MORTGAGE REGULATORY BILL, 2009

A BILL For AN ACT TO ESTABLISH THE NIGERIA INSTITUTE FOR MORTGAGE DEVELOPMENT,
PROVIDE FOR ITS FUNCTIONS AND POWERS; TO PROVIDE FOR THE DEVELOPMENT AND
REGULATION OF MORTGAGE FINANCING IN NIGERIA AND MAKE MORTGAGES MORE AVAILABLE
TO LOW INCOME EARNERS IN NIGERIA; AND TO REPEAL CERTAIN LAWS RELATING TO MORTGAGE
INSTITUTIONS IN NIGERIA AND FOR CONNECTED PURPOSES.

SPONSOR: Senator Gbemisola Saraki

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BE IT ENACTED by the National Assembly of the Federal Republic
Of Nigeria as follows:

PART I – ESTABLISHMENT, FUNCTIONS AND POWERS

OF NIGERIA INSTITUTE FOR MORTGAGE DEVELOPMENT.

1(1) There is hereby established a body to be known as Nigeria Institute

for Mortgage Development (hereinafter called “the Institute”)
(2) The Institute shall be a body corporate with perpetual succession,
a common seal and may sue and be sued in its corporate name.

2. The objectives of the Institute shall be to:

(a) make mortgage financing for housing development easily
accessible to the average Nigerian citizen;
(b) act as a catalyst in mortgage financing and mortgage accessibility in Nigeria.

3(1) There is established for the Institute, a governing board (hereinafter referred to as “the Board”)
which shall comprise the following:
An Executive Secretary who shall, immediately before his
appointment, be a private sector player in the mortgage
market and who shall be the chairman of the Board;
Two representatives of the Governor of Central Bank;
Two representatives of the minister of housing;
A representative of the minister of finance;
Five representatives of the Guild of Bankers; and
Two representatives of labour to be appointed by the President
of Nigeria Labour Congress.
(2) The Executive Secretary shall be appointed by the President on the recommendation of the Guild
of Bankers, and subject to the confirmation of Senate.
(3) A member of the Board appointed otherwise than by office, shall hold office for a term of four
years and shall be eligible for a further term of four years and no more.

4. A member of the Board shall vacate his position if –

(a) he resigns his membership by notice in writing under his hand to the President; or
(b) he is convicted of an offence involving dishonesty or fraud; or
(c) he becomes bankrupt, suspends payment of his debts or compounds with his creditors; or
(d) he becomes of unsound mind; or
(e) the President is satisfied that it is not in the interest of public for the member to continue in
office and notifies the member in writing to that effect.

5. The President shall have power to remove from office any member of the Board appointed
otherwise than by office, if –
(a) he is found to be unqualified for appointment as a member of the Board; or
(b) he has demonstrated inability to effectively perform the duties of his office; or
(c) as a professional, he is disqualified from practising his profession in Nigeria by an order of a
competent authority; or
(d) he is guilty of a serious misconduct in relation to his duties as a member of the Board.

6. The functions of the Institute shall be –

(a) establish a conducive framework for the provision of mortgage financing for house ownership
and housing development in Nigeria;
(b) licence and encourage the emergence and growth of the required number of viable mortgage
institutions in all parts of Nigeria;
(c) facilitate and promote healthy competition in mortgage financing among mortgage institutions;
(d) establish, regulate and monitor operational standards for mortgage institutions to ensure a fair
and efficient mortgage market in Nigeria;
(e) embark on research aimed at improving house ownership and housing development through
mortgage financing in both urban and rural areas of Nigeria;
(f) embark on research on mortgage finance activities and the building construction industry in
Nigeria;
(g) organise and operate, in collaboration with the Central Bank, a mortgage protection system
designed to guarantee liquidity to mortgage institutions as well as afford them opportunity of having
liberal premium terms;
(h) make such rules and develop such regulations as may be necessary to give full effect to the
provisions of this Act; and
(i) do anything and enter into any transaction which in the opinion of the Board is necessary to
ensure the performance of the functions under this Act.

7. The Institute shall have powers to –

(a) acquire and hold land and any landed property for the purpose of carrying out its functions under
this Act;
(b) employ, contract or engage such staff, workers or service providers as are necessary for carrying
out its functions under this Act;
(c) accept grants, aids and gifts from individuals, corporate bodies, governments and international
agencies on such terms and conditions as are not inconsistent with the objectives of this Act; and
(d) do all such things as are necessary or convenient to be done for or in connection with the
performance of its functions and to enable it achieve its objectives under this Act.

8(1) The Board shall, subject to the general direction of the minister, be responsible for the
following-
Formulating policies and guidelines for giving effect to the provisions of this Act;
Evolving the overall policy and general management strategy of the Institute;
Make such rules and regulations, and set such standards for the mortgage market as are necessary
to give effect to the provisions of this Act; and
Perform such other functions and carry out such other duties as are incidental to and necessary for
discharging the functions of the Institute.
(2) The Board shall have power to -
(a) establish committees and sub-committees of its members for the purpose of giving full effect to
the provisions of this Act;
(b) fix the terms and conditions of service including remunerations of employees of the Institute;
(c) make such rules as are necessary to govern and regulate its own meetings and proceedings and
those of any committees or sub-committees it might establish; and
(d) do such other things as are necessary for the successful performance of its functions under this
Act.

PART II – STAFF AND ADMINISTRATION OF THE INSTITUTE

9.(1) There shall be appointed for the Institute an Executive Secretary who shall be the chief
executive officer of the Institute and responsible for the day-to-day management of the affairs of the
Institute.
(2) The minister may appoint at least two other directors who shall head such departments and
perform such duties as may from time to time be determined by the Board.
(3) A person appointed under subsections (1) and (2) of this section shall not, while holding such
office, qualify to hold any office as a director of any bank, financial institution or mortgage
institution.
(4) A person appointed under subsection (2) of this section shall hold such office on such terms and
conditions as may be specified in their letters of appointment.

10(1) The Board shall appoint such number of officers and persons as employees or staff of the
Institute as may appear necessary for the proper and efficient performance of the functions of the
Institute under this Act and on such terms and conditions as may from time to time be determined
by the Board.
(2) For the purposes of subsection(1) of this section, the Board shall develop and implement
appropriate staff conditions of service for its employees with particular reference to remuneration,
pension scheme and other service benefits sufficient to attract and retain knowledgeable and expert
manpower.

11(1) Service in the Institute shall be approved service for the purposes of the Pensions Reform Act,
cap. P4 LFN 2004 but nothing in this Act or the Pension Reform Act shall prevent the Board from
appointing a person to any office on terms which preclude the grant of pension in respect of that
office.
(2) Any power exercisable under the Pensions Reform Act by a minister or other authority of the
Federal government, other than powers to make regulations under section 3 thereof, is hereby
vested in and shall be exercisable by the Board.

PART III – FINANCIAL PROVISIONS

12. There shall be a fund for the Institute which shall consist of –
(a) such sums as may, from time to time, be appropriated to the Institute by the National Assembly;
(b) all such charges, fees, fines and penalties as may be received by the Institute in the course of
carrying out its functions under this Act;
(c) all monies received by way of gifts, aids, grants or loans; and
(d) such other monies as may from time to time accrue to the Institute in the course of its functions
under this Act.

13. The Institute may with the consent of the minister borrow such amount of money or raise fund
otherwise than from the Government as the Institute may require in the exercise of its functions
under this Act.

14(1) The Institute shall keep proper accounts of its income and expenditure in respect of each
financial year and shall cause its accounts to be audited within six months from the end of every
financial year by auditors approved by the Auditor-General of the Federation from time to time.
(2) The Institute shall prepare and submit to the National Assembly through the President, not later
than six months after the end of each financial year, a report on the activities of the Institute for the
preceding financial year and shall include the Institute’s audited accounts for the year under review
together with the auditor’s report thereon.

PART IV – LICENSING OF MORTGAGE INSTITUTION

15(1) No mortgage business shall be transacted in Nigeria except by a company which is duly
incorporated in Nigeria for that purpose and in possession of a valid licence granted by the Institute
authorising it to do so.
(2) Subsection(1) of this section shall not apply to –
(a) the Federal Mortgage Bank of Nigeria established under the Federal Mortgage Bank of Nigeria
Act, cap.F16 LFN 2004 and bank licensed under the Banks and Other Financial Institutions Act,
cap.B3 LFN 2004 and carrying on mortgage business as part of its normal business; and
(b) any institution which before the coming into force of this Act was carrying on mortgage business
if such institution has before 30th June, 2009 applied to the minister for licence and application has
been granted by the minister before that date.
(3) Any person who transacts any mortgage business in contravention of the provisions of this
section shall be guilty of an offence and liable on conviction to a fine of N5, 000 for each day the
offence continued.

16(1) Any company desirous of carrying on mortgage business in Nigeria shall apply in writing to the
Institute for the grant of a licence in accordance with the provisions of this Act.
(2) Every application for licence under this Act shall be accompanied by the following documents –
(a) a copy of the company’s certificate of incorporation, memorandum and articles of association
certified by the Corporate Affairs Commission;
(b) a copy of the latest balance sheet of the company where the company had previously been
engaged other than mortgage business;
(c) a feasibility survey report in respect of the company’s proposal to engage in mortgage business;
and
(d) such other particulars as may be prescribed by the Institute.
(3) Upon receipt of the application and the documents or particulars referred to in subsection (2) of
this section, the Institute shall consider them and if it is of the opinion –
(a) that a licence ought to be granted to the company, it shall issue a licence with or without a
condition;
(b) that it would be undesirable and against the public interest to issue a licence to such company, it
shall refuse to issue such licence and shall state its reasons for such refusal.
(4) An applicant aggrieved by the decision of the Institute may within 30 days appeal to the minister,
who may confirm or overrule the decision of the Institute.
(5) Any mortgage institution which failed to comply with any of the conditions of its licence shall be
guilty of an offence and liable on conviction to a fine of N5, 000 for each day during which the
condition is not complied with.

17(1) The Institute may revoke any licence granted under this Act if:
The mortgage institution ceases to carry on in Nigeria the type of business for which it was licensed
or goes into liquidation or is wound up or otherwise dissolved; or
The mortgage institution fails to fulfil any condition subject to which the licence was granted.
(2) Where the Institute proposes to revoke any licence in accordance with subsection (1) of this
section, it shall before revoking the licence, give a notice in writing of its intention to the mortgage
institution concerned and shall give it an opportunity of making representations and submitting
resons why its licence should not be revoked.

18. No company shall be granted a licence as a mortgage institution and no mortgage institution
shall hold a licence unless the paid-up capital of the company is not less than N2, 000, 000, 000 or
such higher amount as the Institute may from time to time recommend.

PART V – OPERATIONS OF MORTGAGE INSTITUTIONS

19(1) Every mortgage institution shall have power to –

Grant loans and advances to individuals for the purchase or construction of dwelling houses;
Grant loans and advances to any person for the improvement or extension of a dwelling house; and
Subject to the provisions of the Banks and Other Financial Institutions Act, cap. B3 LFN 2004, accept
savings and deposits from individuals and pay interest thereon.
(2) The interest rate applicable to a deposit, loan and advances shall be in accordance with the
interest rate determined by the Institute after due consultation with the Central Bank.

20. Every mortgage institution shall –

(a) conduct proper evaluation of any mortgage loan proposal submitted to it; and
(b) monitor the construction or extension of any dwelling house in respect of which a loan is
granted.

21. A mortgage institution shall not –

(a) grant a loan or advance for the building, extension or improvement of a dwelling house unless
adequate security has been taken on an existing property or the property in respect of which the
loan or advance is being granted;
(b) grant to any person any loan, advance or credit facility or give any financial guarantee or incur
any other liability on behalf of such person so that the total of the loan, advance, credit facility or
guarantee is at any time more than twenty per centum of the sum of the paid-up capital and
statutory reserves of the mortgage institution;
(c) grant any loan, advance or credit facility on the security of its own shares; and
(d) engage in any commercial, agricultural, industrial or any other undertaking except as permitted
under this Act or as the mortgage institution may in any way acquire in the course of the satisfaction
of debts due to it so however that any interest in such undertaking shall be disposed of within a
reasonable time.

22. No mortgage institution shall, as from the date of the commencement of this Act, open or close
any of its branch offices in Nigeria without the prior consent in writing of the Institute.

23(1) Every mortgage institution shall maintain a reserve fund and shall, out of its net profits each
year and before any dividend is declared, transfer to the reserve fund –
Twenty-five per cent of such profit where the reserve fund is less than the paid-up share capital; or
Not less than twelve and a half per cent of such profit where the reserve fund is equal to or more
than the paid-up share capital.
(2) No transfer under subsection (1) above shall be made until any past losses have been made good.
(3) The Institute shall determine the amount to be maintained as reserve fund by every mortgage
institution under this section.

24. No mortgage institution shall declare and pay any dividends on its shares until –
(a) all its preliminary expenses, organisational expenses, amount of losses incurred and other
capitalised expenses not represented by tangible assets have been completely offset;
(b) after adequate provision for bad and doubtful debts has been made to the satisfaction of the
Institute; and
(c) adequate transfers have been made to the reserve fund in compliance with section 23 of this Act.

25(1) Every mortgage institution shall maintain a minimum percentage of its total deposit liabilities
as deposit with the Central Bank of Nigeria as may be prescribed from time to time by the Institute.
(2) Except as required for the purposes of subsection (1) of this section, a mortgage institution may
commit all its deposit liabilities to the granting of loans in the manner permitted under this Act.

26(1) The Institute shall, at the beginning of each financial year, prescribe a minimum amount as a
percentage of the loans, advances and credit facilities granted by every mortgage institution, which
shall go to low income earners and rural dwellers of the category to be determined by the Institute.
(2) The Institute shall set aside a percentage of its income to guarantee the loans, advances or
credits facilities granted under subsection (1) of this section upon such terms and conditions to be
satisfied by the mortgage institutions as the Institute may prescribe.

27(1) Every mortgage institution shall give three months’ notice in writing to the Institute of –
Any proposed agreement or arrangement for any sale or disposal of its business by amalgamation or
otherwise; or
Any proposal for reconstruction.
(2) Upon the receipt of notice under subsection (1) of this section, the Institute shall take such steps
as are necessary to safeguard the interest of depositors, mortgagors and shareholders of the
mortgage institution concerned including-
(a) applying to the High Court to forestall any proposed agreement, arrangement or reconstruction;
or
(b) revoking the licence of such mortgage institution.

28(1) Every mortgage institution shall keep proper books of account with respect to all its
transactions.
(2) For the purposes of subsection (1) of this section, proper books of account shall not be deemed
to be kept with respect to all transactions if such books as are necessary to explain such transactions
and give a true and fair view of the state of affairs of the mortgage institution are not kept by the
mortgage institution.
(3) Any person who being a director of any mortgage institution, fails to take reasonable steps to
secure compliance with this section, shall be guilty of an offence and liable on conviction, in respect
of each offence, to imprisonment for 2 years or to a fine of N500, 000 or to both such fine and
imprisonment.

29(1) Every mortgage institution shall, not later than 4 months after the end of each financial year –
Cause to be published in a daily newspaper circulating in Nigeria;
Exhibit in a conspicuous position in each of its offices and branches in Nigeria; and
Forward to the Institute
Copies of its balance sheet and profit and loss account duly signed and containing the full and
correct names of the directors of the mortgage institution.
(2) The balance sheet and profit and loss account of a mortgage institution shall bear on their face,
the report of an approved auditor and may be published in such form as may be prescribed by the
Institute.
(3) For the purposes of subsection (2) of this section, approved auditor means an auditor approved
for purposes of section 30 of this Act.
(4) Any mortgage institution which fails to comply with any of the requirements of this section shall
in respect of each such failure, be guilty of an offence and liable on conviction to a fine of N200, 000

30(1) Every mortgage institution shall appoint annually, a person approved by the Institute, in this
section referred to as “the approved auditor” whose duties shall be to make to the shareholders a
report upon the annual balance sheet and profit and loss account of that institution.
(2) No person shall be eligible for appointment or continue as approved auditor for any mortgage
institution who –
(a) has an interest in a mortgage institution otherwise than as a depositor; or
(b) is a director, officer or agent of a mortgage institution; or
(c) is a firm in which a director of a mortgage institution is interested as partner or director.
(3) Where any mortgage institution fails to appoint the approved auditor or at any time fails to fill a
vacancy of such person, the Institute shall appoint the approved auditor and shall fix the
remuneration to be paid by the mortgage institution to such auditor.
(4) Every auditor of a mortgage institution shall have a right of access at all times to the books,
accounts and vouchers of the mortgage institution, and shall be entitled to require from the director
and officer of the mortgage institution, such information and explanation as he thinks necessary for
the performance of his duties.
(5) The report of the approved auditor shall be read together with the report of the management of
the mortgage institution at the annual general meeting of the shareholders and two copies of each
report together with the auditor’s analysis of doubtful advances, shall be sent to the Institute.
(6) For purposes of this section, an approved auditor shall be an auditor who is a member of one of
the professional bodies approved by the minister for such purpose.

PART VI – GENERAL AND SUPPLEMENTAL

31(1) Every mortgage institution shall submit to the Institute –

Not later than 28 days after the last day of each month, a statement of its assets and liabilities in
such form as may be prescribed by the Institute;
Such other periodical returns or information as may be prescribed by the Institute.
(2) Any mortgage institution which fails to supply such statement, returns or information required
under subsection (1) of this section shall be guilty of an offence and liable on conviction to a fine of
N5, 000 for each day during which the offence continues.
(3) It shall be the responsibility of the Institute to prepare and publish consolidated aggregating the
figures in the statements furnished under subsection (1) of this section.

32(1) The Institute shall appoint from among its officers, examiners who shall –
(a) have power to examine periodically the books and affairs of every mortgage institution;
(b) have the right of access at all times to the books, accounts and vouchers of the mortgage
institution;
(c) be entitled to require from the director and officer of the mortgage institution such information
and explanation as he thinks necessary for the performance of his duties; and
(d) have access to any accounts, returns or information regarding mortgage institutions that are in
the possession of the ministry.
(2) An examiner shall make a report of his findings to the Institute which shall take such actions as
are necessary.

33(1) No person being a manager, officer or employee of a mortgage institution shall, whether
directly or indirectly, be interested in any loan, advance or credit facility to be granted to any person
by that mortgage institution.
(2) Every manager or other officer who contravenes the provisions of this section shall be guilty of an
offence and liable on conviction to a fine of N100, 000 or to imprisonment for a term of 2 years.

34. Any director, officer or employee of a mortgage institution or other persons receiving
remuneration from such mortgage institution, who asks for or receives, consents or agrees to
receive any gift, commission, emolument, service, gratuity, money, property or thing of value for his
own personal benefit or advantage or for that of any of his relations, from any person other than the
mortgage institution –
(a) for procuring or endeavouring to procure for any person, any loan, advance or credit facility; or
(b) for permitting any person to overdraw any account with the mortgage institution,
Shall be guilty of an offence and liable on conviction to a fine of N100, 000 or to imprisonment for a
term of 2 years and in addition, any money, property or thing of value accruing to any person by
reason of the offence shall be forfeited to the Government.

35. Where a mortgage institution becomes unable to meet its obligations or suspends payments, the
assets of such mortgage institution shall be available to meet all deposit liabilities of the mortgage
institution and such deposit liabilities shall have priority over all other liabilities of the mortgage
institution.

36(1) The Federal High Court of Nigeria shall have jurisdiction over all matters contained and
pertaining to this Act including all offences created under this Act.
(2) A summons, notice or other document required or authorised to be served on the Institute under
the provisions of this Act or any other law may be served by –
(a) delivering same to the Executive Secretary or any director of the Institute; or
(b) by sending same by registered post addressed to the Executive Secretary at the principal office of
the Institute.

37(1) The Mortgage Institutions Act, cap.M19 LFN 2004 (in this section referred to as “the repealed
enactment”) is hereby repealed.
(2) Sections 5(a), (b), (c) and (d); 6(d), (e) and (f) of the Federal Mortgage Bank of Nigeria Act,
cap.F16 LFN 2004 (in this section referred to as “the repealed sections”) are hereby repealed.
(3) As from the commencement of this Act –
(a) the rights, interests, obligations and liabilities of the Federal Mortgage Bank of Nigeria
established under the repealed enactments and repealed sections, under any contract or instrument
or at law or in equity are hereby assigned to and vested in the Institute established under this Act,
without any further assurance; and
(b) a contract or instrument as is mentioned in paragraph (a) of this subsection shall be of the same
force and effect against or in favour of the Institute established under this Act, and shall be
enforceable as fully and effectively as if, instead of the Federal Mortgage Bank of Nigeria, the
Institute established under this Act has been named therein or had been a party thereto.
(4) A proceeding or cause of action pending or existing immediately before the commencement of
this Act by or against the Federal Mortgage Bank of Nigeria in respect of any right, interest,
obligation or liability of the Federal Mortgage Bank of Nigeria assigned to or vested in the Institute
may be continued or commenced by or against the Institute under this Act.
(5) A determination of a court of law, tribunal or other authority or person made in a proceeding or
cause of action referred to in subsection (4) of this section may be enforced by or against the
Institute established under this Act to the same extent that the proceeding, cause of action or
determination could have been continued, commenced or enforced by or against the Federal
Mortgage Bank of Nigeria if this Act had not been enacted.

38. The Institute may make regulations with respect to –

(a) the granting of loans, advances and making of deposits;
(b) the relationship between the Institute and mortgage institutions;
(c) the terms, conditions, rates of interest, fees or administrative charges in respect of advances,
credits, guarantees and any other transactions which mortgage institutions may undertake from
time to time;
(d) the form of application, agreement and other materials necessary for the control of the grant of
advances, credits, guarantees and other transactions which mortgage institutions may undertake
from time to time;
(e) the securities that may be required for loans to be granted by mortgage institutions; and
(f) any other matter that may be incidental or supplemental to the functions of the Institute under
this Act.

39. In this Act, unless the context otherwise requires –

“Advance, Credit facility, or Loan” mean money given on condition that it shall be returned, whether
on notice or on a fixed date, with interest;
“Approved auditor” means the person appointed as such pursuant to section 30 of this Act;
“Board” means the Governing Board of the Nigeria Institute for Mortgage Development;
“Central Bank of Nigeria” means the Central Bank of Nigeria established under the Central Bank of
Nigeria Act, cap C4 LFN 2004;
“Deposit” means moneys lodged by a member of the public with any person for safe keeping or for
the purpose of earning interest or dividend whether or not such moneys are repayable upon
demand, upon a given period of notice or upon a fixed date;
“Director” includes any person by whatever name he may be referred to, carrying out or
empowered to carry out substantially the same functions of a director in relation to the direction of
a company registered under the Companies and Allied Matters Act, cap.C20 LFN 2004;
“Institute” means the Nigeria Institute for Mortgage Development;
“Licence” means a licence granted or deemed to be granted under this Act;
“Minister” means the minister of the government of Nigeria for the time being responsible for
housing;
“Mortgage business” means accepting deposits from the members of the public for the purpose of
granting loans and advances for the purchase, construction, improvement and extension of dwelling
houses;
“Mortgage Institution” means any company licensed to carry on mortgage business under this Act;
“Officer” means any senior or management employee of a mortgage institution; and
“President” means the President of the Federal Republic of Nigeria.

40. This Act may be cited as the Mortgage Regulatory Bill.