Legal Issues Of Residential Mortgage-backed Securities Research

Mortgage-backed Securitization (MBS) as the breakthrough of Asset-backed Securitization (ABS), has been hotly debated in the world since it was undertaken in the U.S.A in the late 1970's, which is the most important achievements in the global finance innovation and now it has played a significant role in the mortgage market in many developed countries. After the reform of housing system in China, the proportion of home loan mortgage moving up quickly in banks, and how to solve the problem is imperative under the situation. This paper bases the development trend of MBS and integrates the problems of capital market in China, discussing how to protect investor's interests when conducting MBS in China. The paper has four parts and the main concepts are as follows: Part 1. It is the introduction of MBS, including the concepts of ABS and MBS, the interests for originators and investors, the participators and process of MBS. Part 2. This is the discussion about the investor protecting in the MBS in the U.S.A, from the points of the administrative supervision and the self-discipline of the corporations. The operation of government promoting, the supervision of information revealing and true sale, the systems of bankruptcy isolation and credit enhancement and rating are the main concepts in this part. Finally, it is the summarizing of the experiences of MBS in protecting investors' interests in the United States. Part 3. It concentrates on the rights and interesting allegation of the investors in the MBS in Taiwan. This part introduces the regulations of the Statute for Securitization of Financial Assets of Taiwan. It including the process of holding investors' meeting, the content and method of resolution, disinvestment rights of anti opinion securities holders and the systems of the empanel and officiating of the entrust censorial and supervising organizations. In the end, it is the summarizing of the experiences of MBS in protecting investors' interests in Taiwan. Part 4. This part is on the basis of the above analyses, and I want to give some advices on how to regard protecting the investors' interests as the core when constructing MBS in China. The feasibilities and obstacles of conducing MBS are the foundation of my advices. I suggest that each one strengthening the idea of protecting investors' interests, government actively promoting and guiding the MBS and perfecting the systems of information revealing and credit rating, setting up the exertion mechanism of investors' rights and interests. I hope above all will establish a good foundation for conducting MBS in the near future in China.