Mortgage Banks: Definition, Functions & Examples

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What is Mortgage Banks?

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.

Mortgage Banks
Mortgage Banks

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.