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Section 1 - Establishment Of National Mortgage Financing And Guarantee Scheme

There is hereby established a National Mortgage Financing and Guarantee Scheme (in this Decree referred to as "the Scheme").

Section 2 - Objects Of The Scheme

The objects of the Scheme are:-

(1) to promote the financing of the construction of dwelling houses by private individuals for their personal occupation including the financing of the making of extensions and renovations to dwelling houses;

(2) the financing of the construction of dwelling houses by organisations engaged in the business of building dwelling houses for sale or letting out to individuals for their occupation;

(3) the provision by the Bank of Ghana, in this Decree referred to as the "Bank" of an indemnity in respect of losses incurred by financial institutions participating in the Scheme arising out of defaults in payment of loans granted by them under the Scheme;

(4) the establishment by the Bank of a secondary mortgage market with a view mainly to providing for the liquidity when required of any financial institution participating in the Scheme.

Section 3 - Qualification For Loan

(1) Subject to the provisions of this Decree, an individual shall not be qualified for a loan under the Scheme unless:-

(a) he has been engaged for a continuous period not less than three years prior to his application for loan under the Scheme, in such employment as the Bank may from time to time prescribe proof of which shall be provided by him to the financial institution from which he seeks the loan;

(b) he provides from his own resources a contribution to the cost of financing the housing project in respect of which he seeks the loan to an extent not less than five per centum of the total cost of the housing project; and

(c) he has kept an account with the financial institution from which he seeks the loan for a continuous period not less than three years unless the financial institution agrees to accept a shorter period.

(2) An organisation shall not be qualified for a loan under the Scheme unless:-

(a) it is an organisation specified in the Second Schedule to this Decree, or prescribed by the Bank by executive instrument under section 35 of this Decree, and

(b) it provides from its own resources a contribution to the cost of financing the housing project in respect of which he seeks the loan to an extent not less than ten per centum of the total cost of the housing project.

Section 4 - Administration Of The Scheme

The Scheme shall be administered by the Bank, and the Bank shall set up a machinery for the effective administration of the Scheme.

Section 5 - Bank To Administer Scheme Through Specified Financial Institutions

(1) Subject to section 4 of this Decree, the Bank shall administer the Scheme through financial institutions specified in the First Schedule to this Decree.

(2) The Commissioner acting on the advice of the Bank may by legislative instrument, add to the list of financial institutions in the First Schedule or may delete the name of any financial institution from the First Schedule.

Section 6 - Mode Of Application For A Loan Under The Scheme

Any person or organisation wishing to apply for a loan under the Scheme shall apply in writing for application forms to any one of the financial institutions specified in the First Schedule to this Decree.

Section 7 - Rate Of Interest

The rate of interest payable on a loan granted under the Scheme shall be two per centum above the current savings deposit rate of interest per annum on the reducing balance of the loan.

Section 8 - Terms Of Loan Granted Under The Scheme

(1) The amount of loan granted shall not exceed 95 per centum of the total estimated cost of the housing project or 90 per centum in the case of loans obtained by an organisation referred to in section 3(2) of this Decree.

(2) the applicant shall enter into a loan agreement with the financial institution.

(3) The applicant shall, in addition to any other terms which the financial institution considers prudent, undertake in the agreement referred to in subsection (2) of this section

(a) to keep in good repair the property used as security for the loan;

(b) take out in respect of the loan or property which has been acquired with the proceeds of the loan or both, such insurance policy or policies with such insurer and on such terms and conditions as the Bank may approve;

(c) to repay the loan in accordance with the loan agreement.

Section 9 - Security For Loan

Where a loan is granted under the Scheme security for the loan shall be provided as follows:-

(a) the property in respect of which the loan is granted shall be mortgaged to the financial institution;

(b) the title deeds and mortgage deeds relating to the property, duly stamped and registered shall be deposited with the financial institution.

Section 10 - Form Of Mortgage Agreement

A mortgage agreement under this Decree shall be in such form as the Bank may from time to time prescribe acting in consultation with the Attorney-General.

Section 11 - Disbursement Of Loan

(1) Where the loan granted is intended for the acquisition of an existing dwelling house, the purchase price shall be paid by the financial institution direct to the vendor on the basis of a certificate issued by a valuer approved by the financial institution.

(2) Where a loan granted is intended for the construction of a new dwelling house by a contractor, the property shall be constructed by a contractor approved by the financial institution.

(3) The financial institution shall release to the Borrower's contractor direct not more than twenty per centum of the amount of the loan after the Borrower has committed to the cost of physical development on the site the minimum contribution required from him under section 3 of this Decree.

(4) The Borrower shall submit subsequent requests for funds to the financial institution which shall vet such requests on the basis of a certificate issued by a valuer approved by the financial institution on the work done before releasing funds for the housing project and any sums approved under this subsection shall be paid direct to the Borrower's contractor.

Section 12 - Payment Of The Loan

(1) In the case of a loan which has been granted for the purchase of an existing house, repayment of principal and payment of interest shall, unless otherwise agreed between the borrower and the financial institution commence one month after the date of the drawing on the loan amount.

(2) In the case of a loan which has been granted for the purpose of building a new dwelling house, repayment of principal and payment of interest shall, unless otherwise agreed between the borrower and the financial institution, commence nine months after the date of the first drawing on the loan or two months after completion of the construction of the dwelling house whichever is earlier:

Provided that notwithstanding anything in this subsection interest shall, in a case to which this subsection applies, accrue on any part of the loan released for the purpose of building the house from the day of such release and such interest shall be paid at such time, in such instalments and in such manner as may be agreed between the financial institution and the Borrower.

Section 13 - Mode Of Payment

The loan and interest thereon shall be paid by the Borrower to the financial institution by monthly instalments or in accordance with any other arrangement agreed between them.

Section 14 - Period Of Repayment

The period of repayment of any loan and payment of interest thereon shall not be less than ten years nor more than twenty-five years in the case of any particular class of loan except where the Bank otherwise directs.

Section 15 - Special Terms For Organisations

(1) Subject to the provisions of this Decree, where an organisation which is engaged in the construction of dwelling houses for sale, obtains a loan for such purpose the Bank may provide for such special terms and conditions as it deems fit in any agreement or mortgage relating to such loan.

(2) The Bank may in particular, and without prejudice to the generality of subsection (1) of this section, provide for the inclusion of a term in any agreement or mortgage referred to in that subsection to the effect that notwithstanding the provisions of section 12 of the Mortgages Decree, 1972 a transfer by sale of any dwelling house under the Scheme shall relieve the organisation effecting the transfer of its personal liability on any covenant in the mortgage and for the transfer of such liability to the transferee, and such condition shall have effect accordingly.

(3) Subsections (2) and (3) of the said section 12 shall be deemed to be modified to the extent necessary to give full effect to any condition imposed by virtue of subsection (2) of this section.

Section 16 - Bank To Provide Indemnity Against Non-payment Of Loan And Interest

The Bank shall provide an indemnity of 95 per centum of any loss incurred by a financial institution as a result of the default of a mortgagor in the payment of the principal of the loan and interest.

Section 17 - Commission In Respect Of Indemnity

In respect of the indemnity afforded to any financial institution by the Bank under section 16 of this Decree the financial institution shall pay to the Bank monthly, a commission at the rate of one-half of one per centum per annum on the balance of the loan for the time being outstanding which amount shall be deemed to be part of the interest payable by the Borrower under section 7 of this Decree.

Section 18 - Insurance Act Not To Apply To Indemnity Provided By Bank

For the removal of doubts, the Insurance Act, 1965 (Act 288) shall not apply to an indemnity granted by the Bank under section 16 of this Decree.

Section 19 - Default In Payment

(1) Where the mortgagor fails to make an instalment payment fourteen days after the due date for such payment, the financial institution shall draw the attention of the mortgagor in writing to this fact and demand urgent steps to be taken to remedy such default by the mortgagor.

(2) If no payment is made and the immediately following month's instalment also falls into arrears the financial institution shall send to the mortgagor a demand note in the prescribed form for the immediate payment of the total amount which has fallen into arrears.

(3) A copy of the demand note shall be forwarded to the Bank.

(4) The demand note shall be delivered either by hand and a receipt acknowledged in writing by the mortgagor, or shall be sent by registered mail to the address provided by the mortgagor, and where the latter method is used the demand note shall be deemed to have been received by the mortgagor at the time at which it would have been delivered in the ordinary course of post.

(5) If a settlement of the arrears is not made after the date of issue of the demand note and the mortgagor does not make a satisfactory arrangement with the financial institution for the settlement of the amount outstanding, the mortgagor shall be regarded to be in default as soon as the fourth succeeding month's instalment also falls into arrears.

Section 20 - Financial Institution To Inform The Bank In Case Of Default

Where the mortgagor is in default under subsection (5) of section 19 of this Decree in respect of which default an indemnity is afforded by the Bank, the financial institution shall forward a claim in writing for the amount in default to the Bank.

Section 21 - Financial Institution To Transfer The Mortgage To The Bank

Where the Bank has paid to the financial institution ninety-five per centum of the outstanding balance on the loan the financial institution shall transfer the mortgage in respect of the loan and all documents relating thereto to the Bank.

Section 22 - Appointment Of Receiver On Default

(1) Upon failure of performance of an act or acts secured by a mortgage to which this Decree applies the mortgagee may appoint a receiver for the purposes of this section.

(2) A receiver appointed under this section may take possession of the mortgaged property and collect by demand, action in the name of the mortgagor or the mortgagee or otherwise, all income including arrears accruing from the mortgaged property, give valid receipts for all income collected and do any other act necessary or proper to manage the property including the making of reasonable repairs and improvements to the property to protect its value or to maintain or increase the income from such property.

(3) A receiver appointed under this section shall be deemed to be the agent of the mortgagor and the mortgagor shall be solely responsible for the receiver's acts or default unless the mortgage otherwise directs.

(4) A person paying money to the receiver shall not be concerned to enquire whether any case has happened to authorise the receiver to act.

(5) The receiver may be removed and a new one appointed at any time by the mortgagee in writing.

(6) For the removal of doubt the fact that a mortgagee has taken possession of property subject to a mortgage to which this Decree applies shall not prevent him from appointing a receiver under this section in respect of that property.

(7) A receiver appointed under this section shall be entitled to retain out of any money received by him for his remuneration, and in satisfaction of all costs, charges and expenses incurred by him as receiver a commission at such rate not exceeding five per centum on the gross amount of all money received, as is specified in his appointment and where no rate is so specified then at the rate of two and a half per centum of that gross amount or such other rate as the court may think fit to allow on an application made by him for that purpose.

(8) The receiver shall if so directed in writing by the mortgagee, insure to the extent if any to which the mortgagor might have insured and kept insured against loss or damage by fire and other risks specified in the mortgage agreement out of the money received by him any building, effects, or property, comprised in the mortgage of any insurable nature.

(9) A receiver appointed under this section shall apply all money received by him as follows:-

(a) in discharge of all rents, taxes, rates and other required outgoings affecting the mortgaged property;

(b) in payment of all annual sums and other payments, interest on all principal sums, due and having priority to the mortgage in right whereof he is a receiver;

(c) in payment of his commission and of premiums payable in accordance with the mortgage and the cost of effecting necessary repairs;

(d) in payment of all interest accruing due in respect of any principal money due under the mortgage;

(e) in or towards the discharge of any principal money due under the mortgage if so directed in writing by the mortgagee;

and shall pay the residue if any, of the money received by him to the person who but for the possession of the receiver would have been entitled to receive the income of which he is appointed receiver or who is otherwise entitled to the mortgaged property.

(10) Any person who in any way whatsoever obstructs a receiver duly appointed under this section in the discharge of his functions shall be guilty of an offence and liable on summary conviction to a fine not exceeding c1,000.00 or to imprisonment not exceeding six months or to both; and in the case of a continuing offence, to a further fine not exceeding c20.00 for each day on which the offence continues.

(11) Section 16 of the Mortgages Decree, 1972 shall not apply to any mortgage to which this Decree applies.

Section 23 - Mortgagee's Right To Possession

(1) In the exercise of his right of possession under section 17 of the Mortgages Decree, 1972, the mortgagee under a mortgage to which this Decree applies shall not be obliged to take any court proceedings; and where he is unable to enter and take possession peaceably, he may use such reasonable force as may be necessary including, but without prejudice to the generality of the foregoing, the use of the services of the police for the eviction of the mortgagor or other person.

(2) Any person who-

(a) fails without reasonable excuse, proof of which shall be on him, to vacate any premises which is subject to any mortgage to which this Decree applies upon his being duly requested so to do under subsection (1) of section 17 of the Mortgages Decree and of this section, or

(b) obstructs a mortgagee in the exercise of any power conferred on him by this section,

shall be guilty of an offence and shall on summary conviction be liable to a fine not exceeding c1,000.00 or to imprisonment not exceeding six months or to both; and in the case of a continuing offence, to a further fine not exceeding c20.00 in respect of any day on which the offence continues.

Section 24 - Sale Of Mortgaged Property Upon Default

(1) Upon failure of performance of an act or acts secured by the mortgage the mortgagee under a mortgage to which this Decree applies may sell or cause to be sold the mortgaged property.

(2) A sale of any mortgaged property under this section may be by public auction or private contract and shall otherwise be subject to such conditions as the Bank may determine.

(3) A mortgagee who wishes to exercise his power of sale under this section shall give reasonable notice of the sale to the mortgagor and every encumbrancer of whom he has notice.

(4) The Bank may prescribe in respect of the failure to perform all or any class of acts what period is considered reasonable for the purpose of subsection (3) of this section so however that in the case of default in the payment of principal or interest or both the notice shall be not less than sixty days.

(5) Where a mortgagee has in exercise of his power of sale under this section sold or caused to be sold the mortgaged property to another person the title of the purchaser shall not be impeachable on the ground-

(a) that no case has arisen to authorise the sale; or

(b) that the notice required under subsection (3) has not been given; or

(c) that the power of sale was otherwise improperly or irregularly exercised; but the mortgagee shall be personally liable for any loss caused by that sale being carried out in any or all of the foregoing circumstances.

(6) Neither the mortgagor nor any encumbrancer is precluded from purchasing the mortgaged property at a sale under this section:

Provided that a mortgagee at whose instance the sale was made shall not have the right to purchase the mortgaged property except where the sale is carried out at a public auction or where it is carried out by a private contract approved by the mortgagor and all the encumbrancers or approved by the Court.

(7) The mortgagee exercising his right of sale under this section may convey to the purchaser the whole of the interest of the mortgagor in the mortgaged property.

(8) The purchaser of the mortgaged property under this section shall take title to the said property free of all interests to which the mortgage of the mortgagee who caused the sale has priority and free of that mortgage but subject to all interests which have priority to that mortgage and shall be entitled as against any person to all the documents relating exclusively to the mortgaged property other than those title documents held by a person with an interest having priority to the mortgage of the mortgagee who caused the sale.

(9) The proceeds from a sale under this section shall be held in trust for distribution by the mortgagee who caused the sale.

(10) Proceeds from a sale under this section shall be distributed first, in payment of all expenses properly incurred as incident to the sale or any prior attempted sale, secondly, in payment of all sums secured by the mortgage or with the same priority as the mortgage, thirdly, in payment in the order of priority of any encumbrances subsequent to that of the mortgagee who caused the sale and the residue to the mortgagor or his successors in interest.

(11) For the removal of doubt it is hereby declared that a mortgagee on whom a right of sale is conferred by this section shall not be deemed to be a trustee of the mortgagor in respect of that right.

Section 25 - Where 75 Per Cent Of Loan Has Been Paid Possession Or Sale To Be Through Court Proceedings

Notwithstanding anything in this Decree where at least 75 per centum of the total loan amount has been paid or tendered by or on behalf of the borrower the financial institution shall not enforce any right to recover possession of the premises or its right of sale otherwise than by court action.

Section 26 - Secondary Mortgage Market

(1) The Bank shall for the purposes of the Scheme establish and operate under section 13 of the Mortgages Decree, 1972 a secondary mortgage market at which any mortgages to which the Scheme applies may be sold, purchased, transferred or accepted.

(2) A transfer of a mortgage to which the Scheme applies may be made only between the Bank and a financial institution or between a financial institution and another such institution.

(3) Where in order to enhance the liquidity of a financial institution that institution requests the Bank to purchase any mortgage held by it the Bank shall comply with such request.

(4) A financial institution shall not under this section sell or transfer more than fifty per centum of the total value of all mortgages held by it at any particular time and in respect of which an indemnity is afforded by the Bank under section 16 of this Decree.

(5) The price payable for a mortgage sold or transferred by a financial institution under this section, or taken over by the Bank at the request of the financial institution under subsection (3) of this section shall be the outstanding balance of the loan and interest at the time of such sale or transfer.

Section 27 - Obligations Of Financial Institution After Transfer To Bank

(1) In the case of a transfer of a mortgage by a financial institution to the Bank, the financial institution making the transfer shall for a fee of one half of one per centum per annum on the reducing balance of the loan, perform the following functions:-

(a) collect the monthly instalments due from the mortgagor and pay such instalments to the Bank;

(b) continue to operate an escrow account in respect of the mortgagor as referred to in section 28 of this Decree for the benefit of the Bank;

(c) report promptly to the Bank any default by the mortgagor on repayment of the monthly instalments;

(d) furnish to the Bank such other information and returns as the Bank may reasonably request.

(2) The fee of one half of one per cent shall be realised by the financial institution by deducting the amounts from the monthly interest payment received from the mortgagor before remitting the amount to the Bank.

Section 28 - Escrow Account

A financial institution which has granted a loan under this Decree any part of which or interest on which remains unpaid shall, unless the Bank otherwise directs, maintain in respect of the Borrower an account separate from the account through which the loan and interest thereon is paid to be known as an "escrow account" through which all payments shall be made by the Borrower to the financial institution of moneys advanced by the financial institution to or on behalf of the Borrower towards meeting expenses in respect of insurance premiums, rates, repairs and all other reasonable charges relating to the mortgaged property.

Section 29 - Rates

Where any mortgagor under a mortgage to which this Decree applies fails to pay any property rates due in respect of the mortgaged property the mortgagee may pay the rates and moneys so paid shall be secured with the same priority as the mortgage and shall be added to the principal sum with interest at the same rate as on the principal sum.

Section 30 - Section 15 Of NRCD 96 Modified

Subject to the provisions of this Decree upon failure of performance of an act or acts secured by a mortgage to which this Decree applies the mortgagee may exercise all or any of the rights referred to in section 15 of the Mortgages Decree, 1972 or conferred by this Decree and accordingly the words "and in no other way notwithstanding any provision to the contrary in the mortgage" appearing in paragraph (b) of the said section shall not apply to a mortgage to which this Decree applies.

Section 31 - Section 21 Of NRCD 96 Disapplied

Section 21 of the Mortgages Decree, 1972 (NRCD 96) shall not apply to any mortgage to which this Decree applies.

Section 32 - Mortgagor's Right To Transfer Restricted

A mortgagor under a mortgage to which this Decree applies shall not transfer any interest in the mortgaged property under section 12 of the Mortgages Decree, 1972 (NRCD 96) without the consent in writing of the mortgagee.

Section 33 - Penalty For Using Loan For Unauthorised Purpose

Any person who, being a person to whom a loan is granted under this Decree uses the whole or part of the proceeds of the loan for any purpose other than the purpose for which the loan is granted, shall, without prejudice to his liability to repay the loan and to pay interest thereon, be guilty of an offence and shall, on summary conviction, be liable to a fine not exceeding ¢5,000.00 or to a term of imprisonment not exceeding twelve months or to both.

Section 34 - Offences By Bodies Of Persons

Where an offence under this Decree or under any rules made thereunder is committed by a body of persons then-

(a) in the case of a body corporate, every director and officer of the body corporate shall be deemed to be guilty of the offence; and

(b) in the case of a partnership, every partner or officer of the body shall be deemed to be guilty of the offence:

Provided that no such person shall be deemed to be guilty of the offence if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of the offence having regard to all the circumstances.

Section 35 - Rules

The Bank may, by executive instrument, make such rules as may appear to it necessary for the efficient implementation of and otherwise for giving full effect to the provisions of this Decree.

Section 36 - Mortgages Decree To Apply Except Where Otherwise Provided

Except as otherwise provided in this Decree the Mortgages Decree, 1972 (NRCD 96) shall apply to a mortgage under this Decree.

Section 37 - Interpretation

In this Decree unless the context otherwise requires-

"amount in default" means any amount in respect of a loan granted under this Decree remaining unpaid as a result of the mortgagor's failure to make the necessary payments required by the terms of the mortgage including overdue interest and other charges recoverable in accordance with normal banking practice, so however, that the total amount in default for the purpose of computation of the claims shall not exceed the total amount of the loan in respect of which indemnity has been furnished by the Bank;

"Bank" means Bank of Ghana;

"Borrower" means a person who has taken a loan under the Scheme;

"Commissioner" means Commissioner responsible for Finance;

"demand note" means a notice to the mortgagor demanding the arrears due;

"escrow account" means the account described in section 28 of this Decree;

"housing project" means a project in respect of which a loan is to be or has been granted under this Decree;

"financial institution" means an institution specified in the First Schedule to this Decree;

"prescribed" means prescribed by the Bank;

"valuer" includes a quantity surveyor.