Research On Legal Problems In Real Estate Securitization

Abstract: Originated in the USA as a new kind of financial tool, Real Estate Securitization has solved most of the problems effectively the real estate industry and financial industry are faced with in the USA. Now it has become the tendency of the development of real estate industry and financial industry worldwide. Nowadays, due to the difficulty the real estate industry and financial industry are confronted with in China. Real estate securitization is just the right way out. Few scholars have made a systematic research on the legal problems securitization will encounter in China, so I aim to do some deep research in this field in my thesis. I will deal with the significant issues in the process of securitization under current legal system in China, including legal problems on property SPV credit enhancement and assessment Jus rerem collateral law bankruptcy law and trust law and then solutions to these problems.There are four parts in my thesis. In the first part, I make a brief introduction to real estate securitization, including the definition and origin , the development of it in the developed countries, types and their characteristics, process and functions of real estate securitization. In the second part, I mainly analyze the necessity and feasibility on the practice of real estate securitization in China. I discuss the first question from the angles of the problems in the real estate market in China, solutions to them and benefits the securitization will bring. Then the thesis proves the feasibility of securitization in China from the angles of what kind of external environment and legal system securitization operation needs, favorable reality and legal system if securitization is carried out in China now and then deficiency existingin external and legal systems that need improvements.In the third part of my thesis, I hold that the values we should fulfill in the law-making process for securitization is to protect the rights and interests of the investors, decrease the risk of investment and maintain the fair social order for free competition in the market economy. Then I view the planning of legal system in securitization from the cost-profit theory, institutional evolution and game theory of economics of law.The fourth part is the crucial part of my thesis. In this part, I analyze the conflicts existing in the current laws related to securitization in China, including legal problems on property SPV credit enhancement and assessment Jus rerem collateral law bankruptcy law and trust law and then solutions to these problems. Problems on property in China now are restricted titles and restriction on circulation, which break the integration of the transaction market the securitization needs. On the problems related to SPV (Special Purpose Vehicle), they are that the establishment and operation of SPV is lack of legal basis, the nature of the securities it issues cannot be confirmed by current laws and there are no laws to regulate the bankruptcy remoteness of SPV, all of which are crucial to the operation of securitization. The legal problems on credit enhancement and assessment are that the current laws don't have regulations on state collateral and credit assessment. Problems on Jus rerem exist in the following aspects: China hasn't got a law on Jus rerem, real estate should be the core of Jus rerem and we should perfect the system of real estate registration if we make Jus rerem law. On collateral law, the conflicts in securitization with current collateral law are these: if the creditor's rights of real estate can be collateralized, if the commercial houses sale in advance can be collateral, if houses in mortgage can be on transaction, and if over-collateralization is legal under current collateral law. The deficiencies in bankruptcy law include: the subjects applicable to bankruptcy law are limited, the protections on the benefits of creditors' rights are weak, time limit in some circumstances are unreasonable and punishments on frauds in bankruptcy are not severe. Lastly, the problems in trust law...