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Some comments and concerns have been expressed on specific aspects of the mortgage corporation proposal, including notably the projection of the shortfall in mortgage funds, effects of the corporation on banks' mortgage lending business, impact on the property sector, risk management issues, corporate structure and involvement of HKMA, as well as the features of the debt securities to be issued by the mortgage corporation.
"We have thoroughly considered all the comments and concerns on the proposal.
"Our assessment is that the setting up of the corporation would not have adverse implications for the banking sector and the property market.
"In fact, most of the comments and concerns can be addressed through a careful definition of the business scope of the mortgage corporation, a high degree of transparency in its operation, a broad representation on its Board of Directors and the putting in place of prudent risk management measures and mechanism," Mr Yam said,
HKMA will now proceed with the preparatory work for the setting up of the mortgage corporation.
As a first step, HKMA will prepare the draft memorandum and articles of association of the corporation, and finalise the organisational structure and human resource arrangements.
There is also a need to develop the purchasing and servicing standards, the information technology system and the asset and liability management mechanism of the corporation.
It is tentatively estimated by HKMA that the mortgage corporation would be able to commence operation in 12 months' time.
"We will fully consult the banking industry, capital market participants and other interested parties in the preparatory work to ensure that the concerns and requirements of the loan originators, capital markets, institutional investors, mortgage loan borrowers and other participants are taken into account," Mr Yam added.
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