CHAPTER TWO  LITERATURE REVIEW INTRODUCTION Housing as an essential need to man is classified into five (5) broad categories to include residential commercial industrial agricultural and special properties all of which increase in value and remain one of the best types of security for loans in Nigeria. Housing has several distinguishing feature which are considered by financing institution in financing. These are heterogeneity, indivisibility of supply cost of transfer, special problem of arrangement, special risk perpetuity imperfect knowledge, decentralized market government intervention and ability to create interest. These attributes makes financing institutions to protect their interest at the expenses of the developers. The developers on the others hands often have to take risk especially from its inelasticity of supply and government regulating finance is the process of obtaining funs or capital general  for the purpose of supporting a development or investment  by giving control over assets. Mortgage is of several types based on security and repayment currently. There are two types of mortgage arrangement in Nigeria. These are legal mortgage and equitable mortgage. Legal mortgage pertains to a deeds executed a borrower (mortgage). Changing the titter to land deposited as security to be held by the lender (mortgage). Unit the loan is filly repaid. The advantage of legal mortgage is that, mortgage can transfer in interest. (legal title ) as the case of auction of instance without resources is the count, with equitable the mortgage  has no legal estate or interest.

EQUITABLE MORTGAGE CAN BE CREATED BY

1. Deposited  of tilled deeds
2. Deposits of unperfected mortgage deeds and
3. On the fact that interest passed is initially equitable interest equitable resources of loan able found available to mortgage market include, saving  by individuals  business or government either in bank or person finds insurance premiums, repayment on existing loans and the reserves of commercial banks.

THEORETICAL FRAME WORK The forms the vital aspect  of this chapter why because related literature will be reviewed and also to set the theoretical frame work that would provide the required under pinting for earlier thesis, relative to this study for this purpose it is divided into several sections as follows mortgage banking in Nigeria mortgage loans function of mortgage institution types of loans offered by mortgage institution operational policies role of other financial institution in housing development and finally the problem of financial housing in Nigeria.

MORTGAGE BANKING IN NIGERIA In discussing financial institution it is used to speak of money and capital markets. Although these markets are closely interwoven yet we can differentiate between the two. The money market provides short term finance that is loans with less two years maturity in market consist of the following institutions.

1. Commercial Banking (i.e. joint banks)
2. The discount house
3. Merchant band and acceptance  house
4. Hire – purchase fruit
5. Financial companies.

The capital market provides long term loans with more than 20 years maturity the main different between money and capital market is that while the former provider short term loans the letter provides for long term loans.

The capital market comprise of

1. Issuing house
2. Insurance companies
3. Investment  trust
4. The stock exchange

From the classifications the mortgage institution fells within the capital markets which provide long term loans for development purposes and since the major concern of the study is centered on mortgage banking there is the need to elaborate more on mortgage finance.

Institutions which are often referred to a mortgage banks. They do not sell shares but they accept capital on which interest is paid. They lend to acceptable borrowers to build house of their own. The greater their deposits the more they can lend. There fore they encourage saving by providing attractive method of house ownership. Prior to the mortgage institute decree 3  of 1992 Nigerian housing  finance  system was severally  underdeveloped and its equipped to mobilized and channel saving to the housing sector. T he promulgation of the decree is informed by need to promote the national evolution of institutional structure to accelerate the development of financial intermediation within the housing delivery system.

Through the development of appropriate financial instruments, the ultimate aim is to encourage and enhanced the level of resources mobilization to support a creditable housing delivery system to serve all Nigeria. Given the increasing population grow organization and the concomitant demand for housing services as well as the limited resources available for response copies with demand for response copies with demand for housing, present complicated challenges with many dimensions. Its dimensions are not only financial and administrative but also technical economic and political. The financial dimension relates to the limited resources available. The share sensitiveness of housing as in issue of common concern presents administrative and political implications the technical feasibility of providing affordable finance to the low income group at current level of cost demand, struck economic management. It is challenge to which the mortgage finance system must respond for the socio-economic growth of the country.

The Federal mortgage bank of Nigeria (FMBN) is designated in decree 53 of 1989 as the apex mortgage institution. This role primarily delivered from decree 7 of 1977 by which the FMBN from decree of 1977 by which the FMBN was established and mandated to inter-alia, promote establishment and supervision of the activities of the primary mortgage institution (PMS).

MORTGAGE LOANS The housing hand bank 1991, defined mortgage as “an instrument recognized by law, by which properly is given up as security, without the necessary of giving up possession of it fir the payment of a debt or obligation. When a mortgage is created, you had creates a loan that is used to finance the purchase construction, completion or improvement of a house: the house is in turn held as security for the loan. Mortgage loan genially are a specialized form of customer and commercial lending. They are mainly always secured by real estate and the majorities are no long term basis that is the loan are secured by mortgage over land or landed properly.

The true purpose of a mortgage loan is finance the acquisition or substantial improvement of real property. However, real estate can also be pledge to secure obligation. In curried for other purpose in such cases the real purpose rather than the form of collateral such as certificate of occupancy (c/o) should determine the term of payment gives and also dictate companies and building social. When the property is changed to o mortgage the interest in the property to which possession of the property remain with mortgage (the borrower).

The mortgage has the right to use the property mortgage and to receive rent if it is land or building. But he will allowed disposing the property as the interest in the property is vasted in the mortgage. The residential mortgage are generally considered more desirable and popular because or dwellers. Construction mortgage are short term loans that may lead to long term commitment. While the commercial mortgages are often loans in disguise in which case they are treated as such furthermore there are legal as well as equitable mortgage. The legal mortgage convey by  deed the legal estate in the property to mortgage the subject to the mortgages redemption right in the legal mortgage borrower is allowed to repay the loan with interest over long period of years monthly on quarterly basis by regular installment. The F.M.B.N. operates the legal mortgage while other mortgage institution (PMS) operates equitable mortgages.

FUNCTION OF MORTGAGE INSTITUTIONS The primary function of the mortgage institution is centered on housing financing. Housing financing in Nigeria has a two tier arrangement, with the federal montage bank of Nigeria (FMBN) as the apex montage institution on one hand and the multiplication of primary mortgage institution (PMIS0 on the other hand. The FMBS and PMIS performs specific function as backed and required of them by the mortgage institution decree no. 53 of 1989, national housing fund decree no. 3 of 1992 and the federal mortgage bank of Nigeria decree no. 82 of 1999 according the FMSN perform the following function.

1. The provision of long – term credit facilities, to mortgage bank for onward sending to individual in the society at the rate and terms as might be determined by the broad in accordance with the federal government policies guiding institution.
2. It encourages the development and promotion of mortgage institution at state and nation levels.
3. The supervising and control of the activities of mortgage institutions in accordance with such directors as may be given from time to time by federal government of Nigeria.
4. The provision with the approver of the minister at competition commercial rate of interest credit facilitates to commercial property development estate develops and other specialized types of building.
5. Formation of guideline requirement and other condition for licensing mortgage institution.
6. Determination of the statutory and mandatory level of deposit by the mortgage institution in federal mortgage bank more Nigeria.

MORE SPECIFICIALLY, THE PMS PERFORMED THE FOLLOWING FUNCTIONS.

Obtaining fund from their .....