Mortgage Institutions Get CBN’s Approval To Refinance Non-Member Banks

The Central Bank of Nigeria has increased access to mortgage financing by removing restrictions on refinancing mortgages earlier imposed.

The apex bank granted the approval to Mortgage Refinancing Companies to re-finance non-member banks.

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The approval is contained in a circular referenced FPR/DIR/GEN/CIR/07/056 and signed by Ibrahim Tukur, the Director of Financial Policy and Regulation Department, CBN.

The circular is an improvement on the earlier provisions contained in section 7.3.1.5.which states that “A mortgage refinance company shall not, without the prior approval of the CBN, extend total outstanding credit to any single borrower, which is equal to or more than twenty times the value of the borrower’s shares with the MRC or 25 percent of its shareholders’ funds unimpaired by losses.”

Based on the provisions contained in the latest circular, Mortgage Refinancing Companies are now free and legally permitted to refinance the qualifying mortgages of banks and all other non-members that do not hold equity.

This, according to the CBN, is subject to meeting all other relevant requirements specified in the framework.

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The implication of this is that restriction on non-member mortgage lenders from refinancing their mortgages with MRCs has now been removed.

In lieu of this, the latest circular stated that the provision of section 7.3.1 5 is hereby revised to “the MRC shall not, without prior approval of the CBN, extend total outstanding credit to any single borrower, which is equal to or more than 25 percent of its shareholders’ funds unimpaired by losses,” the circular reads.

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