Regulatory Alerts2019-11-25 | FPR/DIR/GEN/CIR/07/041Regulation for the Operations of Mortgage Guarantee Companies (MGCs) in Nigeria
The Central Bank of Nigeria (CBN) issues guidelines for the operations of mortgage guarantee companies (MGCs) in the country. These guidelines outline the requirements for licensing, permissible and non-permissible activities, financial and corporate governance standards, and prudential regulations that MGCs must adhere to. The CBN has the authority to grant and revoke licenses, set minimum capital requirements, and approve appointments of board members and senior management. MGCs are responsible for providing guarantees or partial guarantees to lenders against losses from borrower defaults on residential mortgage loans. They are also allowed to invest in government securities and assume ownership of foreclosed properties under certain conditions. The CBN sets capital requirements, including minimum paid-up capital, maximum leverage limits, and risk-weighted capital requirements. MGCs must maintain reserves to cover losses, unearned guarantee fees, and contingencies. The guidelines also cover reporting requirements, on-site examinations, and compliance with anti-money laundering and terrorism financing regulations.