The purport of this article is best introduced with a practical analogy. Let us imagine a country where 80% of Debtors (Mortgagors) do not repay the money loaned to them by financial institutions (Mortgagees) and where the civil court’s proceedings are largely cumbersome and time-consuming, which invariably favour the Debtor (Mortgagor). Will that kind of system not cripple the sector and, by extension, the country’s economy? Will this not negatively impact entrepreneurs and start-ups who have profitable projects? Will these entrepreneurs and start-ups ultimately not have limited access to loans when needed? In essence, will it not limit the provision and access of funding and capital from a prospective Mortgagee?

The major objective of a Mortgagee in a mortgage transaction is to fully recover the principal and interest on the date agreed by both parties for the repayment of the debt/loan while releasing the collateral back to the Mortgagor. Indeed, collateral, usually landed properties, is taken to secure the Mortgagee in instances where the Mortgagor defaults in the repayment of the loan advanced to him.

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Written by Olufe Popoola  for The Trusted Advisors

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