PenCom Sanctions Seven Mortgage Banks for Housing Loan Violations

The National Pension Commission (PenCom) has blacklisted seven mortgage banks in Nigeria for breaching regulatory guidelines on housing loan schemes tied to the Contributory Pension Scheme (CPS). The move, which industry experts describe as a bold step toward strengthening transparency and protecting pension contributors, underscores PenCom’s resolve to ensure that the housing component of the pension framework is managed in line with laid-down standards.

PenCom confirmed that the affected institutions were found guilty of various infractions, ranging from improper documentation to mismanagement of contributors’ Retirement Savings Accounts (RSAs) linked to housing loan withdrawals. The regulator explained that while the Contributory Pension Scheme allows workers to access a portion of their savings for residential mortgages, strict conditions must be met to safeguard contributors’ funds.

According to the Commission, the blacklisting of the banks follows extensive audits and compliance checks. Officials disclosed that the exercise revealed lapses in due diligence, violation of eligibility rules, and in some cases, failure to remit contributors’ repayments appropriately. These breaches, PenCom said, posed significant risks to both contributors and the overall sustainability of the pension scheme.

A statement by the Commission emphasized that pension assets remain sacrosanct and cannot be compromised under any guise. It further warned financial institutions involved in housing loan facilitation to adhere strictly to guidelines or face severe regulatory consequences. “The safety of contributors’ funds is paramount. Any institution that compromises this principle undermines the credibility of the pension system and will be sanctioned accordingly,” the statement read.

The affected institutions were named as Jigawa Savings & Loans Limited, FHA Mortgage Bank Limited, Delta Trust Mortgage Bank Limited, AG Mortgage Bank Limited, Infinity Trust Mortgage Bank Plc, First Trust Mortgage Bank Limited, and Mutual Alliance Mortgage Bank Limited. The letter concluded with the note: “Please be guided.”

The sanction comes at a time when the housing deficit in Nigeria remains a pressing challenge. The Mortgage Bankers Association of Nigeria estimates the deficit at over 20 million housing units, with demand growing annually. The Federal Government and private institutions have continued to push housing initiatives, with pension-backed mortgages introduced as part of reforms to give workers access to affordable homes. However, PenCom’s latest action highlights the risks that mismanagement could pose to the initiative if not properly regulated.

Industry stakeholders have largely welcomed PenCom’s decision, noting that it will serve as a deterrent to other institutions handling pension-related housing loans. Some, however, cautioned that the regulator must balance enforcement with the need to encourage more banks to participate in the mortgage sector, given its importance to bridging the housing gap.

Financial experts explained that under current guidelines, contributors with at least five years of consistent savings are allowed to use up to 25 percent of their Retirement Savings Account balance for equity contributions towards mortgage loans. To qualify, contributors must meet requirements including proof of employment, evidence of property purchase, and documentation with a licensed mortgage bank. Any deviation from these requirements, PenCom insists, threatens the integrity of the scheme.

A senior official in the mortgage sector who spoke on the development said: “The blacklisting is a necessary measure. Pension funds are sensitive, and misuse in any form must not be tolerated. It is better to have fewer compliant institutions than many that put workers’ lifelong savings at risk.”

Workers and pension contributors have also reacted to the development. While some expressed concerns about reduced mortgage options following the blacklist, others commended PenCom for prioritizing safety over convenience. Many emphasized that confidence in the system is more important than access to quick loans that might eventually be mismanaged.

Housing sector analysts believe that the blacklisting could push mortgage banks to strengthen internal compliance and risk management frameworks. They argue that in the long run, such measures will boost the confidence of contributors who wish to leverage their pensions for housing.

Meanwhile, PenCom has reiterated its commitment to broadening access to housing for workers under the Contributory Pension Scheme. The Commission assured contributors that it would continue to engage with compliant mortgage institutions to ensure the effective implementation of the pension-backed mortgage initiative. Officials also disclosed that fresh guidelines are being considered to tighten loopholes identified during the audit.

The development also places renewed attention on the role of the Nigeria Mortgage Refinance Company (NMRC), which works to provide liquidity to mortgage banks. Observers suggest that stricter collaboration between PenCom, NMRC, and the Central Bank of Nigeria (CBN) is needed to align housing finance policies with pension regulations.

For the blacklisted institutions, the sanctions mean they will no longer be recognized by PenCom as eligible partners in mortgage transactions under the CPS framework. Analysts note that reputational damage, in addition to financial setbacks, could follow, as contributors and employers are expected to shun non-compliant firms.

The broader implication of the move, according to economic experts, is that regulators across Nigeria’s financial services industry are adopting tougher stances on compliance. Just as the Central Bank of Nigeria has tightened rules on commercial banks, PenCom’s action signals that pension and mortgage operators must strictly adhere to standards or risk expulsion from the system.

As Nigeria seeks to balance pension safety with housing accessibility, PenCom’s enforcement underscores a critical message: contributors’ retirement savings are not negotiable. Going forward, the success of pension-backed housing loans will depend on the willingness of financial institutions to prioritize transparency, compliance, and accountability.

With this decisive action, PenCom has once again placed itself at the forefront of protecting workers’ funds, while reinforcing trust in the Contributory Pension Scheme as one of the most important social security reforms in Nigeria.