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Mortgage Bank Refinancing – Proposals for Implementation of the European Covered Bond Directive in Hungary

Author

Listed:
  • Gyula László Nagy

    (Takarék Jelzálogbank)

  • Zsombor Incze

    (Takarék Jelzálogbank)

  • Erik Landgraf

    (Szabó Kelemen & Andersen Attorneys)

Abstract

In this study, we summarise the operational models of mortgage banks and the new EU mortgage bond regulations. We analyse the most important challenges facing refinancing mortgage banks in the current framework. These are basically grouped into three subjects: (1) for historical reasons, the characteristics of refinancing loans do not support more efficient portfolio refinancing; (2) the refinancing loan guarantee scheme does not ensure fulfilment of the conditions laid down in other legislation in case of statutory portfolio assignment; (3) overcollateralisation in the current purely refinancing model cannot be achieved from ordinary collateral. On this basis, we propose the development of an alternative regulation for “refinancing mortgage banks”, while fully maintaining the current operation; with this alternative regulation, a revised collateral system would help to solve the problems and develop a more efficient mortgage loan structure.

Suggested Citation

  • Gyula László Nagy & Zsombor Incze & Erik Landgraf, 2020. "Mortgage Bank Refinancing – Proposals for Implementation of the European Covered Bond Directive in Hungary," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(3), pages 102-129.
    • Handle: RePEc:mnb:finrev:v:19:y:2020:i:3:p:102-129
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    More about this item

    Keywords

    covered bonds; mortgage banks; mortgage bonds; mortgage loans; refinancing;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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