Risk Prevention System On The Mortgage Loans Of Real Estate

Slumps in American and the global stock market have been triggered many times since 2007 because of the supreme mortgage crisis's transfer effect, with 100 banks worldwide lost over $ 500 billion. As the US real estate market enters winter, along with the fall in housing price, one third plus house-buyers who bought houses in recent five years were in debt that surpassed the house present value, confronting negative assets. The US real estate market entered recession and nobody would bother to take any interest in the even one-dollar villa. The subprime crisis now has developed to be the first global financial crisis since 21^st century due to the securitization mortgage loan. As the member of global economy, China also can't stays away from it, with severe impact on stock market, export and foreign exchange market, as well as housing price dropped sharply in some cities. After the housing price starts loosing and falling, mortgage loan risk came out initially. According to Southern Weekend, the average price of Shenzhen commercial housing dropped from the highest 20,000 Yuan last year to about 12,000 Yuan currently. Taking the estate called "Ying Jun Nian Hua" for example, its housing price fell from the highest 13000 per square meter to present 6888 per square meter, a 40% decline. Those who bought houses at high prices chose foreclosures, which was likely to be a trend. Meanwhile, the non-performing loan and default rate in Commercial banks for commercial housing mortgage loan keep rising. For instance, in Shanghai, the non-performing rate of average individual housing loan from 2004 to the end of September, 2006 increased over 7 times, along with the default rate risen 10 folds. The cases against customers' defaults by the bank also developed into conventional from the past sparse. Some district courts would handle a decade-odd default disputes within a month.For China, its current excess liquidity and soaring housing price was quite similar to the America's pre-crisis situation. One man's fault is other man's lesson. The commercial housing mortgage system is a guarantee system that stems from the UK-US legal system, but makes progress in Hong Kong. However it hasn't been well-developed and still is inexperienced in the mainland. The bank has been posed on the risks of longtime lent capital, high operational cost by the 10-to-30-year mortgage loan. Thus bank's possibility of having insufficient capital turnover as well as disequilibrium of income and expenditure is enlarged by the growing competition. What's worse, our existing law system hasn't mapped out the commercial housing mortgage clearly and the relevant law still needs to be improved, the situation of which has put the practical use of the mortgage loan to a plight, leading to law disputes accordingly. As the macro economy changes and mortgage business extends, banking industry is exposed to increasing financial risk. Therefore, the important issues for commercial housing mortgage theory and practice are about how to keep risks away, safeguard bank benefit, cultivate a healthy and safe commercial housing mortgage market and how to learn advanced experience from others while based on our own practice. As an emerging economy which is eager to carry out opening and reform in finance sector, we especially need drawing lessons from this crisis to cope with our current situation and risks of mortgage business rationally under the present global financial turmoil. Recently, the Banking Regulatory Commission and Central Bank have issued the Notice on further Strengthening Credit Management on real estate market by CBRC and Notice about land-saving awareness promoted by finance, which indicate the supervisors' policies of Monetary stringency, loan restricting and risk avoidance. Herein, it's essential for us to discuss how to minimize bank's mortgage loan risk from both theory and practice aspects under this circumstance.The thesis consists of four parts except prologue and epilogue.In the first Part, Introduction of Mortgage. This part focus on the headstream of mortgagee system, in which the origin of the word "Mortgage" is introduced, the process of mortgage system developing from common law to equity to modern Anglo-American law system is systematically combed and Hong Kong's amendment to this system is mentioned as well.In the second Part, our current commercial housing mortgage system. Established in the early 1990s in costal areas by drawing lessons from Hong Kong, we have set up the mortgage system with Chinese characteristics after more than a decade practice. Compared with Anglo-American and Hong Kong mortgage system, our marketable housing mortgage involves buyer, developer as well as mortgage banks, consisting multi-legal relations for marketable housing trade, mortgage, loan, developer guarantee obligations etc. It greatly differs Anglo-American system in terms of ownership transfer, subject matter possession, measures of publication and the implement of rights The difference of this has sparked a discussion over mortgage nature in the circle, mainly with theories of hypothecation, pledge, sicherung-suberg, independent harge and vertragsverbindungen. Through the, the author suggests retaining mortgage system as a special one based on the nature analysis and thinking that it is a new property form different from pledge, sicherung-suberg.In the third Part: The risks of the banks in the mortgage loan of marketable housing. Under the global financial turmoil triggered by the subprime crisis, the commercial bank loan risks brought our attention, which is not only related to the interests of the banks themselves, but also related to the development prospect in the mortgage of marketable housing and the stability of financial order. The legal aspects of risks in the mortgage that the banks face were summarized in this passage, including the independence of the effectiveness of the mortgage contract, the risks in performing, the realization of mortgage, the defense that the developers assure the responsibility, as well as the false mortgage problems which may influence the safety of the commercial bank mortgage loans.In the forth Part: the Preventive Measures. Practice in the Risks of the Banks in the Mortgage of Marketable Housing and Preventive Measures. Since the financial security was arising from the trust towards the systems, optimizing the commercial bank mortgage loan risk prevention systematically was needed. Based on the potential risks that the mortgage have, this passage involves a series of institution arrangement, including the risk aversion, transferring, isolation, legal remedy mechanism and so on, with the purpose of preventing the bank loan risks, perfecting the commodity house mortgage.