Transcript Slide 1

M
I K
MONGOLIAN MORTGAGE CORPORATION
MORTGAGE MARKET
DEVELOPMENT IN MONGOLIA
Regional
Symposium
on Pro-Poor
Housing Finance
in Asia and Pacific,
ISSUES AND CHALLENGES
Ts.Enkhbayar
CEO
[email protected]
New Delhi, India
2010.04.19
Content
• Housing finance system development
process
• Mortgage market overview
• Status of conditions on mortgage market
development
• MIK performance , issues and challenges
Housing finance system development overview
• Top down
system
• Financed by
100% state
• Waiting list
• Free
housing
delivery
Before 1990s
Top down
system
1990-2000
Transitional
period
•Housing
supply
stopped
•Housing law
(1997)
•State Housing
policy
•HFS needs
•Enabling
environment
•Housing
privatization
•ADB project
3090
•Some
initiatives by
private sector
• Private
investment
started
• Housing
demand
and supply
study
(ADB)
• HFSP by
ADB started
2000s
preparatory
stage
2003-2007
Kick off
• Mortgage loans
started in 5
banks
• Loan portfolio
205 bln tug
• Loan
standards,
documentation,
database
• MIK established
2006
• HFC
established
2007
• Housing supply
increased
• Housing
demand
• Setting up
mortgage
legal
environment
• Proper PMM
infrastructure
• capital market
development
• Capacity
building,
Institutional
strengthening
• Warehousing
• Liquidity
facility
• Issuance MIK
bond
• Phased
development
approach
2008 ….
Development
Housing Areas:
Ger area
70%- population
59%- UB
80-90% provincial towns
Planning – not proper
Water supply – kiosks (potable)
Sewage – pit latrine
Heating – stove using coal and wood
Electricity – yes
Social infrastructure – not sufficient
Land ownership –yes
Housing finance – savings, assistance
from relatives and friends, loans
Serviced apartment area
Planning –proper ,
Water supply – central system
Sewage – central system
Heating – central system
Electricity – central system
Social infrastructure –sufficient
Apartment ownership –yes
Housing finance – mortgage loans,
savings
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Mortgage market overview
Market Core Indicators
2009.12.31
2004
2005
2006
2007
Total Debt Outstanding /mln.MNT/
8,2
19
31
74,3
164,6
Total Debt Outstanding / Changes/ :
0%
132%
62%
141%
Debt Outstanding/Borrower /mln MNT/ :
7,2
6,6
6,5
8,3
Number of Mortgage Borrowers
1,057
2,892
4,774
8,984 16,444 16 590 16 628
Market W.A.I.R /Ann , %/:
12.0% 14.5%
14.7%
17.8%
16%
75.%
76.%
68%
Original W.A. LTV % :
83%
70%
2008
2009
2003
122%
217
8.3%
226
8.5%
10,0
13
13.6
18.7% 17.2%
70%
78%
205,857,090.12
164,625,901.96
74,318,389.54
8,199,617.73
19,018,145.68
30,839,715.65
2003
2004
2005
2006
2007
I Quarter, 2008
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Shareholders
Main Goal
Bank of
Mongolia
Zoos
Anod
Хас
UBC
bank
Capital
MIК
Capitron
Established 06.09.2006
Golomt
TDB
Mongol
Post
Khaan
Promotion and
development of primary
and secondary mortgage
markets by raising
medium to long term
funds on domestic and
foreign capital market
through a series of capital
market tools to create and
ensure s smooth
functioning of long-term
financing system to
promote affordable home
ownership and urban
development for
Mongolia’s people.
Mortgage market activity
Borrower
Mortgage Bonds
Loan
Lender
Commercial
Bank
loans
Funding
₮
Secondary
Mortgage Market
Institution
INVESTOR
(International,
Domestic )
Funding
2 major role
i) market development driver I
i) Pioneering SMM
PRIMARY MORTGAGE MARKET
SECONDARY MORTGAGE MARKET
(Large amount, qualified, guaranteed
,Mortgage loan that attract investors)
( Raise fund through making a portfolio on similar housing
mortgage loans to sell it to the third party)
Lender- Agency- Investor
Borrower - Lender
MONGOLIAN MORTGAGE CORPORATION
Shareholders
Board Members
Financial
Committee
Operational
Committee
Risk
Committee
Legal & Audit
Committee
CEO
Asset management and
Securitization Division
(Asset management
officer, Securitization
officer)
Finance and Investment
Division
(Senior finance officer,
Accountant, Assistant
Accountant)
Risk Management
Division
(Risk management officer)
Internal operation
Division
(IT, Layer, Cooperation
officer, Administration &8
HR officer)
Reason why we established MIK
– Increase the affordability of the housing loan
– Stable structure for long term financing
– Increase in housing mortgage market
– Need for capital market development
– Liquidity facility
16% - PWR
84% - PWOR
МIK OPERATION
Outstanding mortgage pools 2008-2009 bln
Tug
9,000.00
Dec 2009 swapped
MIK bond with
mortgage pool
8,000.00
16%
84%
7,969.78
7,000.00
6,000.00
5,000.00
4,000.00
USD
8%
3,000.00
MNT
92%
2,000.00
2,614.38
2,707.99
2,429.80
1,630.49
1,000.00
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2008.IV
2009.I
2009.II
2009.III
2009.IV
DEVELOPMENT PHASES
Diversification
2017-2020
Development period
2013-2016
Start up period (setting up solid
foundation for mortgage market
development)2007-2012
Phased Development Approach
Start up period
2007-2012
Legal and policy
environment related
with mortgage market
development will be in
place
Financial infrastructure
related with mortgage
market will be in place.
dominant player
By purchasing qualified
mortgage pools and
issuing MIK bonds MIK
would become
financially capable and
highly professional
mortgage financing
institution
Mortgage security
SPV
Pool registration
Tax matter
MIK legal status
Standardization of
mortgage loans
Property appraisal
Mortgage database
system
Mortgage insurance
Credit bureau
Capital market
development
Rating
Income verification
system
Market environment
Mortgage law
Primary mortgage market infrastructure
Legal environment
Issues to be done for developing efficient mortgage market development
Political stability
Economic stability
Balance on Supply and
demand
Creating domestic
potential investor
Affordability
Capacity development
Institutional capacity
Coordination and
linkages of market
players
Quality of collateral
•Efficiency of Urban
planning, land development,
construction quality
•Effective operation and
maintenance
MIK Progress
Sep 2006
June 2007
Nov. 2007
June 2008
Oct. 2008
May 2009
June 2009
July 2009
August 2009
Sep. 2009
Oct.2009
Oct 2009
Dec 2009
Jan 2010
March 2010
April 2010
April 2010
April 2010
• MIK established
• MOU signed with KfW, MOF, BOM
• First mortgage pool purchased
• MIK set up internal operational procedures
• Mortgage standardization procedure approved
• Mortgage toolkit with IFC TA project
• Mortgage law approved
• Agreement with MOF-KfW
• FRC shelf registration MIK Bond
• UNESCAP-UNHABITAT- NHB workshop
• first OTC transaction and procedure
• First MIK bond issued and sold
• KfW TA started
• MIK IT infrastructure
• Micro housing finance study project , IFC
• ABS law has discussed by Parliament
• Domestic investor-insurance companies
• involved
Mortgage guarantee program initiated with 14
FMO
learning
• Play dual role
– Driven force of setting up Mortgage market
development as well as capital market
• (laws, regulations, policy framework, financial
infrastructure, capacity building, workshops, RTD,
lobbying, etc)
– Acting as secondary mortgage institution
• Purchasing pools from banks, warehousing m
issuing bonds and selling investors etc
• Institutional strengthening and capacity building
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ISSUES AND CHALLENGES
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Implementation of laws and regulations recently approved
Economic stability
Different Understanding of mortgage issues
Standardized and documented origination and servicing
Low affordability rate
Local rating agency
Inappropriate Professional appraisal
Title and Lien registration, enforcement
Balance sheet treatment with recourse based loan pools and bonds
Bankruptcy remote vehicles
Tax and accounting guidelines
IT infrastructure AM
Credit scoring
Mortgage insurance
Mortgage guarantee program
What is next?
• Improve accessibility housing loans to LIHs
– Housing micro finance study,
– Guarantee program with international orgs.
• ABS , SS laws and related regulations, by laws
• Issue bonds to domestic and international market
• Expanding cooperation
– Network meeting in Mongolia APHFU
– Intensive development of mining industry –coal
mining, copper mining, gold etc and
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THANK YOU
Mongolian Mortgage Corporation LLC /MIK/
MIK Building , United Nations street-38
Chingeltei district-4, 15160
Ulaabaatar, Mongolia
www.mik.mn, [email protected]
Tel: (976) 11-328267
Fax (976) 11-313338
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