America's Housing Mortgage Loan Securitization And Its Enlightenment To China

Mortgage-backed securitization (MBS), which originated in the United States in1970s, canenhance the liquidity of capital, transfer credit risk, solve some problems of commercialbanks, such like the mismatch of assets and liabilities and the limitation of capital and atthe same time improve the financing efficiency of financial markets. This thesis firstanalyzes the characteristics of the mortgage-backed securities and the causes of thesubprime mortgage crisis and summarizes related experiences and lessons. Then, throughthe research of development status of MBS in China, the feasibility analysis and thecomparative analysis of issued products, I conclude that China has the necessity andfeasibility to continue to develop MBS steadily. There are six suggestions for thedevelopment of MBS in China. First, comprehensive legal system and related accountingand tax system is required. Second, we need to prevent the credit risk of underlying assets,standardize the approval process of mortgage loan, establish early warning system of thereal estate market, and improve the personal credit system. Third, a reasonable credit ratingsystem and regulated credit rating agencies are needed. Fourth, we should improve thecapital market and expand the scope of institutional investors. Fifth, to prevent system riskand avoid “regulatory vacuum”, financial supervision institutions should enhance theregulation system of MBS and establish regulatory inter-agency coordination mechanisms.Sixth, the government should play a positive role on the improvement of SPV mechanismand encourage exploring various forms of SPV.