objectives are included:-
1. To examine the roles and functions of
federal mortgage bank of Nigeria.
2. To find out their sources of fund.
3. To examine the procedure in giving out loan
to the applicant
4. To appraise their performance over the
5. To examine the problems facing by the
institution and the applicants
6. To prefer useful recommendations to the
1.4 SIGNIFICANCE TO THE STUDY
federal mortgage Bank performs the functions mentioned below:-
1. To provide social loan to individual for
purposes of individual homes.
2. To dictate the level and pace of growth
industry and minimize avoidable fraudulent.
3. To provide commercial loan to corporate
bodies that want to build house for sell or to let.
4. To provide equitable distribution of
mortgage landing activities all over the country.
The scope of the study cover Federal mortgage Bank Ibadan
in Oyo state.
OF THE STUDY
The limitation of the study in the course of research is
that the various department with the responsibility of collecting, analyzing
and keeping statistical records in the establishment are not always in the
office due to the official duties, therefore making it difficult to see them.
The cost of visiting federal mortgage institution at their location is very
high. Most banks workers do not attend to investigators until after their tenth
hour which makes every things boring to investigators. Also, bankers they
believe it is confidential and in most cases top secrets.
1.6 STUDY AREA
Geographical setting of Ibadan is
located in South Nigeria. It is the capital of Oyo State, and it is the second
largest city in Africa; parts of the city’s ancient protective walls still
stand still today and its population is estimated to be about 3,800,000 according
to 2006 census.
Ibadan was surrounded with seven hills, is also the second
largest city in Nigeria. Ibadan grew into an impressive and sprawling urban
center so much that by the en of 1829, Ibadan dominate the Yoruba region militarily,
politically and economically. The colonizer develop commercial activities and
also develop academic infrastructure the city. That is the first University to
be set up in Nigeria was University of Ibadan 1962. And there is museum in the
building of its Institute of African Studies, which exhibits several remarkable
prehistoric bronze carvings and statues. Other note worthy institutions in the
city include the University College Hospital and Institute of Tropical
Agriculture Ibadan has several well stock libraries, a zoological garden and
several botanical gardens. Nestled inside (IITA) is the best golf course in
Nigeria and the grounds of the Ibadan Polo club is not too far away. Ibadan is
home to the first television station in Africa. There are hotels with hot stops
access, decent restaurants, couples of radio stations. Government secretariat
is at Agodi and The Government Reservation Area (GRAs) at Agodi, Jericho and
Onireke are relice of that era. The grid pattern of the residential layout of Oke
– Bola and Oke – Ado is also associated with its activities. Their commercial
economy are cassava, cocoa, cotton, timber, rubber, flour milling, leather
working, furniture making and palm oil. Dugbe market is the nerve center of
Ibadan’s transport and trading network. Another prominent landmark is Cocoa
House, the first sky scraper in Nigeria, other attraction Mapo hall,
Trans-amusement parks, the cultural centre mokola, and liberty stadium with a
seating capacity of 35,000. The traditional market are Oja’ba, Ayeye and
Oranyan and modern markets, Gbagi titun, Ageni, Bodija, Alesinloye, gate etc.
They trade foodstuffs, textile goods, Aso-Oke, utensils, electronics and
pharmaceuticals. They also operate transportation system with eleven local
governments in Ibadan. Ibadan is an exception educational centre which has
numerous primary and post primary institutions, etc. Their official language in
Ibadan is Yoruba.
1.6.2 HISTORICAL BACKGROUND OF FEDERAL
MORTGAGE BANK NIGERIA IBADAN BRANCH
The Federal Mortgage Bank of Nigeria formally known as
Nigeria Building Society (NBS) has been in operation since 1956 as a building
society. The Decree No. 7 of 29th January, 1977 abrogated the
Nigeria Building Society for the Federal Mortgage Bank of Nigeria.
In 1933, the federal mortgage bank was deconsolidated into
federal mortgage bank and federal mortgage finance. Federal mortgage bank
remain the apex bank to license and control all the primary mortgage
institutions before the central bank of Nigeria book over this function
recently. The bank also administers the national housing. It collects the fund
from the source and redistributes it to the primary mortgage institution for
onward transmission to own builders. Capital foundation of federal mortgage
bank in 60% for federal government of Nigeria and 40% for Central Bank of
The federal government of Nigeria promulgated another
decree known as mortgage bank of Nigeria Decree 82 of 1993 to empower the
mortgage institution to administer the National Housing Fund by collecting same
and disturbing it to primary mortgage institutions. The law provided the
following functions to the bank which are: -
1. To supervise and control the activities of
mortgage institutions in Nigeria.
2. To encourage and promote development of
mortgage institution at rural, local, state and federal levels.
1.7 DEFINITION OF TERMS
i. ASSESSMENT: An assessment can be
defined evaluating or estimating of a nature, quality or ability of someone or
something. It is also the process of designing, defining, selecting,
collecting, analyzing, interpretation and using information to increase
student’s learning and development by Erwin 1991.
ii. MORTGAES: A mortage is a form of
security for money lent. An interest will be reconvened when the loan is
repaid. A mortgage deed usually provides for repayment at a fixed date, often
six months after the date of the deed.
iii. DEVELOPMENT: As oxford dictionary
defined it as a stare of gradual growth of new building on land it is also a
process of using an area of land to make profit by building on it. Also
according to the british town and country planning acts of 1971 in section
22(1) describe development as the construction carried out such as building
engineering, minning, or other operation in ,on over or under land or the
making of any materials change in the use of any building or land.
iv. REAL ESTATES: Real estate means
property that actually exists, genue and immovable i.e. such as land,
buildings, structures claims and all types of developments on land.
v. INSTITUTIONAL: - Can be defined as
any structure or mechanism of social order and cooperation governing the
behavior of a set of individual with a given community.
vi. MORTGAGEE: Is an organization person
that lend money to people to buy property like land and buildings.
vii. MORTGAGOR: Is a person that borrow
money from the bank or similar organization to buy a property.