Secondary Mortgage Market

As one of these most important prerequisites, in certain countries, without exception (see below), an investor needs a license to purchase and resell mortgage credit backed by 1-4 families. Indeed, about 1/3 of states require that buyers and, in certain cases, vendors of housing finance obtain housing finance lenders licences, according to the pledge given, precedence of the credit and/or its interest rates or yearly percentages.

The Georgia Residential Mortgage Act, for example, does not define "Mortgage Lender" only as someone who grants credit, but also as someone who buys it on a committed credit and secondary market base, regardless of the nature of the pledge, and therefore demands that these buyers be licenced. They argued that because they only bought and resold credits from their office and did not broker or use credits, the interstate trade clause made these state license provisions unapplicable to them.

However, in recent years some states have strongly opposed these unconstitutional claims and called for housing finance to be allowed in their countries. In particular, they recognise them in investigations of licenced authors ("to whom do you resell your loans") and in enforcement measures. Many of the countries that require licences to purchase home finance in the secondary market require the company's agents to fill out requests, resolve business and legal disputes, and its nominee employees to reply to intrusive financial queries and undergo backgrounds exam.

If, for example, the sponsor never intended to use the same company or vehicles to obtain mortgage credit or to use the acquiring company only for a short term, it would be inconvenient to license such a company. The non-licensed company could then buy the loan from a third party and at the same have the right to the loan transferred to a Delaware statutory trusts with a SNB custodian.

Trustees acting on trusts' behalf are exempted from state approval obligations by reason of pre-emption by the Confederation and, in most cases, by express legal exception. Or the Delaware statutory trusts with the SNB custodian could be the buyer of the seller's loan directly in the deal.

Whereas the right is vested in the exempted domestic banking fiduciary, the commercial or commercial interest in the credit remains with the recipient of the trusts, who may be the buyer of a mortgage as well. Investors wishing to make use of the funds only instruct the Delaware Government Foundation to instruct the Delaware Government to transfer the funds back to a third person before reselling them or to directly resell the funds to the third person.

What is the best moment to use a Delaware Statutory Trusts with a SNB custodian? It should only be used to buy contracted secondary market credits through a company that buys the credits on a one-off or occasional base, or if the company only exists for a brief term (i.e. usually less than about 18 months).

It should not be used to grant credits, to obtain credits under home equities facilities or by a company that conducts repeated whole lending transactions over an extended timeframe. In addition, it is of crucial importance that the credits are always served by a fully licenced service provider.

There are two key considerations when deciding to purchase housing mortgages by using a Delaware statutory trusts with a SNB trustee: First, in the case of enforcement, the mortgages must be excluded in the name of the trusts themselves and not in the name of the non-licensed individual.

Secondly, if the sponsor sets up a seperate company to keep REO after a levy of execution, it is important that REO is even after the levy of execution to transfer the REO to the car and that the loans before the levy of execution is not transfered to the REO unit. REO must obtain a license to assign a pre-enforcement credit granted in certain jurisdictions, and usually will not obtain such licenses.

Countries where licences are needed for the acquisition of housing finance have seen supervisory authorities become very harsh on non-licensed companies that carry out foreclosures on their own behalf. Within this framework, shareholders buy indivisible shares in mortgage credits securitised by a profit sharing warrant. Whilst the customer retains the right of property in the mortgage credit (i.e.

In the case of a company (seller of the investments), the holder of the certificates (i.e. the buyer of the investments) is the economic owner of the borrowings. According to this scheme, the acquirer of the holding would normally not be required to obtain approval under the Land laws, since he would never have the right to a credit or an indivisible part thereof, but only the economic interest in the credit.

If the buyer wishes to sell his shares in the credit to third persons, the shareholding can be dissolved slightly.