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Shelter has been universally accepted as the second most essential human need after food. The physical structure utilized for this shelter is termed housing and its provision has been a major concern that might form the cave man of today’s urban dwellers.

The formulation of the proposals to solve this housing problem hinges its pivot on finance. This could be easily explained by the fact t hat investment in rural estate generally involves a heavy capital outlay. This project topic “the impact of mortgage (finance) Bank” is chosen in order to ascertain and highlight on how the mortgage institution have been coping with the problem of housing finance in Nigeria.

The federal mortgage Bank of Nigeria (FMBN) being the mortgage institution in the country  is specially chosen to see to what extent it has reached in providing financial assistance and other technical serve to the citizen of the nation for them to at least  be able to have houses of their own without saving or amassing the funds required.

Before the establishment of the federal mortgage Bank of Nigeria (FMBN), the semblance of a mortgage institution in Nigeria was the Nigerian’s building society (NBS) which was incorporated in December, 1956 and Jointly owned by the common wealth corporation (CDC) and the federal Government of Nigeria. Towards the end of the Nigerian Building Society (NBS) administration, its operations becomes extremely neglected. It (NBS) major problem include:

  1. Accounting and book-keeping backlog of nearly 12 months of operation.
  2. Inadequate and inconcevient working space
  3. Inadequate and incompetent staffing at the middle and senior management level.
  4. Cross errors in accounting data
  5. High proportion of delinquent mortgage account s
  6. Their condition for granting mortgage loans, favoured only the upper and the middle classes while the low income earners did not benefits much from its operation.
  7. Finally, lack of deliberate fixed assets in form of office and residential accommodation where available, deliberate neglect and disposal of most of such assets.

The federal mortgage Bank of Nigeria (FMBN) was then established in 1977 as the federal Government fully owned bank under Decree No 7 of 20 January 1977. The establishment followed the dissolution of the Nigerian Building  society (NBS) whose assets and liabilities were taken over by the new bank

The authorize capital of the federal mortgage Bank of Nigeria (FMBN) was at its establishment #20 million , which was divided into 200,000 shares of #100 each. The transition period of transforming the Nigerian Building society (NBS) to a mortgage Bank, witnessed the management of the Bank in hand of a firm of foreign consultants-Beneshot Moret Boshoom (BMN) of Holland, with a 3year contract running from July 2977 to June 1980 to among other things recognize and operate the Bank. The BMB team involved itself in minutes details of the operations of the bank and so not enough time to deviated to either analyzing the existing systems and problems of making long-term operating plans for the Bank.

Furthermore, lack of direction and coordination among the various operating departments of the Bank impaired the effort s made by the team during its management period. In June 1979, the federal government appointed the members of the Board and the managing Directors of the bank. The inauguration of the managing Directors of Bank. The inauguration of the Board also wittiness a change in the capital structure of the ownership of Bank. The authorized capital of the Bank was increased from #20 million to #50 million jointly owned by the federal Government and the central Bank of Nigeria (CBN) in proportion of 60% and 40% respectively.

 The federal mortgage Bank of Nigeria (FMBN) having existed for quite over a decade, become necessary to work at the role it has played with other mortgage institutions in ensuring Housing development in the country.

In his opinion, Ughanadu said,

“Housing finance is in extremely short supply and costly in Nigeria. This lack a credit and high cost of finance for housing is recognized increasingly as a major impediment to the provision of shelter. The shortage and high cost of financing can be felt at every stage in the housing development, but it is long-term mortgage credit”.

It is clear that housing ownership is a large investment for a family, often the largest it would ever make. There is therefore every need to augment household saving with log term loans for the purpose of housing development


It is the objective of study to:

  1. To examine the value of mortgage institutions in housing finance for the development of the Nigerian economy.
  2. To determine the effectiveness of the federal mortgage Bank of Nigeria (FMBN) in their primary functions.
  3. To ascertain the methods and techniques adopted by various mortgage finance institutions toward solving housing problems.
  4. To determine the major challenges facing the mortgage finance institutions in their developmental role.
  5. To ascertain the factors responsible for the distress of most mortgage finance institutions in Nigeria.
  6. To identify the area of strengths and weakness of mortgage finance institutions.
  7. To critically finance the factors that can finally hinder the mortgage finance institutions from achieving their objectives.


The researcher is carrying out the activities of the federal mortgage Bank of Nigeria (FMBN), since the Bank is the federal government concern with its operations similar throughout the country. The area office of the Bank at Enugu State was used specially as the major sources of information.

However, effort were made to look at the roles of other mortgage institution at Enugu State, like the Enugu State Home ownership cooperation, the state housing corporation and others.


       This research work was hampered by many factors that limited the study from obtaining its absolute objectives. Such factors includes insufficient money to carry out the field study effectively, information based on figures and precise data were not easy to get as up to date records were not in a place. Getting the officials of the Bank to make out time to grant answer to the questionnaire was also difficult, while some employees embark on window dressing of data for fear of discipline action.


The system of financing housing development in the country (Nigeria) has left costly alternative for those who wishes to own a house of their own. In urban centres or cities like Enugu, Abakaliki, Port Harcourt, Oweerri and others, family of four or five shares a room of between 3.66 and 4.27 metres packed with family possessions. By implication, if house in the country is judge against these observations, many could definitely be found to be living in sub-standard houses, if not shackles.

The federal mortgage Bank of Nigeria (FMBN) seem to be overstretched in the performance of its functions, as the mortgage loans they afford to disburse can not meet up with housing needs and the rate of economic development of the country. It becomes imperative to study ways to improve the performance of the federal mortgage Bank of Nigeria (FMBN) and ensure a speedy housing finance for the development of the country (Nigeria).


The research was designed to be a greater benefit to the government, mortgage institution and the society. The work was aimed to enlighten the federal mortgage bank of Nigeria (FMBN) on its success and failure in housing finance between 2000-2005.the study also evealed to the government and the public the effectiveness and weakness of the federal mortgage finance institution as well as the apex body. It in addition highlighting on the ways of solving the major problems that hindering the mortgage institutions from achieving their objective, suggestion on improving the current roles played by the federal mortgage bank of Nigeria( FMBN).


The following hypothesis have been formulated for the purpose of the study.

1.   HO: Mortgage Institutions do not play role in the development of the Nigerian economy.

HI: Mortgage Institutions play role in the development of the Nigerian economy.

2.  HO: Mortgage Institutions do not face challenges in financing housing development in Nigeria.

H1: Mortgage Institutions face challenges in financing housing development in Nigeria

3.  HO: Funds mobilized by the Mortgage Institutions are not utilized effectively by the fund applicants.

     HI:  funds mobilized by Mortgage Institutions are effectively utilized by the fund applicants.


In other to avoid generalization, ambiguity and misconception of  concept  and terms, that will from time to time be used, in the study, the following terms will be defined below.

  1. MORTGAGE INSTITUTION:  An institution established to accept savings and give out loan for construction and purposes of building(s).
  2. FINANCE: This refers to money committed for a project or business enterprises to enable it operate.
  3. MORTGAGE: The use of land or property as a collateral or security for borrowing, fund, so that if the borrower fails to repay, the lender can take possession of the property.
  4. MORTGAGE LOAN;  Loans make on real estate collectoral, urban or rural  residential or business in which a mortgage is given to.
  5. REAL ESTATE LOAN: Bank loan for construction and purposes of building(s)
  6. HOUSING: A physical structure that man used for shelter.
  7. INTEREST RATE: The percentage rate of return received from lending or saving funds.
  8. MORTGAGORS: These are individuals, companies, corporate bodies, estate developers, etc. who seek for loan from the mortgage institutions.
  9. MORTGAGES: These are mortgage institutions and other institutions that lend money to those who need it for building, renovations, construction, etc for building.
  10. PRIMARY MORTGAGE INSTITUTION ( PMIS) : These are mortgage institutions  directed by section 36 of 1989 decree to assist  the Federal mortgage  Bank of Nigeria  to grant loan and advances to individuals  for the purchase  or extension of the dwelling houses.

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