Study On Assets Transferring Of Mbs

The article studies on the fundamental assets transferring of MBS from the point of view of civil law theory, which aims to explain some fundamental thesis of such assets transferring according to civil law principles, the mechanical target and the economy and legal environment of China. Discussion will concern on how to apply laws in the stage that the assets-to-be-securitized (hereinafter as fundamental assets) be transferred from the originator to the trustee. Laws cannot eliminate the inherent business risks of MBS. However, proper legal arrangement could reduce the waste of resources and potential risks which arise from conflicts between regulations. This article tries to, in the framework of present laws and with modern technology, resolve the problem that how to satisfy the requirement to efficiency meanwhile not conflict with present legal system.Chapter1discusses the structure and functions of assets securitization, the characters of MBS and the requirement to the assets transferring. Assets securitization is a structural financing product. MBS has some characters because of individual loans as fundamental assets. Such characters include that the obligators are human beings, the credit of assets is backed by mortgage and the future cash flow is stable, compared to other loans.Chapter2discusses the properties of assignment of fundamental assets. There are two methods to transfer fundamental assets from the originator to the trustee:the assignment of contract and the assignment of loans. Compared to the former, the assignment of loans cost less, and the operation is easier. Therefore, the assignment of loans shall be adopted in the assets transferring of MBS. However, CBRC issued regulations in2010which installs strict requirements of forms to assignment of loans. Obviously, such regulations lack reasonability.Chapter3discusses the effect of transferring notice and the effect of restriction clause. Based on the study on foreign laws, this article takes the point of view that modern technology should be adopted to fulfill the notice requirement without changing laws. The transferring notice shall be used to oppose the obligator. No matter the third party acts in good faith or not, the restriction clause shall not have external validity and affect the effectiveness of assets transferring. However, the creditor who violates such clause shall bear the liability for breach contract. Occasionally, the third party who intends to seduce creditor to breach the contract and causes damages to obligator shall bear infringement liability.Chapter4analyses the regulations and the presence of loan interest rates in China, points out that the predictability of prepayment rate of loan is low because of the natures of the finance regulation system of China. The article tries to find proper legal means to raise such predictability. However, the breach liability method does not tally with presence of economy regulations. Thus, to pose heavy responsibility on the prepayment prediction which do not abide by the principle of caution is a considerable method.This article argues that, redistribution, introducing new technology means and dispersing damages can fulfill the requirement to civil law in assets transferring stage of MBS. Special legislation is not in badly need instantly.