CBN Sets N6bn Minimum Capital Requirement for Mortgage Guarantee Companies

Central Bank of Nigeria (CBN) has set the minimum capital requirement of N6 billion for the operation of Mortgage Guarantee Companies (MGC) in the country. In an exposure draft posted on its website, it pointed out that the licensing of MGC would deepen the mortgage banking sub-sector, through increased market access to mortgage finance and sharing of credit risk with mortgage lending institutions by issuing guarantees to reduce or replace equity contribution that would otherwise disqualify mortgagors from accessing mortgage as required by the uniform underwriting standards. The regulation, among other things, stipulates the basic requirements for the MGC’s principal line of business of guaranteeing mortgages for lenders based on the security of residential mortgage assets and sets the capital requirements including minimum paid-up capital as well as permissible investments and liquidity requirements. Read More