REDAN wades into FMBN, estate developers’ debt imbroglio

The FMBN, by publishing the list of non-performing loans had threatened to drag directors of the affected firms to court and report them to the appropriate agencies. The bank has also given its customers till Monday, October 5, 2009 to regularise their accounts.

The publication read “following several demands’ notices and in line with the ongoing sanitisation in the banking industry, it has become necessary to request defaulting customers of the bank to regularise their accounts within 21 days.”

But the development apparently jolted several firms who have had issues to iron out with FMBN concerning their loans before the publication. Some claim to have since sold off the houses under the estate developers’ loan but were still awaiting their Certificates of Occupancy (C-of-O) from the relevant land agencies. Others said they had handed over their houses to subscribers through the National Housing Fund (NHF) who were paying back the loans gradually.

On the list of the debtors are CITEC International Estate Ltd (N1.7bn), Cambial Limited (N2b), Same Global System Limited (N1.6 billion) and Sijuades. On the list Netconstruct Nigeria Limited owes N454 million, Modular limited owe N332 million, Imani and Sons Limited owes N249 million, Good Homes Estate Limited owes N219 million; Shelter Initiatives Limited (N295 million), Tanus Property Development Limited owes N198 million Atasi-Isi Supplies and Services owes N723 million.

The Guardian learnt that the senior officials of the Real Estate Developers Association of Nigeria (REDAN) led by its President, Chief Olabode Afolayan, last week met with the affected developers and their directors to ascertain the true position of their indebtness and actual figures. It was also learnt that on Friday, REDAN officials met the Managing Director of FMBN, Abdulsalam Ahmed, and its management staff behind closed doors to negotiate a truce for their members.

It was learnt that FMBN agreed to set up a committee, which members will be drawn from FMBN and REDAN to examine individual firms and separate them according to the type of loan, whether estate developers loan or NHF loan and treat each separately. The committee’s report will determine the actions to be taken against each of the affected developer.

FMBN Managing Director, Abdulsalam Ahmed, recently disclosed that the bank needs approximately N40 billion (about $132 million) capital base in order to effectively carry out its operations. He said the bank’s N5 billion (or $17 million) capital base is grossly inadequate in view of the magnitude of its mandate to bridge the housing finance gap in Nigeria, which runs into trillions of naira. The FMBN’s current capital base, he said, is insignificant when compared with an average capital of $132 million held by similar institutions in some other countries.

However, the Chief Executives of Shelter Initiatives Limited, Mr. Oluseyi Lufadeju told The Guardian that “a mortgage loan can only be declared bad if only the bank has fully paid for the properties purchased by all the beneficiaries of the properties as packaged by the approved Primary Mortgage Institution and the bank’s loan to developer is not recouped. A mortgage loan is very different from a commercial loan. FMBN lacks understanding of this business.”

Lufadeju, who is a former managing director of the Kenya-based continental housing finance agency Shelter Afrique, said: “FMBN has refused to pay developers mortgage loans on behalf of the beneficiaries even in cases where their board has approved them. In our own case, we delivered 162 units of various categories since 2007; people are living in our houses in Yayale Ahmed estate. FMBN has not paid us. We still get a bill of N3 million monthly. It is on account of this they published our name as debtors. We need to change the sloppy way we do things in this country.”

CITEC, through its lawyers, Messrs Olumide Ayeni and Company also stated that “FMBN had created mortgages on CITEC houses up to the tune of the value of N900 million only, without fulfilling its corresponding obligation of crediting the sum of N900 million into the estate development loan account which sum CITEC had repeatedly requested be credited to the loan account to reduce the charged of interest which has been accumulating at about an aggregate rate of N15 million per month.”

Dr. Olumide Ayeni said: “The conduct of FMBN brings to fore an important factor why several state governments, other public and private institutions among others are reluctant to continue making contributions to the national housing fund scheme.”

Attempt to get the reaction of FMBN officials on the above remarks failed. Some of their officials were unwilling to make comments.

By Chinedu Uwaegbulam, Assistant Housing & Environment Editor