Study Of Housing Mortgage Loan Securitization Issues

Mortgage-backed securitization (MBS) is one of the greatfinancial creations since 1980s. At present many countries have adoptedthis new finance tool. It has changed the traditional financial medium andopened up a new way for market finance. This new tool plays animportant role in economic development which improves the fluidity ofbanks and promotes the development of housing finance. Now MBS hasbeen a heated topic in China and will be implanted in the near future as aninnovative finance tool. According to the statistic from the central bank, the personalhousing mortgage loans have increased quickly in China from the year2002 to 2004. The increased quantity respectively is 267 billion yuan,352.8 billion yuan and 407.2 billion yuan. The total balance respectivelyis 825.8 billion yuan, 1177.9 billion yuan and 1592.2 billion yuan withinthese three years. So this great balance of housing mortgage loans can beas the base assets for China to implement MBS. Under the present circumstance of housing finance in China, MBSwill bring a lot of realistic and active significances for China toimplement MBS. These can be said that: firstly, it can develop thehousing finance market and housing industry, also it can expand thedomestic demand and imputes the development of national economy.Secondly, it can pump plenty of capital from the circulative market to theissuing market continuously and diversify the credit risk of commercialbank has faced. Thirdly, as a good investment tool, it can convert thepersonal saves to investment and active the security market. Fourthly, itcan help to build a famous international status and prompt thedevelopment of housing finance system reform. Fifthly, it also canimpetus the creation, optimize and perfection of housing finance tools. The thought of this thesis is that: first it main introduce theconcept of MBS and the theory on which it is founded, then concretelyintroduce the operation process of two mature mortgage-backed securities.It can make us to know the significance of MBS in practical level. At lastwe study the operational model of MBS using the approach mentionedabove for China to implementing it. Second we provide severalcountermeasures to break through the system obstacles which we willface in the process of implementing the MBS in China. The thesis main concepts are as follows: Chapter 1, the discussion main on the concepts, operational theoryand basic processes of MBS. Since MBS denotes two meanings macro-and micro-economically, it is quite necessary to accurately compare ABSand MBS by their relationship, difference, basic functions, effects andrelated principal concepts. Then introduce the basic structure andparticipant of MBS. At last, we introduce the functions and significancesof implementing MBS industry in China. Chapter 2, this chapter is the keystone of this paper. Itconcentrates on the study on the operational project of MBS implementedin China. First, the discussion on the approaches to upbuild the specialpurpose vehicle (SPV) and advance the approaches and conditions for ourcountry to set up this institute. Second, the study on the tools and pricingmechanism of MBS. Since MBS has not been implemented in China andthe study on it mostly focused on theory level, so it is still strangeness toChinese people and introduce two mature mortgage-backed securities andoperational mechanism of them here. China can select one of them adaptto practical conditions. Third, the discussion on the main approaches andoperation measures of credit enhancement for MBS. It consists of innercredit-improvement and outside credit-improvement. To the operationmechanism of credit enhancement, the main introduce on how todistribute the credit risk and the determine the level of enhancement.Fourth, the main discussion on the processes and influence aspects ofcredit rating. Investors make the investment decision according to therates which the rating institute made. At last, we raise the operationapproach and process for China to implement MBS. Chapter 3, it concentrates on the various risks...