Sustainable collateral valuation as panacea to poor mortgage loan recovery in Nigeria

Abstract

Value is the estimate of future benefits accruable to an asset. Much as a valuer is not required to be gifted in prophecy, his task demands diligence and foresight. The aspect of determining the market value of property and related assets as benchmark for credit facilities is perhaps, much critical in this respect. There abounds statistics of mortgaged collateral properties that were found at the point of mortgage foreclosure, to be worth much below expectation and at some extremes, even less than their quoted values at the creation of the mortgage several years earlier. This has invariably, contributed significantly, to the collapse of many Nigerian banks and with similar reports from the financial crisis that sprang up in the United States of America last decade. Several factors have been responsible for this. This paper is in two parts. The first undertakes empirical study of common challenges confronting efficient mortgage valuation activities in Nigeria, using purposive sampling by way of case analysis of historical data on selected mortgage transactions. The other part focuses on position discourse on sustainable value analysis to accompany expressed opinion of value on property assets to be used as collateral for mortgage loans. This sustainability of value is not interchangeable with, but complimentary to the more popular concept of property sustainability.