Prevent Real Estate Mortgage Legal Risks

The recent U.S subprime lending crisis is widely sweeping across Europe andAmerica, even spreading to the whole globe. we can see clearly that in addition tocredit risk, market risk, operational risk, legal risk cannot be ignored in banks. Thehousing mortgage loan is a complex banking business. Since ninety s, the housingmortgage loans will be gradually maturing. The mortgage is an important part ofcommercial bank loans, on the one hand because mortgagor don’t need to transfer themortgaged property. On the other hand, according to the "security law","propertylaw" regulation, the bank shall have the right to mortgage property to seek preferredpayments in the case of the debtor failing to perform due debts. Typically, because thereal estate cannot be move, hidden, and is not easy to depreciate, in addition to theloss by fire, flood, demolition and other reasons, it can well ensure theimplementation of financial institutions in the creditor’s rights. Therefore, the banksrequire the borrower to provide real estate as collateral. Purpose is that if the borrowercan not repay debt, so banks can pay off property and minimize legal risks.After many years practical experience in financial markets, loan mortgage is toachieve judicial execution problems, because of review of mortgaged propertysituation being lax before the mortgage loan, changes in mortgage property owners orother facts, obstacles of enforcement after mortgage loan. On the basis of experienceat home and abroad for reference in this paper, the authors define the legal risk ofhousing mortgage loan, and study the characteristics, types and causes of mortgageloan. In addition, drawing lessons from western banks mortgage legal risk preventionexperience, the author puts forward our country’s real estate mortgage legal riskprevention legislation Suggestions. First of all, we should perfect the loan legalenvironment; and strengthen the supervision of mortgage loans; The second aspect isto adopt the system of housing mortgage insurance; Thirdly, the disposal methods forsystem in real estate mortgage. At last the author summarizes the banks’ thedevelopment direction of housing mortgage loans legal risk prevention in our country.