Anaysis Of Risks And Prevention Of Mortgage Backed Securitization

Mortgage-backed securitization is one of the most successful financial derivatives in theword since 1970. MBS make loan assets of the bank can be traded on the market. Then the bankcan improve the mobility of its asset, convert loan assets into high liquidity cash. MBS has beenwidely implemented in countries whose estate market is developed. China also launched the pilotwork of MBS in 2005, hoping to get some experience and promote it at an appropriate time.Nowadays, mortgage loans has been increasing rapidly, which makes commercial bank facemore liquidity risk. As the suggestion to the problems I mentioned above, MBS seems to be theonly choice for commercial bank. MBS improves the mobility of loan assets in bank, alsopromotes the overall quality of real estate companies. MBS has been widely developing inUnited States, Europe, Japan and Hong Kong etc. In 2007, Sub-prime Crisis in United Statesmade a large number of bank bankrupt, which also make us consider the risk of MBS. Sub-primeCrisis warn that MBS just as a corn has two sides.In such a global context, this article analyzes the risks and risk control of MBS, and try tobuild a risk prevent system. In the first part, this article introduces the background of MBS, andanalyzes the theoretical of research. The second part, this article introduces the environment andoperation of MBS in China. After that, this article analyzed the risk of MBS in Sub-prime Crisis.The most important part is analyzing the risks of China's MBS. Finally, this article tries to givesome useful suggestions to the risk prevent system of MBS.