Mortgage banks give loans to investors on a long term basics to_____________

Analyze the question: The question asks about the main purpose of loans that mortgage banks give on a long-term basis.

Explain the concept: A mortgage bank is a specialized financial institution that gives long-term loans for the purchase, construction, or renovation of real estate (land and buildings). The word "mortgage" means the property itself is pledged as security for the loan. If the borrower fails to repay, the bank can take the property. Because houses are expensive, repayment is spread over many years (often 10 to 30 years). In Nigeria, the Federal Mortgage Bank of Nigeria (FMBN) is a good example. It supports housing finance through schemes like the National Housing Fund (NHF).

Solution (checking each option):

• A. Finance agriculture: This is the role of agricultural banks, such as the Bank of Agriculture (BOA). ❌
• B. Establish banks: Mortgage banks do not lend for setting up banks. ❌
• C. Acquire machinery: This is usually handled by commercial banks, the Bank of Industry (BOI), or development banks. ❌
• D. Build houses: This is the core function of mortgage banks, since they provide long-term housing finance secured on property. ✅

Answer: The correct option is D. build houses.

Exam tip: Match each bank to its specialty:

• Mortgage bank → houses
• Agricultural bank → farming
• Industrial/development bank → industries and machinery
• Commercial bank → short-term loans and overdrafts
• Central bank → regulates the economy

If you see "mortgage," think "home."