Mortgage Lending

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Mortgage Lending, A comparison of the differing approaches of the Hong Kong Mortgage Authority and Fannie Mae/ Freddie Mac in the securitization of Mortgage loans

Table of Contents


Chapter I: Introduction4

Background of the Study4

Rationale of the study6

Purpose of the Study7

Significance of the Study8

Aims and Objectives10

Chapter II: Literature Review11

Chapter III: Methodology51

Research Design51

Choices of Methodology51

Quantitative Research51

Qualitative Research52

Mixed Method Research53

Limitations of Mixed Methods56

Literature Search58


Where To Obtain Information Needed For This Paper61

Time Plan61

Chapter IV: Discussion & Conclusion64




This paper analysis Mortgage Lending, with special focus on comparison of the differing approaches of the Hong Kong Mortgage Authority and Fannie Mae/ Freddie Mac in the securitization of Mortgage loans. This paper will make the several contributions. One is the quantifying and measuring the differing approaches of the Hong Kong Mortgage Authority and Fannie Mae/Freddie Mac in the securitization of Mortgage loans. Today the market has changed dramatically, mainly as a result of deregulation and increasing competition from a wide range of institutions, but also because of changes in technology and information. These have made it possible more readily and effectively to specialize in different activities and to transfer risks between sectors, to minimize the costs of such risk and to provide a wider choice of more suitable instruments. As a result modern intermediaries may access a vast array of funds, while at the same time offering a fuller range of mortgage products and reducing the costs of intermediation.

Chapter I: Introduction

Background of the Study

Overall, the mortgage market has changed from an 'under-supply' of funds in the 1970s to one of intense competition to provide mortgage finance, particularly pronounced at the peak of the last boom in 1988. Nevertheless, building societies still dominate the housing finance markets; for example, they accounted for 60 per cent of total outstanding mortgages at the end of 1990s and the start of the 2000s. The challenge from the banks is reflected in the growth of their mortgage advances which grew from £593 million in 1980 to £10 894 million at the height of the recent house price boom. To a lesser degree, growing competition has come from the centralized lenders. Yet, although these new lenders presently amount to only 7.7 per cent of outstanding mortgages, they are of particular interest because of the qualitative ways in which they are influencing the housing finance markets in Britain.

By focusing on the financing techniques of the new centralized lenders, this paper highlights the combined influence of financial risk in the development of new financial instruments and the ways in which these risks are identified and priced. These lenders, it is contended, introduced much change into the HONG KONG housing finance market chiefly due to their main funding process: that of so-called mortgage-backed securitization (MBS). This is a process which enhances the attributes of domestic mortgages so that they equate with other capital market investment media in terms of risk/return. Securities backed by domestic mortgages are sold to investors through the capital markets.

Although this financing technique provides the potential for further expanding the supply of housing finance ...
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