Danish mortgage market
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98% of Danish mortgages are securitized to mortgage-backed securities and sold by the mortage originators.
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[edit] Business
[edit] Costs
Proponents of the Danish system say that its leaner and more efficient than any other system, with costs around 0.5% of the interest on the loans. Compared to the United States system of originators and GSEs which cost 1.25% - 1.5% of the mortage interest.
[edit] Regulation
Hans-Joachim Dübel, a Berlin-based financial services consultant, say that it would be difficult to apply the model to the rest of Europe because it would reduce the profit margins in the mortgage industry. "I don’t believe that other European mortgage lenders would like to be as tightly regulated or as constrained in terms of risk taking as the Danish mortgage credit institutions are. For example, the strict cover principle implies that Danish institutions have to pass on all interest rate risk to investors, a significant source of income and profit for mortgage lenders elsewhere."
[edit] Foreclosure
Also, a very detailed credit check isn't done on the borrower; the loan is based more on the property than the borrower. To support this approach and to protect the investor, the foreclosure process is speedy. In contrast with France, say, where it can take several years to foreclose, Danish properties can be repossessed in less than six months.
