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On China's housing mortgage loan securitization

Author: WuShenZhi From: www.yourpaper.net Posted: 2007-11-21 01:21:51 Read:
[Abstract] this article as a starting point to learn and apply the assets securitized financial innovation tools, demonstrate the need for the implementation of the housing mortgage securitization in China and put forward countermeasures to be taken choose.

[Key words] the mortgage housing mortgage loan securitization countermeasures recommended

Housing mortgage loan securitization inevitable choice for China's commercial banks

Housing mortgage loan securitization refers to low liquidity, but can produce the expected flow of mortgage funds into the circulation of securities in the capital markets. Mortgage-backed securities is the field of international finance is a major financial innovation in developed market economies has been the formation of massive mortgage-backed securities market, mortgage-backed securities has become the mainstream of Western commercial bank credit asset securitization and residential development of the industry, the increase in the rate of homeownership and financial risks to prevent and defuse significant and far-reaching impact. Trends of China's commercial banks in the face of financial innovation should be implemented securitization of housing mortgage loans, its the objective inevitability specific performance in the following six areas.

(-) Is conducive to broaden the financing channels of commercial banks

Implementation of housing mortgage loan securitization of housing mortgage loans held by the banks into securities and sold to investors in the capital market, banks can this realizable funds for the payment of new home mortgages, so as to broaden the bank raising channels to expand the bank's sources of funds, thus enhancing the bank's assets and ability to expand. 1990s, each year in the United States more than 60% of the housing mortgage loans through the issuance of MBS bonds provided. In China, with the expansion of the scale of housing mortgage loans, the perfect capital markets, and the development of asset securitization, mortgage securitization will surely become one of the main channels of China's commercial banks to raise long-term credit funds.

(B) help to reduce
operational risks of commercial banks

China's commercial banks issuing housing mortgage loan period of up to 20 years and 30 years, the borrower generally Youyi paid in installments to repay the bank loan debt. And liabilities of commercial banks in China are basically the deposit, the vast majority of the deposits below the five-year time deposits and demand deposits, the maturity mismatch of assets and liabilities, and to increase the bank's operational risk. With the development of the mortgage business and the bank account for the proportion of total loans increased, the structural contradictions of this "short-deposit long loan will become increasingly prominent, and may make the bank caught in a serious shortage of liquidity predicament, to economic development and adversely affect the social stability. Through the securitization of housing mortgage loans, illiquid loans into highly liquid securities, while improving the liquidity of bank assets, also will focus on the transfer of the bank's risk, and dispersed to the different preferences of investors in order to achieve bank risks socialization.

(C) help to improve the profitability of commercial banks

Implementation of housing mortgage loan securitization, not only to expand the bank's funding sources, and to enhance the liquidity of the banking assets, but also the bank to create a new profit growth point. 1. The banks have been securitization of housing mortgage loans may continue to retain the service functions; including the recovery of the principal and interest of loans, loan account records, organization loans collateral auctions and other loan services, and service charges, which can generate fee income to the bank. The banks also can be used as securities underwriters for the sale of mortgage backed securities to provide services, the payment of a certain fee. 3. The cash flow generated by the housing mortgage loans, if any, remaining after the payment of the Securities of principal and interest and fees, banks are also entitled to participate in the allocation of the remaining cash flows. Visible, mortgage securitization income of the bank to break through the limitations of traditional deposit and loan spreads, and the development of new sources of revenue. At the same time, due to the above-mentioned business is not reflected in the bank's balance sheet, thus eliminating the need to increase the bank's capital, thereby enhancing the profitability of the bank.

(D) will help strengthen the commercial banks' capital management

Countries commercial bank capital and risk-weighted assets in accordance with the the "Purcell Agreement, the provisions of the capital adequacy ratio of commercial banks, the lowest rate of 8% (which composed of 4% core capital). The capital adequacy ratio is low, has been a prominent issue affecting the reform and development of China's commercial banks. Through the use of asset securitization technology, housing mortgage securitization, and this part is removed from the bank's balance sheet, it may be a corresponding reduction in the number of the bank's risk assets, which can improve the bank's capital adequacy ratio and corresponding increase in bank credit level. Therefore, China's commercial banks to strengthen capital adequacy ratio management, improve capital adequacy ratio, in addition to taking a "molecular countermeasures by endogenous and exogenous two channels Recapitalization, you can also take the denominator countermeasures", that is, through the credit assets securitization to raise the capital adequacy ratio, sufficient capital to support a modest expansion of the size of loans, to enhance the bank's risk-bearing capacity.

(E) is conducive to improve the central bank's macro-financial regulation

Open market operations is one of the basic tools of the central bank to control money supply. Central Bank securities traded on the open market, in addition to government bonds, treasury bills, mortgage-backed securities as a liquidity, revenue is higher quality bonds can also become the object of the central bank buying and selling securities. With the expansion of the perfection of China's capital market and the housing mortgage secondary market, the central bank by the housing mortgage bonds traded in the financial markets, and expand the transaction object, increase the intensity of the operation, which can commercial banks in the breadth, depth timely adjustment of liquidity, thereby effectively adjust the money supply.

(F) conducive to promoting the development of China's capital market

Intrinsic correlation based on the money market and the capital market, the housing mortgage loan securitization as a condition to improve the capital market, through the securitization of housing mortgage loans will promote the development and improvement of the capital market. The one hand, the implementation of the mortgage-backed securities and capital markets investment risk, stable cash income investment products and financing instruments to promote the conversion of savings into investment, the docking of the money market and the capital market, money market and capital market coupling, the financial deepening boosters; On the other hand, due to the housing mortgage loan securitization is a systematic project involving banks, ad hoc trust institutions, credit rating agencies, securities firms, asset management companies as well as institutions and individuals investors in many aspects, its successful application not only to have more than many involved in the main coordination, and this must be the appropriate policy environment and regulatory system. Therefore, the implementation of the housing mortgage loan securitization is conducive to promoting the development of China's capital market.

Second, the securitization of housing mortgage loan suggestions

(A) select suitable commercial banks as promoters

A housing mortgage market in the United States, financial institutions, there are four categories, namely, savings and loan associations, commercial banks, mutual savings banks and life insurance companies. Our only commercial bank loans for housing mortgage loans to a market system, and thus, in theory, any one commercial bank can as the originator of the securitization of housing mortgage loans. However, due to the different economic development of the historical background, the loan structure, and bank area, the size of the home mortgages of commercial banks also obvious differences. View from the proportion of the provincial and municipal branches of housing mortgage loans to total loans, some banks have more than 20%, while some banks less than 5%. Therefore, in accordance with the principle of economies of scale, China should choose housing mortgage loans has reached a certain scale of commercial banks as a sponsor. China Construction Bank China opened the first state-owned commercial banks in the individual housing loan business. The end of 2000, the bank accumulated issuing commercial individual housing loans of 182.3 billion yuan, 136.8 billion yuan of outstanding loans, accounting for nearly 10% of the line of loans in the interbank market share of 42%, already have the asset base of the housing mortgage loan securitization . Therefore, China Construction Bank as the preferred bank of housing mortgage loan securitization sponsors. At the same time, should choose a relatively large scale of housing mortgage loans, improve risk control mechanisms, provincial and municipal branches of the mortgage operation specification pilot.
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