The Application Of Mortgage-backed Securitization In China

Asset Securitization is the most important invention in finance field ever since 1970's. As a financing instrument,it developed quickly and has been widely adopted throughout the world. The People's Bank,the central bank of China,has chosen the China Construction Bank for a trial operation of the mortgage-backed securitization. This paper aims at introducing the successful experience of the U.S. in this field,hoping to provide valuable reference to the course of securitization in China.This paper consists of three chapters. Chapter One introduces the concept of asset securitization and the theories on which it is founded. The origin and history of asset securitization is also mentioned in this chapter.Chapter Two explains why mortgage-backed securitization has become the first form of asset securitization in most countries. Then it analyses one of the major reasons which have contributed the success of mortgage-backed securitization in the U.S.,that is,the perfect insurance & guarantee mechanism with the integrated issuing market and the trading market for mortgage-backed securitization. The framework for several kinds of mortgage-backed securitization is briefed after that and the analysis of the role of the U.S. government in promoting the exercise of mortgage-backed securitization and its significance to China ends this chapter.The body of this paper comes in Chapter Three. First it briefly introduces the history and the present situation of mortgage loan in China and analyses the necessity and the feasibility of adopting mortgage-backed securitization in China. The major obstacles on the way to mortgage-backed securitization and the corresponding solutions are discussed,the risk and risk-control methods in mortgage-backed securitization is analyzed and finally,the possible models of mortgage-backed securitization in China is presented.