|
Since 1997, with the reforming of housing regulation and gradual deepening of financial reform, China’s commercial banks gradually develop individual housing loan business as a new profit growth point. After several years of rapid development, the personal housing loan has entered a high-risk period.This paper starts from the current situation of individual housing loan risks in China, analyzes the risks from the U. S. subprime mortgage crisis, and brings out the establishment of risk management system and corresponding solutions for our commercial banks.The first chapter describes the purpose of personal housing mortgage loans. Because of the abolition of the welfare housing distribution system and individual housing turned to the market, housing becomes the most significant expense for the residents. Few people can fully paid for the housing, therefore comes out the personal housing mortgage loan business. Because of its high profitability, personal housing mortgage loan is taking a bigger part in commercial bank business. Influenced by the U. S. subprime mortgage crisis and real estate bubble increase, it becomes more import how to identify, transfer, control and manage the risk of personal housing mortgage loans to the commercial banks.The second chapter describes the theoretical basis of bank risk management----"New Basel Capital Accord", "the" three pillars "theory. The minimum capital requirement is the most important part of the " three pillars ". Banking supervision and market discipline is a complement and support to the first pillar. It also describes the definition of personal housing mortgage loans, types and practical significance, through the use of a large number of charts and examples of the analysis to strengthen the argument.The third part this article points out the current problems of personal housing mortgage loans in China, and corresponding risks, such as credit risk, liquidity risk, policy risk, "fake mortgage" risk, prepayment risk, collateral risk, and does an in-depth analysis of these risks through extensive examples and diagrams.The forth part introduces the reason for the subprime mortgage crisis, which is due to rising U.S. interest rates and continuous cooling of housing market. The rising interest rates results in the repayment pressure. Many users with bad credit feel payment pressure, may default on bank loans and placed an impact on bank load collecting. With the suddenly falling of house prices, borrowers become unable to make payment, the banks short sale the houses, but cannot collect the loan and the interest, therefore the bank suffer from loan losses. It wouldn’t be a serious issue if this is a rare case, but the rising interest, plus the bad credit of subprime borrowers, leads to a large number of borrowers who cannot pay back the loads and causes the sub-prime crisis. Sub-prime crisis have placed impacts on varying countries in the world, including China, and also gives profound enlightenment in risk management of personal housing mortgage loan business.The fifth part of the article concludes the recommendations to improve the risk management of individual housing loans for Commercial Banks. First, establish credit assessment of individual housing loans system, focusing on the creditworthiness of the borrower and the assessment of real estate building companies. Second, it proposes the solution to prevent the personal housing mortgage loan credit risk, liquidity risk, operational risk, "fake mortgage" risk, prepayment risk and collateral risk. Third, strict censorship needs to be placed on the loan approval of commercial banks, and gradually improve the internal control system. Fourth, adapt loan insurance on individual housing, transfer the risks from the commercial banks, and require banks, building companies, home buyers pay according to a certain percentage of co-insurance costs to banks as the beneficiary. For the buyers with good credibility, banks may consider some of the premium refund. So if the loan payment is delayed, and the house builders don’t take the obligation, the bank may ask the insurance companies to cover the loss, relying on insurance companies as a protection mechanism. Finally, it proposes the establishment of the banking system to regulate the risks of individual housing loans, and strengthening risk prevention system, the establishment of government mortgage guarantee system for low-income families, and of appropriate mechanisms of social housing security and strengthening of bank supervision.
|