The Hong Kong Mortgage Corporation Limited (HKMC), Convenor of the Steering Committee of the Project on the Standardization of Mortgage Origination Documents in Hong Kong, hosted a Forum today (Thursday) to launch the full set of the model mortgage loan origination documents (Model Documents) and to promote its adoption by mortgage lenders in Hong Kong. The Steering Committee (Annex A) composes of major mortgagee banks, professional bodies, academic institutions and the relevant regulatory authorities.
The full set of Model Documents, representing the final product of Phases I and II of the Project, consists of:
- the Model Two-party Mortgage
- the Model Three-party Mortgage
- the Model Deed of Guarantee and Indemnity
- a set of Recommended Core Provisions for the Mortgage Loan Application Form
- a set of Recommended Core Provisions for the Facility Agreement
- the Model Instructions to Solicitors
- the Model Solicitors' Completion Certificate.
Phase I of the Standardization Project was marked by the successful development of the Model Two-party Mortgage and the Model Deed of Guarantee and Indemnity. Since its publication in July 2001, the Model Two-party Mortgage has been adopted by 14 major banks in Hong Kong, which together account for about 84% of the residential mortgage market. The Model Deed of Guarantee and Indemnity embodies important principles of fairness to the third-party surety which have been adopted and replicated in the Code of Banking Practice.
The full set of Model Documents is drafted in plain English to further enhance understanding by their users, i.e. borrowers, mortgagors and the mortgage lenders themselves, while at the same time exemplify the best market practice in mortgage loan origination advocated by the Steering Committee. Equally important, the Model Documents aim at striking a fair and balanced relationship between the borrowers, the mortgagors and the lenders. These landmark improvements from traditional old-fashioned legal documents were made possible with the constructive comments provided by consultative parties (Annex B) consisting of industry representatives, professional bodies and relevant regulatory authorities.
The Forum was well attended by over 400 attendees from banks, law firms, barristers' chambers, the Hong Kong Monetary Authority (HKMA), the Judiciary, the Department of Justice, the Consumer Council and other interested bodies. The key features and significant improvements to be brought about to the local mortgage loan origination process by the launch of the full set of Model Documents were clearly and enthusiastically expounded by the distinguished speakers in the Forum. The speakers included The Hon. Mr. Justice Barry Mortimer, Judge of the Hong Kong Court of Final Appeal; Mr. Joseph Yam, Deputy Chairman of the HKMC; Mrs. Pamela Chan, Chief Executive of the Consumer Council; Mr. Kim Salkeld, Land Registrar; Mr. Anson Kan, Vice President of The Law Society of Hong Kong; Mr. Ambrose Ho, Vice Chairman of Hong Kong Bar Association and Ms. Susie Cheung, General Counsel and Company Secretary of the HKMC.
Mr. Justice Barry Mortimer commented, "The Model Documents under Phase I of the Project have been well received and widely welcomed. Such has been the success of Phase I that now we have Phase II adhering to the same principles. The documents deserve special acclaim and universal acceptance. These are documents which most people will sign at some time during their lives . . . . for the purchase of their home on mortgage. They are documents of the first importance and they fulfill the aims of those who have drafted them."
Mr. Joseph Yam, Deputy Chairman of the HKMC said, "For the secondary mortgage market, standardized mortgage documents help to shorten the time frame and transaction costs for the sale and purchase of mortgage portfolios and the issuance of mortgage-backed securities." He further said, "We hope that with a full set of the model mortgage origination documents now available, those undecided mortgage lenders will feel confident enough to make a full commitment to adopting the Model Documents by following the example set by some of the larger institutions." In promoting wider adoption of the Model Documents, the HKMA had issued a letter to all authorized institutions on 29 September 2003 to advise them to adopt the Model Documents.
Mrs. Pamela Chan, Chief Executive of the Consumer Council said, "The Mortgage Corporation has set an exemplary model for businesses in Hong Kong in devising a balanced set of mortgage documents in order to promote best market practice, and in championing the use of plain language in legal documents to enhance information disclosure and consumer understanding. I earnestly hope to see industry-wide adoption of the model documents in due course so that consumers at large can benefit from the commendable efforts of the Mortgage Corporation."
Mr. Anson Kan, Vice President of The Law Society of Hong Kong said, "The introduction of Model Documents also represents the best market practice and raises the industry's standard. The Law Society fully supports the goal of the Steering Committee and believes the further use of such documents will help to promote a prosperous and stable property market which the HKMC can use as a basic stepping stone to enhance the international financial standing of the HKSAR."
The full set of Model Documents is available for public review at the offices of the Consumer Council and at the website of the HKMC (www.hkmc.com.hk).
The Hong Kong Mortgage Corporation Limited
27 November 2003
Annex A (MS Word, 30KB)
Annex B (MS Word, 30KB)
