MITIGATING CRISES IN THE NIGERIAN BANKING INDUSTRY THROUGH EFFECTIVE APPLICATION OF PRUDENT MORTGAGE PRINCIPLES
ABSTRACT
This work identified non-performing loans as a major contributor to banking crisis. Albeit many loans were secured with mortgages, recovering them proved impossible owing to many factors which militate against realization of mortgage securities. This work therefore examined these factors that hinder realization of mortgage securities and proffered solutions to them in order to enhance debt recovery. The work discussed the canons of good lending; the factors that lenders should reckon with in deciding whether or not to grant a loan. It also discussed land mortgages with emphasis on statutes that have bearing on land mortgages. Mortgage of personal chattels, ships, companies‟ assets and shares were also discussed. Incidence of bank failures in different countries was discussed. The work adopted the doctrinal method of research; placing reliance on primary and secondary materials. The primary materials include legislation while the secondary materials include case law, text books, reports, and internet materials. The study found out that the slow judicial process in Nigeria is a serious challenge to realization of mortgage securities. The land Use Act‟s requirement of Governor‟s consent to alienation of land was also considered an albatross to mortgage transactions In Nigeria. The Auctioneers Laws‟ requirement that notice of sale of mortgage properties must be publicized before the sale can be valid was also found to be a bane to the realization of mortgage securities. Therefore, we recommended incorporation of Alternative Disputes Resolution mechanisms in mortgage deeds to reduce resort to litigation to settle mortgage related disputes. We also recommended exemption of mortgage transactions from the Land Use Act‟s consent provision. We further recommended that the courts give greater consideration to equitable principles in deciding mortgage disputes and refrain from literal interpretation of statutory provisions.