Legal Risk And Control Of Mortgage-backed Securitization

As a main kind of Asset Securitization, Mortgage-backed securitization, can be defined as a margin activity that SPV first concentrates a series of mortgage loans alike which issued by the loan organization,then packs and combines principal and interest which should be periodically repaid to the financing institution by housing buyers , finally regard it as foundation property to issue MBS .As a financial technique, MBS has complex structure, many participants, and embodies complicated legal relationships, therefore, its smooth process and final success is decided by the valid legal risks control. MBS legal risks can be divided into two types, the first one is that"the disadvantageous law results caused by the participants which against the law", and, the second one is that"the surprising and disadvantageous results caused by the law itself". And because MBS in our country is in the beginning stage, so the second one is more outstanding. Under current MBS law financial system, the process of MBS , including the transfer of the foundation property, SPV, credit evaluation and credit enhancement, the issue and bargain of MBS etc all exist a series of legal risks , the existence of these legal risks have important influence to the mode,the process and the future of MBS. Therefore, it is urgent that analyze the MBS law risks and put forward some proposals to perfect legal risks control regulations.Take a comprehensive view of the foreign countries that have carried on MBS, the modes of legal risk control regulations of these countries have different characters, without comparison. The perfection of MBS legal risk control regulations of our country should be built on deep researches into law tradition and present condition, and follow the principle of"combining foreign experience and Chinese fact and establishing regulations in the development". From the aspect of precaution, we should rely on our current law structure, build up our perfect legal system, and establish the central registration system of priority interests, this is the first choice of perfecting the second type of legal risks. As to the first type of legal risks, we should chiefly strengthen precaution and supervision, the participants should be careful and observe the law, perfect the internal control system of legal risk, take the precaution of the market riskfrom mortgage loans, and strengthen the rule of publishing information.