The Study Of Mortgage Backed Securitization

In recent years, with the deeply reform of housing policies and the rapid development of national economy of China, the real estate industry becomes more and more important in the national economy. Meanwhile, the price of real estate rises very rapidly. It should not be ignored that the financial channels of the real estate market of China are still very narrow due to the lack of multi-level capital support system and of risk-share system. The capital demands of the real estate industry's development are mainly financed by the commercial banks nowadays. At the same time, the securitization of residential mortgages, which is one of the most important financial innovation instruments in the world, is becoming more and more popular. The China government also wants to solve the problems raised in the development of financial markets with the help of the securitization of mortgages. So it's necessary to explore the proper models of the primary and secondary mortgage markets which should be fit for the present situation of China.In the article we review the international background and experiences in developed countries of the securitization of residential mortgages. The author thinks that the participation and intervention of the government is necessary for the development of MBS, for that it needs vast amounts of capital, long time investment, and high risk, and lacks with liquidity. The government gives assurance to MBS, reduces taxes of MBS, and takes part in the mortgage financial markets. Only through combining policies with commercial MBS, can the financial agencies be incentive and the housing problem be solved. From the comparison we know that the government of developed countries takes an active part in the MBS market and the government makes money flow from rich areas to poor areas. Then the liquidity is created by the process of liquid and no-risk MBS.Following, the article proves the necessity of MBS in China from both theoretical and experimental views. The author illustrates that the securitization makers supported by the government will deliver additional liquidity to the lender. When the rate of MBS is quite low, MBS will low down the fluctuation of stock markets and smooth the impacts of demands of MBS in the pessimistic period. The author also points out the key role of the government in the stock market, which will prevent the financial risk of real-estate.At the last chapter, the author presents, considering other scholar's writings, a model of MBS in China market and points out that we should rely on the active role of the government in the first and second stage markets of MBS. We designs a operation model which are operated by the specific agencies, which can low down the risk of financial markets.