A mortgage financing system is a system aimed at relieving real estate companies from tying up a lot of capital in land as a non-current asset through clients gaining financial support from financial institutions. Land being unlimited and mobile resource, it can change possession and ownership, this therefore calls for automating a system that will enable a financial institution pay a lump sum at ago to a real estate company as a way of securing property as the client pays back to the financial institution in installments inform of loan servicing within a given time scope after which the client is entitled to full ownership of the property.
Housing Finance Bank Uganda was incorporated in 1967 on December 7th as Housing Finance Company Ltd, exclusively doing the mortgage business and for a long time enjoyed monopoly in the market. Later on went on to acquire a commercial bank license on 9th November, 2007 and finally became a fully fledged Commercial Bank on the 2nd of January, 2008.
The shareholders of Housing Finance Bank include: National Housing & Construction Company (0.82%), National Social Security Fund (50%) and the government of Uganda (49.18%) with authorized and paid up capital of Ugx 61,000,000,000 ( Sixty One billion Uganda Shillings)
Owning land or buying a home is the embodiment of a dream of any mankind who seeks to be self reliant. However, this hasn’t been the case because only 4 amongst 10 Ugandans own land or their homes. This is because very few people have enough cash to buy a home or land in a lump sum.
Financial institutions are limited of services as they are empirically known for keeping safe custody of client’s valuable items, foreign exchange services, trading in securities, credit creation from deposits and interests. However, they need to increase their cash float by rendering diverse qualitative and quantitative services such as partnering in viable joint ventures with real estate companies that could eventually increase their investment cash-flows.
The problem real estate company’s face is that they operate with inadequate working capital yet they own fixed assets that’s to say large chunks of land, already built up homes that could be liquidated through mortgaging hence increasing investment cash-flow which is not the case as the existing full payment system prolongs the property liquidation time lag where the property ends up under-utilized or lying redundant not until the client pays the lump sum at ago.
To develop a system that can act intermediary between low income earners interested in acquiring land/home from real estate companies and financial institutions willing to offer financial support by paying a lump-sum to the real estate company as the client services the loan in installments as is entitled to full ownership and possession when the loan is dully settled.
1. To investigate and analyze the existing system.
2. To design a prototype of the system.
3. To implement the prototype.
4. To test and validate the system.
This system will be limited to clients of Housing Finance Bank and National Housing & Construction Company. The design will take four months, from December to March. The research will be carried out through observation of the procedures of securing a mortgage and interviews conducted on the feasibility of the system and how it will meet the business need. The language that will be used is PHP and mysql server database management system.
The system will ease securing of a safe mortgage by breaking the bureaucracies involved in the choking paperwork and reduce on the foreclosures associated by verifying the underlying information, providing a central source of information and tracking the mortgage loan from origination to securitization to pay off.
The system will attract masses to indulge in mortgage-backed securities as it relieves the client from cut-throat property full payment.
In order to achieve the specific objectives above, the following set of methods will be used for development of the system.
Observation where policies, procedures undertaken by clientele to secure a mortgage in a bank will be keenly followed to ascertain the truthfulness of what exactly happens hence providing a pro-active stance in my study.
Design will be done and achieved through the use of entity relationship diagrams that will be able to show the relations between entities. Data flow diagrams will also be used to show the flow of data in the system.
Implementation of the design prototype will be achieved through the use of hypertext preprocessor (PHP) and structured query language (mysql).
Testing will be achieved through checking for errors in the system whereas validation will be achieved through the running and debugging programs where sample data will be stored in the database and could be viewed by the use of structured query language.
In order to investigate and analyze the existing system, observation is a technique that will be used where policies, procedures undertaken by clientele to secure a mortgage in a bank will be keenly followed to ascertain the truthfulness of what exactly happens.
Interviews will also be used to collect information about the terms and conditions of securing a safe mortgage from the financial institution and the procedures undertaken in case a client has forfeited loan servicing. To explore the attitude towards the intention to develop a new system, telephonic interviews will be carried out to predict whether the system will help ease their work of monitoring the servicing of the loan by a client.
A study will be carried out on the existing system and the gap realized will urge me to develop an improved system that will enable the business effectively meet the business need.
Design will be carried out using data flow diagrams to show the flow of data and entity relationship diagrams to show the relationship between the different entities in the system.
In order to transform the design into a working system, the following languages will be used; structured query language that will enable the creation of the database written by oracle and the user interface will be linked to the database by the use of hypertext preprocessor (php).
TESTING AND VALIDATION
The prototype will be tested to check for errors through running and debugging programs.
Validation of the system will be done by entering data whose output is known to see if its submitted and if the specific objectives are being achieved.