A Legal Study On China's Securitization Of Housing-mortgaged Loans

The securitization of housing-mortgaged loans, a new type of housing financing regime integrating housing financing with investment, is extensively adopted by many countries and regions in the world. With the establishment of a special kind of organization -- SPY (special purpose vehicle), bonds can be issued to the public, and then the fund corrected in this way is to be used to buy the housing-mortgaged loans granted by the banks and the capital and interests of the issued bonds will be paid back with the borrowers' payment for the loan capital and interests. The regime of securitization of housing-mortgaged loans was created in the USA in the 1970s and it was imitated and spread in many other countries in the North America, Europe. Australia and Hong Kong introduced this regime too. Therefore, the traditional housing financing regime is injected with a new vitality.Practicing this regime requires certain pre-conditions such as the scale of mortgage loans, a brisk stock market, a huge group of investors as well as a number of intermediary service institutions including credit rating corporations, insurance companies, law firms and accounting firms.In China, the securitization of housing-mortgaged loans has become heatedly discused topic recently. In our country, initiate innovations are needed for the market potentiality of real estate, explosive expand in house requirement, further improvement in house market and to develop and reinforce the housing finance, and so mortgage-backed securities provided a ideal tool for resolving the problem for those. The government and the banking circles hope to raise the efficiency of the housing financing regime, improve the banks' asset quality and to diversify the risk, so as to promote the development of real. It is necessary and workable to applying the mortgage-backed securities to propel housing innovation, although what we are should be attention to the necessary mortgage environment and it's policy are not completely fostered. However, in order for China to do securitization, we still need to solve the following problems: the lacking of enough matching laws and credit insurance and guarantee, for example, a necessary legal and regulatory framework that allows for the clear separation of assets into the SPY, and clarifying the taxation issues related to asset transfers, which will determine whether the securitization vehicle is tax neutral or not.We also need passages within the legislation to deal with foreclosures, bankruptcy; title transfers, etc. so that when there are problems there's still a way to realize the value of the underlying assets.Through analyzing the present condition and problems in our country, this paper put forward the framework for carrying out the securitization of housing-mortgage loan in China at present with a focus on how to establish a legal framework for securitization of housing-mortgage loans, and on the exploration of the functions of intermediary institutions and corresponding matching environment during the process of securitization.