Mortgage bank denies guaranteeing the transaction

The Federal Mortgage Bank of Nigeria has come out to say that it neither sponsored nor guaranteed the housing bond transaction.

This is coming on the heels of the ministerial directive from the Co-ordinating Minister of the economy and finance, Dr. Ngozi Okonjo-Iweala.

Part of the directive reads, “I wish to recommend that Mr. President considers directing the Honourable Minister of Lands, Housing and Urban Development to direct the FMBN to raise funds to pay its maturing obligation of N24.564 billion on May 24, 2015, as it must forestall imposing a crisis on the economy.”

You will recall that the housing bond was initiated by former President Olusegun Obasanjo, under the supervision of the current the Co-ordinating Minister of the economy and finance.

Industry experts wonder why she did not see it fit to put it at the top of her agenda all this while.

The insist that Dr. Iweala was supposed to advice the government to take over the responsibility of redeeming the bond, instead of using the Federal Mortgage Bank as a scape-goat.

Rev. Ugo Chime, President of Real Estate Developers Association of Nigeria (REDAN) also advised the minister and the debt management office, to look for a way of resolving the current impasse, rather than try to renege on an agreement that backed the bond transaction.

In a swift twist to the event, the Managing Director of Federal Mortgage Bank of Nigeria, Gimba Ya’u Kumo, in a letter dated 29th of April, 2015 told the debt management office that “The bond was structured in consultation with the Federal Ministry of Finance and the DMO, both the tenor and the interest mismatch were identified at the time but overlooked by the then minister of finance.”

Citing that the floating of the bond was at the instance of the Federal government, as the guarantor and UBA-United Bank for Africa Trustees Limited as the Notes Trustees.

Adding that “The Federal Government can redeem the guarantee to meet the matured obligation and subsequently recoup from the un-remitted collections by Aso Savings and Loans Plc. (N4.54 billion), non-performing loans (N3.64 billion) and outstanding mortgages. It is our view that passing the buck at this time that the bond is almost maturing is unhelpful.”

The first tranche of the bond, will mature on May 24, 2015.