Nigeria: Experts suggest solutions to housing loans default by pensioners

Zawya

29-04-2025

Affordable housing advocates have suggested way out of housing loans default by the retired civil servants.
Why some called on the government to convert the housing loans default by the pensioners to grants, others urged the authority to rework the mortgages of the affected by removing all interest charges, and grant waivers on a percentage of the outstanding.
The advice followed the announcement by the Federal Government that it will begin seizure of properties from retired civil servants who defaulted on housing loan repayments in a move aimed at enforcing accountability and recovering public funds.
The Federal Government Staff Housing Loans Board (FGSHLB) revealed this development recently through its Head of Information and Public Relations, Mrs. NgoziO biechina, in Abuja.
According to the Executive Secretary of the Board, Mrs. Salamatu Ahmed, the decision followed a directive issued by the Office of the Head of the Civil Service of the Federation, which emphasized the importance of obtaining a Certificate of Non-Indebtedness as a mandatory requirement for retirement from the public service.
'The Federal Government will commence the seizure of mortgaged properties belonging to retiring federal public servants who have failed to fully repay housing loans obtained from the board,' Ahmed stated.
She stressed that the FGSHLB retains the legal authority to repossess such properties based on the terms of the loan agreements, in accordance with Public Service Rule 021002 (p). The rule mandates all retiring public servants to present proof of full loan repayment before exit from service.
The board is currently compiling a list of retirees with outstanding housing loan debts, which will be forwarded to relevant government agencies for enforcement and recovery actions.
Ahmed also warned that this policy is not limited to newly retiring officials but also applies to those who have already exited public service but remain indebted.
Affected individuals are advised to urgently regularize their loan status and obtain the necessary clearance certificates to avoid asset forfeiture.
Reacting to the government's position on the platform of Housing Development Advocacy Network (HDAN), Lagos-based estate surveyor and valuer, Mr Olufemi Oyedele, advised the authority to convert the loans to grants.
He said, 'That retired civil servants cannot pay their housing loans is a default in 'government efficiency'. It is sacrosanct that the people in a country should be housed.'
According to him, getting loan to build a basic house should be a sieve as everybody should have one either with loan or as a gift.
Oyedele said, 'The loans should be converted to grants. Every man has a right to decent living, including housing rights, according to Chapter 4 of the 1999 constitution of the Federal Republic of Nigeria. Anything short of writing off the loan is wickedness and executive rascality!'
Executive Director, HDAN Mr Festus Adebayo, corroborated Oyedele, saying:' I support the motion that the housing loan should be converted to grants.'
Another expert, Adewunmi Okupe, an architect, pointed out that loans default usually happens when the mortgage is not affordable.
From inception, he said the authority knew that the deductions from pensioners' salaries could not effectively pay the mortgage.
'Those who took mortgage are expecting some magic from somewhere to help them out,' he said.
He took another dimension to the issue, saying some of the affected civil servants took loans and built houses that are beyond their income.
'Civil servants build duplexes, block of four flats, and so on at costs that their salaries cannot afford,' he said
He advised that it's high time people got a design and build at costs that are affordable by respective income levels
'Let us design and build at costs that are affordable by respective income levels so that we can stop this national embarrassment,' he said
On the way out, Okupe suggested to the government to rework the mortgages of the pensioners affected by removing all interest charges, and granting waivers on a percentage of outstanding in such a way that one-third of their monthly pension can effectively be used to offset the outstanding.
Another expert who identified himself simply as 'Evocati' blamed the FGSHLB for the defaults.
He said, 'The fault rests squarely on the FGSHLB who created the loans to spill into retirement for the civil servants.'
Loans, especially mortgage, he said, were booked based on current verifiable income, and not on wishful thinking or hope of some future windfall.
According to him, the agency should have limited each civil servants loan to what he can repay with 1/3 of his salary within the period left in service regardless of the magic being expected to happen.
If this method had been followed, he said the mess would have been avoided.
'I support the recommendation for the re-working of the mortgage and some concessions from the government to enable the pensioners to pay conveniently,' he said.
Oyedele gave two reasons why mortgage can't work in Nigeria: high rate of employment and high rate of corruption.
'Mortgage is not a practice where so called primary mortgage institutions get grant or allocation at lower rate from government and give it out to the privilege few at higher rate than procured. Mortgage housing fund accessed from a pool of fund from people who are willing to procure house and have contributed into the pool. The attraction is a guarantee of getting loan as a contributor and not the interest rate on their deposit which is usually lower than the average interest of the capital markets of the nation,' he said.
Oyedele suggested three factors that are needed to make mortgage system work in Nigeria: Reduction in corruption, increments in minimum wage, and application for rule of law.
According to him, there would be a need to reduce corruption across board, especially at the highest level of administration.
'If a Senator on N15 million per month and N1.8 billion per annum procure a house of N2.2 billion after spendings a year in the Senate without loan and nobody is raising eyebrow, then mortgage cannot work. Mortgage shouldn't be the recourse of the poor and the less-influential in the society,' he said.
He called for the need to increase minimum wage and reduce maximum wage to make mortgage work in Nigeria.
He said, 'The disparity in salaries of workers in Nigeria is so high that some salaries earners can build their own houses without assistance or support while majority of Nigerians cannot. The strong do not see anything wrong in the system.'
He also suggested that the rule of law must be adopted to make mortgage work.
'Without rule of law, no system can work in the nation,' Oyedele said.
Okupe believed that mortgage can work with civil servants if the houses being mortgaged come at affordable prices with respect to their mortgage affordability since the repayment will be deducted from source.
'Repayment should be restructured to end before pension starts or a portion of the gratuity can be used to pay whatever balance is left,' he said.
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