Now Every Lagosian Can Own A House

T

he government of Lagos state has instituted a programme that encourages low and middle income earners to own their own homes. The Lagos Home Ownership Mortgage Scheme, H.O.M.S for short, is being managed by the state’s ministry of housing and the programme is open to every Lagosian.  H.O.M.S is based on a home-grown mortgage system financed by the state.

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Lagos Home Ownership Mortgage Scheme (Lagos H.O.M. S)

It has been identified that the greatest obstacle to achieving the goal of housing for all is the absence of enduring mortgage system.

Provision of Accommodation is by nature capital-intensive, and affordability implies that for low and medium income earners to be able to buy houses, there must be in place a mortgage finance system and one of the major challenges that impedes home ownership in Nigeria is the inadequacy of the mortgage sector.

Faced with the ever-increasing need to provide adequate accommodation for the citizenry, the State Government reaches the need to assist the citizenry in meeting their shelter aspiration as well as facilitate the creation of long term and sustainable wealth.

Lagos HOMS, a home ownership scheme that affords first time home buyers who are resident in Lagos State the opportunity to own their homes.

FEATURES OF THE SCHEME

 · Tenor minimum of 10 years and maximum of 20 years.

· Facility Amount: This will be subject to the 70% balance of the cost of the type of houses purchased.

· Equity Contribution: Applicant would be required to make a minimum equity contribution of 30% value of the property he/she intends to buy.

· Pricing

- Interest rate 6%

- Fee N10,000 (Civil Servant)

- Admin. Charges N25,000 (Others)

- No other charge

· Repayment

- Equal periodic principal repayment. Interest to be paid on reducing balance or

- Equal monthly instalment of both principal and interest.

· Security

Deed of  Mortgage over the property to be acquired.

 MODE OF OPERATION FOR THE SCHEME

· Interested Applicants must obtain a form from Ministry of Housing or download form from the Lagos State Government website (www.lagos.gov.ng).

· Applicants should fill the form and submit to Ministry of Housing accompanied with payment of N1,000 for the Application Form.

· Applicant who has submitted his/her application form will be directed to any of the three receiving banks for pre-qualification.

· All Applicants pre-qualified and recommended by any of the receiving banks will be issued with Letter of Offer.

· Applicants are expected to pay the 30% equity contribution to any of the three collaborating banks.

· Applicants to submit proof of payment and an acceptance Letter to Ministry of Housing.

· Ministry of Housing refers documents to Ministry of Justice to prepare and execute Contract of Sales and Deed of Mortgage Agreements.

· Housing releases Letter of Confirmation of Allocation and keys to successful Applicants.

CONDITIONS/ELIGIBILITY FOR QUALIFYING FOR THE MORTGAGE SCHEME

- Applicant must reside in Lagos

- Applicant must be under 60 years of age.

- Applicant must have a verifiable means of income.

- Applicant should be credit worthy.

- Successful applicants are expected to pay 30% of the value of the house they intend to purchase.

- Houses purchased under the scheme must be occupied by the beneficiary and cannot be transferred or rented out until all obligations have been fulfilled

- Beneficiaries are to pay 6% interest rate on the mortgage loan.

- Applicant must have been working for his/her current employer for at least six months (and must be so confirmed by employer).

- Applicant must be first time home buyers.                               

FINDING

The Lagos HOMS is a mortgage scheme that is completely funded by the Lagos State Government. Apart from providing the pool of houses, government also provides the funds for the mortgage facility being granted.

GLOBAL TERM SHEET FOR LAGOS HOME OWNERSHIP AND MORTGAGE SCHEME

Background:- This term sheet tends to provide a standardization for administering the Lagos State Home Ownership and Mortgage Scheme to all residents of Lagos State. Though priority will be given to Civil Servants in Lagos State Ministries and Parastatals, the target market is all residents of the state (irrespective of tribe), that is Lagosians. The purpose of the scheme is to encourage first time home buyers with verifiable source of income to own their own houses.  To administer this scheme for LASG, three banks have been nominated; FBN Mortgages, Skye Mortgages and Zenith Bank Plc.

Definition of Risk Acceptance Criteria: For the purpose of this term sheet, the table below spells out the risk acceptance criteria for effective administration of the scheme which will be adopted by the participating banks involved.

Risk Acceptance Criteria

 Pre – Qualification /Screening Process:

1. Lagos State Government will first pre-qualify the intending beneficiary who must be a first time home owner in Lagos State and  the claim of first time home ownership must be administered under an Oath.

2. The pre-qualified individual must open an individual current account with Bank. The account will serve for both the purpose of paying 30% equity contribution and also for monthly repayment.

3. The beneficiary will submit his/her allocation paper from LASG to the bank along with request letter and apply for a mortgage scheme under Lagos State Home Ownership Mortgage Scheme.

4. Upon meeting the Risk Acceptance Criteria tabulated above, approval will be conveyed via an offer letter and monthly repayment schedule communicated to the beneficiary.

5. For proof of affordability, salary earners are to submit pay slips for the past 6 months and salary account statement for the past one year while self-employed would submit company profile, three years audited account statement and business personal account statement for the past 12 months.

6. Monthly repayment as stated in the repayment schedule commences as soon as offer is accepted and condition precedent to commencement of monthly repayment is met.

7. Bank will communicate acceptance and approval to LASG for release of Keys to the beneficiary to take possession.

8. Update on monthly repayment will be given to LASG on monthly basis.

9. A dedicated account will be opened which will warehouse all monthly payment from the buyers which would have joint signatories from the Ministry of Housing & Ministry of Finance.

Event of Default

This occurs:

1. If the beneficiary fails to make repayments for three consecutive times.

2. If repayment has not been regular and there have been defaults at three different times which in the opinion of the banker has raised doubt on the ability of the beneficiary to continue with the repayment, such issues will be reported to LASG who will take steps towards foreclosure.

Foreclosure of Security:

The interest on the properties resides with Lagos State Government, hence the right to foreclose lies with them.

Monitoring Tracking of Repayment:

This shall be the joint responsibilities of LASG and Bank. Bank on a monthly basis will be updating LASG on the repayment update that shall aggressively follow up with any loan defaulters for regularization.

Accelerated Repayment:

This shall be allowed so far 90 days notice is given which shall also be communicated to LASG.