Commercial Banks Personal Housing Mortgage Loan Risk Prevention

Individual housing loan provided by commercial banks is an essential aspect of housing finance in China. It develops with the reforms on housing system and is of great significance: on the one hand, it increases the purchasing power of individuals; on the other hand, it stimulates the reforms on housing system and expands internal demand so as to accelerate economy. However, we have to be aware of the grave risks taken by the providing banks: such as credit risks (default risks), risks of value of estate under mortgage, risks of materialization of the right to mortgage, obligor' death risks, liquidity risk, prepayment risk, etc. How to bring these risks under control to ensure the secure and stable function of individual housing loan is an urgent problem. This thesis intends to discuss this problem systematically from the following four aspects: individual credit reporting system, security system, insurance system and mortgage-backed securitization.The whole thesis consists of five sections besides introduction.Section one: Analysis on individual housing loan and its risks This section begins with the definition of individual housing loan and the analysis on the related legal relationships. The various risks faced by loan providing banks demand respective inspection. The author believes that the control and prevention of loan risks is a systematic project in which the prevention system before hand and the control system afterward weigh the most, while this article focuses on the prevention system beforehand.Section two: The risks prevention system of individual housing loan and the individual credit reporting system. This section begins with the definition on individual credit reporting and an analysis on credit risks prevention functions. The author lists the problems in the current credit investigation system of loan providing banks and discusses the difficulties in establishing China's individualcredit reporting system, which includes the choice of mode, the establishing steps, the construction of assistant systems, the protection of consumers' privacy.Section three: The risks prevention system and the additional security systems. Security systems can prevent credit risks (default risks). Given the peculiarities of housing loan and security systems, this section mainly discusses two additional securities, i.e., guaranty and mortgage. As to guaranty, the author expounds on its application range, guarantor, guaranty period, while as far as mortgage is concerned, the author as well discusses its application range, estate under mortgage, and the materialization of the right to mortgage system, the perfection of which may decrease the risks of the banks in exercising its right to mortgage.Section four: The risks prevention system and insurance system. Insurance system may disperse and prevent credit risks, obligor's death risks, risks of value of estate under mortgage, and risks of materialization of the right to mortgage. Housing loan insurances include policy insurance and commercial insurance. The author believes that China shall set up its own housing loan policy insurance system based on the experience of the U.S. This section ends with a discussion on three housing loan commercial insurance system, that is, house under mortgage insurance, guaranty insurance and life insurance.Section five: The risks prevention system and the Mortgage-backed Securitization (MBS). The MBS may disperse and prevent risks as liquidity risk, credit risks, interest rate risks and prepayment risks. The section begins with a definition on the MBS and go on to analyze its functions to banks, obligors and investors with focus on the prevention and control of bank' s risks. Then the author probes on the transaction form of MBS (its operation flow) and the varieties of Mortgage-backed Securities.