Research On Risk Management Of Commercial Bank Of Family House Mortgage Loan

With continuous deepening of housing system reform of China and increasing enthusiasm of urban residents for house purchasing, housing financing business has seen rapid development. Family house mortgage loan business is quite favored by commercial banks for its reliable guarantee, high profit and controllable risks, etc. The credit size and profit contribution has increasing weight. Moreover, non-performance balance and non-performing rate of family house mortgage loan are increasing gradually. In particular after breakout of the global financial crisis caused by US subprime mortgage crisis, this trend shows accelerating evidence with regulation of the real estate market, causing certain risks and potential hazards to the commercial banks. Risk control and management of the family house mortgage loan is critical and urgent and is the key link for sound development of commercial banks. It is imperative to strengthen management of risks in family house mortgage loan.Occurrence of risks is featured by uncertainty, objectivity, measurability, timing, potential and transferability, etc. Risk evaluation is the process of identification and analysis of internal and external risks and is the element of internal control. New Basel Agreement takes capital requirements of risk operation into account besides credit risks and market risk; and provides system framework of risks evaluation and calculation and calculation method.Risks in family house mortgage loan of China take various forms. The risk points are relatively scattered. Risk types are overlapped and integrated. It mainly takes the forms of credit risk, market risk, operational risk and liquidity risk. Credit risk includes borrower risk and developer risk. Market risk includes macroeconomic risk, interest risk and early repayment risk. Operational risk includes operation and management risks of the bank and legal risk.Causes of risks in family house mortgage loan include adverse selection and moral risks, defects in Risk Control and Prevention System, disorder in the development of real estate industry, narrow financing channels for real estate industry and effects of cyclic fluctuations in real estate industry, etc. In light of the actual situations of China, measures should be taken to improve risk management for COSO framework-based comprehensive risk management system of family house mortgage loan, such as strengthening management of all sectors in lending, improving the environment for recognition and evaluation of individual credit risks, highlighting the development of customer base characteristic of low risk and big potential and implementing the system of interest penalty for early repayment of loans. New ways should be explored to reduce risks of banks, such as marketization of interests and diversification of financial products, securitization of house mortgage loans, sharing the risks in family house mortgage loan with involvement of more parties and increasing inputs in techniques of quantitative analysis, etc. Analysis and operational application of a commercial bank proves that these measures are pertinent and operational to perfect risk management system of commercial banks of China and improve risk management level of family house mortgage loan.