Abstract
Utilization of secured lending valuations (SLV) by deposit money banks (DMBs) has not been sufficiently investigated in Abuja, Nigeria. Adequacy of the reports, factors influencing their use and how DMBs utilized them for loans were examined. Primary data collected from Estate Valuation (ESV) firms and DMBs were analyzed. Although the study showed that substantial portions of the report were adequate, crucial aspects such as valuation methods and value-opinions were not satisfactorily prepared. It also indicated that the poor perception of DMBs on valuation reports was the most critical factor that influenced their use. Value opinion, considered inadequate, was however sufficiently utilized. This inconsistency could lead to mortgage valuation failure in the city. The study recommends that valuation regulators should mandate ESVs to acquire periodic contemporary skills before their licenses are renewed. Lending regulators should similarly ensure that SLVs are processed by retained ESVs before utilization. Key words: Utilization, valuations, secured lending, Abuja, Nigeria.
Highlights
One of the essential roles of deposit money banks (DMBs) in Nigeria is the provision of financial support through secured lending to businesses that operate in the economy
The Estate Valuation (ESV) firms were asked to state the items of content of valuation report which “they never include (NI); rarely include (RI); occasionally include (OI); frequently include (FI); and always include (AI).”
The continued utilization of valuation report for lending by DMBs could have arisen from the fact that only NIESV members are statutorily allowed to carry out property asset valuation in Nigeria
Summary
One of the essential roles of deposit money banks (DMBs) in Nigeria is the provision of financial support through secured lending to businesses that operate in the economy. Secured lending by DMBs is regulated by the Central Bank of Nigeria (CBN) and moderated within the framework of the CBN Prudential Guidelines for DMBs (2010). The regulations mandate the ESVs to appropriately prepare the SLV reports for proper utilization by the DMBs in order to prevent mortgage flaws and valuation failure. Activities of DMBs on how they utilize secured lending valuations (SLV) reports in Northern Nigeria in Abuja, the federal capital city of Nigeria have not been adequately investigated in order to ascertain whether or not DMBs contribute to mortgage valuation failure. On the basis of the foregoing, a study on how DMBs currently utilize valuation reports for loan underwriting in Abuja with a view to providing information that could reduce lending risk in the city has become imperative
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