Study On The Legal System Of Mortgage Insurance

Mortgage insurance means that the institution or organization established by law signed a security contract with the lender for qualified borrowers applying for mortgages, promising that when the borrower does not repay the loan principal and interest on schedule, it will assume responsibility for settlement agreement.To support the housing consumption of urban residents,expand mortgage business, ensure the realization of lender claims, solve the difficult problem of collateral disposal and borrowers"difficult to find security", ShangHai took the lead in the country setting up a mortgage insurance company in 1997 which is mainly engaged in second-hand housing mortgage insurance business. The innovation in the field of housing finance business was pushed rapidly across the country. Shortly thereafter, ChengDu, ShenYang, TianJin, BeiJing and other major cities had set up mortgage insurance company, the scope of which business form was extended from second-hand housing mortgage insurance to the new housing mortgage insurance. In May 2000, the Ministry of Construction and the People's Bank jointly issued the Mortgage Insurance Management Ordinance, formally established the basic framework of China's mortgage insurance system. It had played an important role in promoting urban residents housing consumption, spreading the risk of bank loans and reducing the burden of real estate developers. But in the process of its rapid development, China's mortgage insurance is faced with many problems need to be sorted out. The title of this article is Study on the Legal System of Mortgage Insurance. It fully expounded the general theory of mortgage insurance, analyzed in depth the background, development status and problems of China's mortgage insurance, put forward specific ideas and proposals on how to further develop and improve China's mortgage insurance from the setting up of security agency, definition of security objects and security conditions and risk control, etc. In addition to the introduction and inclusions, the text is divided into five chapters, about 160,000 words.Chapterâ… , analysis of the concept and function of mortgage insurance, mainly on the connotation, features, general function, special features and different models of mortgage insurance. Mortgage insurance means that the institution or organization established by law signed a security contract with the lender for qualified borrowers applying for low down payment mortgages, promising that when the borrower does not repay the loan principal and interest on schedule, it will assume responsibility for settlement agreement. Mortgage insurance has general function of security which is to ensure the realization of lender claims. In addition, it also has its special social role, such as improving the borrower's credit, reducing the risk of the lender, urging lenders to issue low down payment mortgages to borrowers; promoting standardization and homogenization of mortgages, providing the prerequisite and basis for the realization of mortgage-backed securities. Government providing security for mortgage is an important means of indirect intervention and regulation of mortgage market. It is conducive to the achievement of government's housing policy and housing goals based on giving full play to the role of market mechanisms. Mortgage insurance model means operating mechanism and management system, including the setup, organizational forms, capital sources of security agency and security object, security conditions, the type of security, the scope of security, security risk control, etc. Currently, national mortgage insurance system can be broadly classified into four types, that is the model of government security cooperated with commercial insurance represented by America, policy-oriented security combined with commercial insurance represented by Canada, single commercial insurance represented by Australia, governmental mortgage insurance fund represented by France, Holland and other countries.Chapterâ…¡, China's mortgage insurance, mainly on the notion and contents, background, development status, and problems of China's mortgage insurance. China's mortgage insurance means that the security agency established by law signed a security contract with the lender for qualified borrowers applying for mortgages, promising that when the borrower does not repay the loan principal and interest on schedule, it will assume responsibility for settlement agreement. China's mortgage insurance resulted in inadequate personal credit system, mortgage system and social security system. It had played an important role in promoting urban residents housing consumption, spreading the risk of bank loans and reducing the burden of real estate developers. But in the process of its rapid development, China's mortgage insurance is faced with many problems, for example, its main function is catabolic, rights and obligations between the related parties are asymmetric; the legal status of the security agency is not clear, the nature of its business is ambiguous; the credit of security agency is not sufficient, its security capacity is weak; the business activities of security agency is irregular, its risk management capabilities is low and poor; government's support and supervision on the mortgage insurance are not in place, etc. The causes of these problems is that government's development ideas and goals of mortgage insurance is not clear, did not clearly defined whether the mortgage insurance is policy-oriented or commercial, based on government credit or enterprise credit. The result is that the government has become the market players, competed with enterprises, or enterprises abuse of government credit resources to seek commercial interests, left risks to the government. So, further development and refinement of China's mortgage insurance needs to make the objectives and the nature of mortgage insurance clear, re-structure the mortgage insurance system from the setting up of security agency, definition of security objects and security conditions and risk control, etc.Chapterâ…¢, the nature of China's mortgage insurance, mainly on the theoretical basis and practical significance of policy-oriented mortgage insurance. Housing is basic human needs, the basic condition of human existence and development. The right to housing is an important part of survival. Due to the special nature of housing and housing market, the government must intervene moderately the housing market to protect the housing rights of residents. Governmental mortgage insurance is an indirect governmental intervention and an important means of regulation the housing market. It is essentially a governmental housing security policies and measures for low-income people. In the development process of mortgage insurance, government played a leading and guiding role. In the beginning of mortgage insurance, security agency was usually played by the government or government-funded agency which directly involved in mortgage market, provided security for middle or low-income people when they apply for low down payment mortgages. Its purpose is to enhance, supplement or improve the credit of middle or low-income people, urge lender to provide low down payment mortgages, support middle or low-income people through market-oriented solution to fill their basic living needs, protect their right to housing. China's mortgage insurance of being classified as policy-oriented mortgage insurance is not only the objective requirements of the status quo of China's housing market, but also is conducive to enhance the fairness and improve efficiency of China's housing security system, consistent with the inherent requires of establishing different levels of mortgage insurance system in allusion to different income groups.Chapterâ…£, dissection and deconstruction of the China's mortgage insurance legal system, mainly on the core elements of the China's mortgage insurance legal system, that is the setting up of security agency, the determination of security object and security conditions, the allocation of security responsibility. The setting up of security agency should be based on policy-oriented housing finance system, focusing on the regulation and integration of policy-oriented housing finance institutions, rather than blindly setting up institutions and expanding its preparation. Housing Fund Management Center providing mortgage insurance will help to avoid the problems of inadequate credit of security agency and information asymmetry of mortgage market, reduce the possibility of borrower default and risks of mortgage insurance by combination of the mandatory of housing fund system with the goal of maximizing individual interests of depositors. Mortgage insurance is essentially a possible government subsidy. When the borrowers default, government shall be responsible for its security commitments and actual expenditure will eventually occur. So it is necessary to take full account of the bearing capacity of the government's financial, strictly limited the security object and security conditions, in order to prevent the abuse of government housing support resources. When borrowers can not repay the loan principal and interest, the security agency should take special measures to dispose the default setting as mortgage insurance fundamental purpose is to provide housing security for low-income people, protecting their right to housing.Chapterâ…¤, risks prevention of China's mortgage insurance, mainly on the notion, features, types, prevention mechanism of the risks of mortgage insurance, analysis of the causes of subprime crisis, and the experiences and lessons should be learnt in the development process of China's mortgage insurance. Mortgage insurance is a highly specialized high-risk Industry. Compared with the insurance risk which is objective, can be predicted of its probability and statistics, the risk of mortgage insurance is a credit risk, the specificity of which occurrence mechanism is highly subjective and uncertainties. Professional capability of risk management is the basis of the survival and development of security agency. It is necessary for security agency to establish a comprehensive risk control mechanisms, improve the risk prevention capacity, maintain good credit and sufficient liquidity, avoid bankruptcy to effectively prevent and control the risks of mortgage insurance. But it is not enough to effectively guard against the risks only rely on its own internal control mechanism of security agency. It is necessary for security agency to establish an internal and external risk prevention mechanism to maintain its sustainable development, such as scientific internal management system, individual credit assessment mechanisms, risk-sharing mechanisms, risk compensation mechanism, government support and regulatory mechanism, etc.