1.1 BACKGROUND OF THE STUDY
With the present proliferation of banks and finance houses in the country as well as the entry of the manners of people into the banking sector and the alarming number of distressed banks recorded in the early nineties, it is vital at this point to highlight the pre- requisite for good credit administration in Nigerian banking system. This will help to set out dynamic guidelines to bankers, financiers and students of banking profession and reduce to the nearest minimum the incidence of untold bad debt portfolio in the industry and curd possible banks failure in the system.
Owojori,(2011). Stated that mortgage institutions are the financial intermediaries between the savers of funds and the users of funds for the purpose of developing houses.
In Nigeria, there are primary mortgage institutions, which are set up to really cater for the need of providing loans and loan able instruments, either to individuals who are the customers, or corporate institutions who develop houses in large quantities in order to sell to the public.
Also, most of the deposit money banks have set up mortgage affiliates. The housing sector plays a critical role in a country’s welfare, as it directly affects not only the well being of the citizenry, but also the performance of other sectors of the economy. However, there are some lingering problems faced by mortgage. Institutions, the chief of it being the finance or availability of credits. This is because housing provision requires huge capital outlay, which is often beyond the capacity of the medium income or low income groups.
With due consideration to the importance of housing and the role played by mortgage institution, it is imperative that, there is an effective credit administration system that will enable eligible individuals have their own house thereby contributing to the development of the nation.
Ozili (2009), observed that the National housing trust fund is inadequate to meet the housing needs of its contribution. Further more, the condition laities for accessing loans are not affordable to the low income earners and the poor. Private financial institutions in Nigeria have recently started packaging mortgage loans to prospective home owners and property developers.
However, Mallo, D. (2010), observed that private financial institutions charge very high interest rate on credit facilities with very short repayment tenor.
Etudaiye, muhtar. F (2010), observed that, in most cases emphasis are placed on the security offered for loan and the insistence that recovery potential of credit should be from the projected cash flow.
This has led to the increase case of nonperforming credits. Zandi, M.(2011), observed that, the model account for observed patterns in housing consumption, ownership and portfolio allocations. He also opines that the loan structure is a quantitatively significance factor ion a household’s housing financial decision. However, he also observed, that, the mortgage structure preferred by a household is dependent on age and income and that loan products with low initial payment offer an alternative to mortgage with no down payment.
Mutual Alliance Mortgage Bank incorporated, on 20th August 1992 under the name Mutual Alliance Savings and Loans Limited (RC213814) with fully paid up share capital of N20 million.
The name of the bank was charged to Mutual Alliance Mortgage Bank Limited and re-incorporated in 1995 in accordance with mortgage, institution decree 53 of 1967.