Mortgage Securitization System (MSS) (a complementary system of Rastin Banking)

Abstract

Purpose: This paper aims to define a new system to facilitate obtaining reliable collaterals and guarantees for financial activities from tangible assets through a new financial instrument of “guarantee certificates”. Design/methodology/approach: This system makes it possible to securitize movable/immovable assets into negotiable paper lots, namely, “guarantee certificates”. Each lot of these certificates can be used as a guarantee or collateral for any guarantee-backed activity in banks or other activities. Findings: The mortgage securitization system (MSS) securitizes tangible assets and provides necessary collaterals and guarantees to be used for different purposes. The operations are carried out through notary offices. This system, as a complementary system of the Rastin Banking system, can also be executed separately. Research limitations/implications: The system is novel and needs to be more elaborated for further practical development and adjustment. Although this paper deals with only securitization of tangible assets, research can also be extended to securitization of intangible assets, through new institutions and rules. Practical implications: Many properties and assets can be used as guarantees for observing obligations. The available ways for changing (especially large) properties into small guarantees are not easy and efficient. The MSS was designed to break large assets into many guarantee (certificate) lots and reduce the formalities of mortgaging and its transfer. Social implications: This system provides reliance and security upon collaterals and conditions for fast claim-clearing and low formalities without time-consuming adjudication processes. Originality/value: Complementary systems in Rastin Banking have been designed to solve prevailing problems of banking and financial activities. The MSS was designed to provide necessary arrangements for transforming assets into negotiable papers.