Commercial Bank Housing Loan Risk And Legal Precautions,

The sub prime mortgage crisis, which erupted in USA in 2006 inspired me to study China commerical banks home loan risk preventation and regulation. The magnitude of the crisis is getting bigger and bigger, lots of Countries are now taking prudent policy to home loans morgage. In China, even we do not have sub-prime morgarge and the derivatives market as sub-primary mechanism, with the marco economy control policy changing from moderately tight monetary policy to tight monetary policy, the ongoing higher investment on real asset and the consumer goods price inflation, the home mortgage is higher than before.China real asset re-started booming from 1999. In the past ten years, the size and volume of real asset mortgage has been developing beyond imagination. But there is a big gap between real asset mortgage regulations and real asset markets. The commercial banks are the major financial channels for the real asset developers and millions private borrowers . The banking system has poured tens of trillions RMB to the real asset industry. But the real asset mortgage system has big issues. Firstly, commercial banks are solely capital providers for real asset industries. Secondly, there is no derivatives market as sub-primary mechanism to balance the primary mortgage risk. Thirdly, we do not have sophisticated credit evaluation system. Last but not least, there is not clear regulations on home loan service provider. Right now, China real asset prices are escalating. The risk of real asset mortgage is getting more serious than before. The risk comes from commercial banks are so interested in real asset mortgage, the laws and regulations are so limited to guide and supervisor real asset mortgage, the whole credit evaluation process is not sufficient and banking regulation is being developed. From the regulation and law perspective, how to improve the regulation, revise and draft new laws to better control the real asset risk and prevent the risk are so imperative and crucial. From the regulation and law perspective, how to improve the regulation, revise and draft new laws to better control the real asset risk and prevent the risk are so imperative and crucial.This article tries to explain China commerical banking real asset morgarge risk and the thoughs on how to prevent the risk. The 1st chapter introduces the current real asset market in China and China commerical banks housing mortgage development and risks. The 2nd chapter describes our current real asset financial rules, policy and laws. The 3rd chapter is the proposal on how to revise China rules, laws or regulations on real asset to prenvent the risk in China.