Stakeholders Unveil New Funding Initiative for Mortgage Banks

• Stakeholders Unveil New Funding Initiative for Mortgage Banks

Stakeholders in the housing finance industry have inaugurated the Mortgage Warehouse Funding Limited, a special purpose company set up to provide short-term local currency and competitively priced funding to mortgage banks.

The MWFL, a private-sector driven initiative to enhance mortgage banks’ origination capacity, was incorporated in December 2014 and initially sponsored by a group of eight-member mortgage banks.

The initiative is mobilised by the Mortgage Bankers Association of Nigeria as well as other parties, including the Nigeria Mortgage Refinancing Company Plc as liquidity and off-take provider; CitiHomes Finance Company Limited as programme manager; Lion’s Head Global Partners, London through its African Local Currency Bond Fund as the initial subordinated commercial paper subscribers; and Dunn Loren Merrifield Advisory Partners as financial adviser and arranger.

The stakeholders said the activities of MWFL would complement those of NMRC, as it would serve to provide short-term and interim funding for mortgage origination financing through the issuance of high quality investment grade rated senior and subordinated commercial paper notes under an initial N20bn programme currently undergoing registration at FMDQ OTC.

According to them, the proceeds will be used to fund a percentage of its member mortgage banks’ pipeline of pre-qualified NMRC conforming mortgage loans.

The Head, Nigeria Housing Finance Programme, Central Bank of Nigeria, Mr. Adedeji Adesemoye, said the introduction of MWFL into the mortgage eco-system was a laudable development that would help both the mortgage banks and the construction industry.

The President, MBAN and Director on the boards of both NMRC and MWFL, Mr. Niyi Akinlusi, stated that the initiative was expected to significantly increase the fire power available to mortgage banks for their daily operations.

“With the successful completion of this landmark issue, MWFL will connect the Nigerian mortgage market currently plagued with low deposits level and high cost of alternative sources of funds to the money market by efficiently intermediating short-term funds from the money markets towards the provision of housing finance in Nigeria,” he said.

The Chief Executive Officer, NMRC, Prof. Charles Inyangete, said the MWFL was part of the economic housing model being put in place to create an end to end financing of the entire mortgage process.

The Chairman, MWFL, Mr. Sonnie Ayere, said, “The inauguration of this conduit will see us begin to de-risk construction finance as MWFL becomes the funding source of the off-take often required by commercial banks to fund developers.”