The Deputy Minister of Finance and Economic Development, Momodu Kargbo has applauded MPs when they approved the Home Mortgage Finance Act, 2009 which is an Act to regulate home mortgage financing, and institutions which carry on home mortgage financing and to provide for other related matters.
Reading a report to Parliament on the home mortgage finance Act, the deputy legislative committee chairman, Hon Dr. Bernadette Lahai explained that the Home Mortgage finance institution was a NASSIT sponsored pioneering-mortgage finance institution aimed at creating the enabling environment for individuals and groups to borrow and finance the acquisition of houses through a private limited liability company.
She said the Home Finance Company (HFC) Mortgage and Savings Limited was created to spread the cost thereof over a period of time through a longer term mortgage loans.
Dr. Lahai also explained that some amendments were made in the bill and that a situation where the mortgagor failed to make an installment payment after 14 days after the due date for such payment, the mortgage shall notify the mortgagor in writing of this fact to demand immediate steps to be taken to remedy such default by the mortgagor.
She further explained that clause 12 (2) of the bill was interpreted in tandem with the provisions of the 1991 Constitution for which they concluded that the clause was dangerous and contravenes the Constitution. And also even though the legal system was cumbersome in the country, the clause gave the mortgagee power to act outside the jurisdiction of the court.
Against that background, she explained the clause was amended to be that a mortgagee shall make expert application to the High Court for an order to re-enter and take possession of the mortgage property and an order from the High Court to enforce by writ of possession. She stated that both the mortgagor and the mortgagee have an insurable interest in the mortgaged property.
Speaking to the Press after the bill was passed, the deputy Minister gave an historical context of home mortgage as he said’ before then, there was no where one could go to secure a loan to build and buy a house there was no formal institution, there may be some informal arrangement and we felt at the ministry that the lack of a law was inhibiting people for this type of institution and organizations to develop. You know funding the construction or the acquisition of a house is not the same as doing a business or buying a car” He further explained that acquiring a house through a loan was a long term process and usually from his experience overseas, it can be anywhere from 25-30 years mortgage.
The deputy minister believed that mortgage business was a complex one but that the best way to understand it is the fact that “when you take a loan to build a house or buy a house is a much longer time to pay than to pay for a car or a refrigerator” He expressed optimism that the Act would alleviate some of the housing problems in the country and he added “it lays the housing foundation as there is housing shortage particularly in Freetown and all over the country.”