A mortgage bank is specifically set up for the purpose of providing long-term loans for building houses. E.g. Federal Mortgage Bank or Imani Mortgage Finance Ltd.
Functions of Mortgage Banks
Provision of long-term housing loans: They make loans to people and organizations who wish to build their own houses.
Acceptance of money deposits: They accept deposits from people and organizations, especially those who wish to save part of the money required for setting up their own houses.
Encouragement of the growth of industries which produce building materials: By encouraging the setting up of houses by individuals and organizations, there is a higher demand for building materials, this in turn encourages the industries’ output.
Provision of advice: They advise investors (those wishing to set up their own houses) on how to invest meaningfully how to raise capital, how to cut down costs etc.
Execution of government housing policies: They assist the government in its policies relating to the provision of houses e.g. The Federal Housing Scheme for Civil Servants and Federal Low Cost Housing Projects etc.