Comprehensive Prevention And Treatment Of Bank False Mortgage

The so-called false mortgage is not based on real purchase of a house but for defrauding the credit fund of the bank.This paper makes a synthesis of existing literature on the subject of false mortgage research, and through in-depth study I find that the deeper reason of generation of false mortgage problem is that banks are prevalent in the information asymmetry, and thus leads to severe problems of agency by agreement. Some bank staff ignores the bank’s risk control for their own interests, and turns a blind eye to false mortgage, or worse, some problem employees also collaborate with the developers for mortgage fraud. The direct result of these Circes is that even if the bank has a series of sound control measures of false mortgage, the lack of enforcement to promote staff to implement the bylaw intended by the bank will result in staff not following false mortgage control measures.To solve the problem of false mortgage, bank must first clarify the bank’s internal principal-agent relationship. If the problem can not be properly addressed, the governance of any mortgage against the false policy will be nothing more than a dead letter. False mortgage will not disappear.For the problem of agency by agreement within the bank, I suggest that bank should control the costs and benefits into account, and through selecting a measure "random spot checks, increasing the penalty" to largely reduce the possible occurrence of false mortgage. The method points to:bank audit department should conduct random check on personal housing mortgage loans at a certain probability from time to time and in strict confidence before each sampling, then give extremely harsh punishment to the staff who was found in illegal lending. If we assume that the probability of randomly selected to P; bank employees leave the mortgage proceeds for the Z, punishment by the loss of K, then the utility function is U= Z-PK. Only employee’s illegal mortgage proceeds of Z is less than the cost of PK, the rational choice of staff will be not helping the developers to leave the mortgage. Through the above analysis, the bank can choose increasing the probability of sampling P or K to control penalties false mortgage purposes.Comprehensive Treatment of false mortgage banks not only need to improve internal control mechanisms, but also need to be supported by strong executive power. Only within the bank’s efforts may minimize the fake mortgage probability of occurrence. To eliminate false mortgage fundamentally, which is economic cancer, we also need socially relevant functional departments, and in close collaboration with national laws, improve the legal punishment mechanism, strengthen the construction of housing registration system to crack down on real estate behavior. Through all these measures, I believe, the mortgage problems will certainly be properly addressed.This paper first introduces the definition of false mortgage, the patterns of manifestation and the harmfulness by false mortgage. Then I analyze the reasons why false mortgage exists, and put forward a plan to solve this problem, which includes strengthen the construction of housing registration system to crack down on real estate behavior, improve the legal punishment mechanism, construct an excitation mechanism and enact national laws. At last, I introduce a case to analyze false mortgage.