How do you start a mortgage bank in Nigeria? What is mortgage? You should have these answers. In case you do not, you have landed on the right website today.
In one of our posts, we highlighted licensing and approvals as one of the big points start-ups need to note in granting mortgage loans. But, in this post, we are focusing on something more different.
This post seeks to identify required licenses that start-ups need to obtain before operating a mortgage bank in Nigeria.
Before we delve into this topic proper, we want to understand what a mortgage bank is.
What Is A Mortgage Bank?
A mortgage is a loan where real property is used as security and collateral for a loan.
Hence, a mortgage bank is a specialized and licensed bank providing financial services in respect of mortgage transactions in Nigeria.
To operate a mortgage bank in Nigeria, is there any license required? Let’s proceed to the next subheading.
Is Any License Required In Operating A Mortgage Bank In Nigeria?
In Nigeria, the primary regulatory provision on mortgage banking is the CBN revised guidelines for primary mortgage banks in Nigeria. The Guidelines require any one seeking to engage in mortgage banking activities namely, mortgage finance, real estate construction finance, etc to obtain a license to be able to do that.
However, the license is restrictive as holders are proscribed from carrying out specified operations such as leasing, granting commercial loans, estate management, etc.
You’d find the steps there also. Application is generally made to the Governor of the Central Bank of Nigeria paying the prescribed application fees and attaching the documents provided in the guidelines. Other conditions provided such as share capitalization requirements, directorship, et must also be fully complied with.
Importantly, the CBN is the lead regulator for primary mortgage banks in Nigeria having power to issue and revoke licenses. Recently, the CBN revoked the license of 4 primary mortgage banks in Nigeria.
Compliance with regulatory requirements is a mandatory requirement and so, it is vital to ensure that before you embark on conducting operations relating to primary mortgage banking in Nigeria, make sure you obtain the requisite licenses and permits.
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References
- Sahara Reporters, “Nigeria’s CBN Revokes Operating Licenses of 132 Microfinance Banks, Others” available at https://saharareporters.com/2023/05/23/nigerias-central-bank-revokes-operating-licenses-132-microfinance-banks-others accessed on August 14 2023
- Central Bank of Nigeria “Revised Guidelines For Primary Banks In Nigeria” available at https://www.cbn.gov.ng/out/2013/ofisd/revised%20guidelines%20for%20primary%20mortgage%20banks%20in%20nigeria.pdf accessed on August 14 2023
- Emmanuel Ifeanyi, “Understanding Mortgage and Mortgage Banking In Nigeria” available at https://www.tekedia.com/understanding-mortgage-and-mortgage-banking-in-nigeria/ accessed on August 14 2023
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