Ts.EnkhbayarCEO

Enkhbayar@mik.mn

New Delhi, India 2010.04.19

MONGOLIAN MORTGAGE CORPORATION M I K

Regional Symposium on Pro-Poor

Housing Finance in Asia and Pacific,

MORTGAGE MARKET DEVELOPMENT IN MONGOLIA

ISSUES AND CHALLENGES

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

Housing Areas:

Ger area

Planning – not proper Water supply – kiosks (potable)Sewage – pit latrineHeating – stove using coal and woodElectricity – yesSocial infrastructure – not sufficientLand ownership –yesHousing finance – savings, assistance from relatives and friends, loans

Planning –proper , Water supply – central systemSewage – central systemHeating – central systemElectricity – central systemSocial infrastructure –sufficientApartment ownership –yesHousing finance – mortgage loans, savings

70%- population59%- UB80-90% provincial towns

70%- population59%- UB80-90% provincial towns

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Serviced apartment area

2009.12.31Mortgage market overview

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Market Core Indicators 2003 2004 2005 2006 2007 2008 2009

Total Debt Outstanding /mln.MNT/ 8,2 19 31 74,3 164,6 217 226 Total Debt Outstanding / Changes/ : 0% 132% 62% 141% 122% 8.3% 8.5%

Debt Outstanding/Borrower /mln MNT/ : 7,2 6,6 6,5 8,3 10,0 13 13.6

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% 18.7% 17.2%

Original W.A. LTV % : 83% 70% 75.% 76.% 68% 70% 78%

Shareholders Main Goal

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.

Established 06.09.2006

Mortgage market activity

LenderCommercial

Bank

loans Mortgage Bonds INVESTOR

(International,

Domestic )Funding Funding

Borrower

Loan

₮

Secondary Mortgage Market

Institution

2 major role i) market development driver I

i) Pioneering SMM

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 & HR officer)

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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

Dec 2009 swapped MIK bond with mortgage pool

МIK OPERATION

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16% - PWR84% - PWOR

DEVELOPMENT PHASES

Phased Development Approach

Issues to be done for developing efficient mortgage market development

MIK Progress

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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– 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-38Chingeltei district-4, 15160Ulaabaatar, Mongolia

www.mik.mn, info@mik.mn  Tel: (976) 11-328267Fax (976) 11-313338 

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