Mortgage-Backed Securitization: International Experience And Practice In China

Securitization, which began from MBS, is the most dynamic financial innovation in the world's capital market since the 1970s. In more than 30 years, it's preferred by lots of commercial banks. In America, Securitization accounted for half of the housing mortgaged loan and MBS reached 5.3 trillion U.S. dollars in the late 2003. And MBS is the largest in the bond market. Securitization not only flourished in the United States, but also developed in American, European and Asian countries. In China, with the development of the housing mortgage loans, MBS is a hot topic.In China, the housing mortgage loan business began in 1992, although it started relatively late, but developed rapidly in recent years. Meanwhile the proportion of the personal housing mortgage loans has increased from 0.39% to 9.27%, even some urban commercial banks reached 18%-30%. Therefore, both the increasing mortgage loans and the liquidity problem create basic conditions for MBS.However, Securitization still suspended and there were few practices in China. So what's the reason? Which model should China adopt? What can China learn from foreign experience? These are things my paper attempts to answer.This article firstly gives a systematic introduction of the practice of securitization in China. Then I analyze three main models: market-oriented model, government-dominated and semi-government model. Through a comparative analysis, I try to draw on foreign experience for our practice. After that, combining with the first two chapters, I try to explore the road of the MBS. Lastly, according to the problems that may be encountered in the operation of MBS, I recommend some policy.This paper is divided into five parts: The forefront concentrate on the significance of the study, the main topic, research methods and the framework of the paper. In ChapterⅡgives an overview of the theory and practices of MBS. Firstly, I list the principle of the securitization. Then the implementation of MBS has important practical significance. In the past 10 years, the kinds of our practices of securitization include: offshore securitization, quasi-securitization and securitization pilot. Finally, I draw main problems that China may encounter.Chapter III describes the operating modes in different countries. There are three categories in the world: the government-led mode, the quasi-government mode and market-nominated mode. Suggestions to our country: government's active participation, the mutual development of a two-tier market, the diversity of tools.Based on the first two chapters, ChapterⅣexplores the road of housing mortgage securitization. Firstly, I analyze the basic rules of the operation. Secondly, SPT plays an important role in the mechanism and characteristics of MBS. Finally, I analyze the three main risks: the early repayment risk, credit risk and interest rate risk.ChapterⅤ, I offer some ideas to get breakthrough from securitization obstacles. I concentrate on credit system, the legal system, insurance system design and so on.