Mortgage Valuation in Ethiopia: The case of Commercial Banks

Bishaw, Habtamu

dc.contributor.author	Bishaw, Habtamu
dc.date.accessioned	2021-08-06T12:48:45Z
dc.date.available	2021-08-06T12:48:45Z
dc.date.issued	2021-08-06
dc.identifier.uri	http://ir.bdu.edu.et/handle/123456789/12313
dc.description.abstract	Mortgage valuation has a substantial role in the mortgage lending process at the commencement of the loan, during the life of the loan, and at the end of the loan. However, in Ethiopia, the property valuation system is not developed for handling the mortgage valuation process. Besides, literature is scarce on mortgage valuation implementation in banks. Thus, this study aims to contribute to the empirical scarce literature on mortgage valuation in Ethiopian commercial banks. The study employed a convergent parallel mixed research design. Primary data were collected from valuers, loan officers, attorneys, and an officer through interviews and questionnaires while secondary data were obtained from laws, regulations, articles, and other relevant sources. Respondents were selected using snowball, purposive, and convenient sampling. The collected data were analyzed using descriptive statistics, thematic categorization, and narrative analysis. The study reveals that the valuation process does not incorporate key components of valuation and the valuation reporting does not show how the valuation is undertaken. The mortgage system in Ethiopia overlooks important rights of the mortgagor including anti-deficiency laws, mortgage rate determination, and redemption right. The application of a junior mortgage is also dependent on the needs of banks. Moreover, commercial banks undertake mortgage valuation without a consistent valuation basis and they predominantly adopt the cost approach. This can be the result of the absence of a legal framework, the absence of national regulatory institutions, and the employment of engineers without valuation degrees. In such cases, it is evident that governance in mortgage valuation is in question. The study also establishes that valuation inaccuracy in the form of undervaluation is prevalent, which is more than the conventional average from the literature. The imperfection of the property market, valuation methodology, and lack of data from the market are highly responsible for high valuation inaccuracy. To improve the malpractices of mortgage valuation in Ethiopian commercial banks the government should establish an independent institution that could have regulatory roles. Other valuation activities could be filled with market trading knowledge. Generally, a public-private partnership should be the basis for the development of a valuation profession that can apply its skill to market data and ensure that valuations are grounded in market evidence	en_US
dc.language.iso	en	en_US
dc.subject	Land	en_US
dc.title	Mortgage Valuation in Ethiopia: The case of Commercial Banks	en_US
dc.type	Thesis	en_US