The mortgage industry of Denmark has proved very effective in providing borrowers with flexible and transparent loans on conditions close to the funding conditions of capital market players. Simultaneously, the covered mortgage bonds transfer market risk from the issuing mortgage bank to bond investors. Lastly, strict property appraisal rules, credit risk management by the mortgage banks, and tight regulations including the so-called 'balance principle', have also historically shielded mortgage bonds from default risk. High industry concentration and automatic stabilizers also play a role in maintaining stability.
In Denmark, the mortgage banks are the only financial institutions allowed to grant loans against mortgage on real property by issuing covered mortgage bonds (Realkreditobligationer). The scope of activities allowed to mortgage banks is limited to the origination and servicing of mortgage loans, their funding, exclusively through the issuance of mortgage bonds, and activities deemed accessory. As of 2007, there are eight mortgage banks active in the Danish mortgage market, some affiliated with commercial banks.
Famous quotes containing the words mortgage and/or industry:
“We are playing with fire when we skip the years of three, four, and five to hurry children into being age six.... Every child has a right to his fifth year of life, his fourth year, his third year. He has a right to live each year with joy and self-fulfillment. No one should ever claim the power to make a child mortgage his today for the sake of tomorrow.”
—James L. Hymes, Jr. (20th century)
“Bankers, nepotists, contracts and talkies: on four fingers one may count the leeches which have sucked a young and vigorous industry into paresis.”
—Dalton Trumbo (1905–1976)