MIK Holding IPO and
RMBS Issuance
Strictly Private & Confidential 2016
Mongolian Mortgage Corporation LLC
HQ Building of TDB, 10th Floor, Peace
Avenue 19, /14210/, 1st khoroo,
Sukhbaatar District, Ulaanbaatar, Mongolia
Tel: +976 11 328 267
Fax: +976 11 313 338
MIK HFC LLC’s Securitization Performance and RMBS Issuance
RMBS Activity Summary
Contents
Summary Activities to MIK HFC LLC…………………………….…3-6
Business and Financial Performance Indicators of MIK Group........8
MIK Holding JSC’s IPO and trading performance...........…….….9-11
RMBS’s Cover Pool Portfolio Characteristics………….….….…12-15
Sustainable Mortgage Financing Program for Middle-and-Low
Income Group Affordable Housing…………………….…………16-20
Key Transaction Parties, Scope of Works of Securitization, RMBS
Issuance Transaction Structure, Mortgage Lending and Eligibility
Criteria……………………………………......................................21-31
RMBSs Issued performance………….………………………..……...32
Page 2
Institutional Goal
Mongolia’s first Secondary mortgage market institution, “The
Mongolian Mortgage Corporation (MIK) HFC” LLC. was established on
October 6, 2006 by the decision of the Shareholders Meeting
represented by the Bank of Mongolia (BoM) and 10 private commercial
banks.
The main goal of “MIK HFC” LLC. is to contribute to primary and
secondary mortgage market development by issuing and selling
Mortgage-backed securities predominantly on domestic capital market,
to implement and ensure a sustainable long-term housing financing
market development, contribute to better accessibility and affordability
of home ownership, support environmentally healthy urban
development.
Page 4
“MIK HFC” LLC. Shareholders
State owned Entities’
Shareholding-
19.66% *
Private Banks’
Shareholding-
71.34% **
TDB Capital’s
Shareholding- 7.53%
Other Shareholders-
1.47%
MIK HOLDING JSC
(100%)
MIK HFC LLC
(100%)
Special Purpose
Companies
MIK ASSET SPC 1-8
MIK ASSET 9
Page 5
*- BOM, State bank and Development bank of Mongolia
**- Golomt bank, Capitron Bank, Xac bank, Chinggis Khaan bank, Capital bank, Khan bank, TDBank,
UBC bank
Organizational Structure of MIK Holding JSC. (as of 2015.12.31)
Page 6
SHAREHOLDERS MEETING
BOARD OF DIRECTORS
Board
Secretariat
Internal
Audit
Legal and
Operations
Committee
Finance
and Audit
Committee
Nomination
and
Remuneration
Committee
Risk
Management
Committee
CHIEF EXECUTIVE
OFFICER
Organizational Structure of MIK HFC LLC. (as of 2015.12.31)
Page 7
BOARD OF DIRECTORS
IMPLEMENTING RIGHT OF
SHAREHOLDERS MEETING
CHIEF EXECUTIVE OFFICER
Management Counsel Asset and Liabilities Committee
Special Purpose Companies
MIK ASSET SPC 1-9
Deputy Director,
Business Development
Securitization
Division
Securities
Market
research
Sub-Division
Marketing,
Products
Development
Management
Sub-Division
Mortgage
Asset
Assessment
Division
Chief Operational
Officer
Information
Technology
Division
Legal
Division
Human
Resource
Management
Division
Chief Financial
Officer
Financial
Accounting
and
Controlling
Division
Accounting
Supervision
and Financial
Planning Sub-
Division
Servicing
Agreement
Accounting
Sub-Division
Treasury
Department
Risk
Management
Department
Portfolio Risk
Assessment
Sub-Division
Business and Financial Performance Indicators of MIK GROUP
Page 8
Key Indicators(In 000.MNT): 2013 2014 2015
Current asset, of which 355,195,470 878,796,405 2,153,815,841
Residential mortgage loan portfolio 322,893,517 826,127,184 2,017,371,457
Newly purchased mortgage portfolio,
incremental : 326,304,190 551,746,231 1,311,812,757
Nr. of Transactions for the period: 7 3 9
Total assets 356,420,135 893,948,819 2,169,174,333
Total liabilities, of which 332,246,086 847,669,235 2,050,365,056
RMBS outstanding 322,901,700 831,338,000 2,026,603,800
Total Equity 24,174,049 46,279,584 118,809,276
Total Interest Income 3,203,537 41,840,929 125,520,407
Total Interest and Coupon Expense
Total Net Interest Income
1,204,191 24,539,111 76,446,697
1,999,346 17,301,817 49,073,710
Total Operating Expenses, of which 1,209,027 5,209,222 13,474,121
Professional Service Fee Expenses¹ 205,843 4,739,124 14,103,060
HR and Administration Expenses 677,897 1,470,825 2,341,501
Total Net Earnings before Taxes 869,417 12,487,307 36,930,824
Retained Earnings after Taxes 816,230 12,105,535 35,613,988
Number of Shares 14,298,856 16,798,856 20,709,320
EPS, MNT 57 721 1,720
Key Indicators(In %): 2013 2014 2015
Equity / Total Assets 6.78% 5.18% 5.48%
Debt / Total Assets 93.22% 94.82% 94.52%
Net Profit Margin (NPM) 25.48% 28.93% 28.37%
Annual Return on Assets, (ROA) 0.23% 1.35% 1.64%
Annual Return on Equity (ROE) 3.38% 26.16% 29.98%
¹ - Servicing fee, TA fee, Legal service, Audit expenses
MIK HOLDING JSC. IPO performance
Page 10
Secondary Market:
Trading information of company in the first 26 days after IPO
Offering: IPO of 3,106,398 common shares
15% of total shares
Price: MNT 12,000 per Share
Total Amount: MNT 37.28 billion
Closing date: December 24, 2015
№ Date Price Trading
High Low Open Close Volume Total Amount
1 1/19/2016 12,500 12,500 12,500 12,500 10 125,000
2 1/15/2016 12,300 12,300 12,300 12,300 369 4,538,700
3 1/13/2016 12,300 12,300 12,300 12,300 25 307,500
4 1/11/2016 12,220 12,200 12,210 12,220 303 3,702,030
5 1/8/2016 12,300 12,200 12,300 12,210 35 427,200
6 1/7/2016 12,200 12,200 12,200 12,200 2,022 24,668,400
7 1/6/2016 12,200 12,200 12,200 12,200 1,120 13,664,000
8 1/5/2016 12,400 12,100 12,200 12,180 107 1,303,300
9 1/4/2016 12,200 12,100 12,100 12,100 3,056 36,979,300
Total 7,047 85,715,430
Primary Market:
Residential Mortgage Loan
Purchase plan up to 2018
Page 11
31-Jan 29-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec
Purchase portfolio by
RMBS, bill.MNT185.0 130.0 150.0 255.0 720.0
Purchase portfolio by other
funding source, bill.MNT2.0 2.0 5.0 10.0 13.5 6.7 39.2
31-Jan 29-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec
Purchase portfolio by
RMBS, bill.MNT200.0 200.0 200.0 600.0
Purchase portfolio by other
funding source, bill.MNT2.5 15.0 17.5
DateTotal
amount
2017
Total
amount
2016
Date
RMBS’s Cover Pool Portfolio Characteristics,
Sustainable Mortgage Financing Program for
Middle-and-Low Income Group Affordable Housing
MIK ASSET SPC 1-7 Issued RMBSs’ Brief Summary (in Bln.MNT 2015.12.31)
№ SPCs
RMBS
Amount
(at Issuance
date)
Senior RMBS
Outstanding
balance
Junior RMBS
Outstanding
balance
Total RMBS
Coupon Paid Total coupon
paid
(cumulative)
Total RMBS
redeemed
(cumulative)
Total Mortgage
cover pool
outstanding
balance Senior Junior
1 MIK Asset One 322.90 237.14 32.29 23.57 6.76 30.33 60.24 261.84
2 MIK Asset Two 222.05 179.97 22.21 10.62 2.90 13.52 24.42 193.25
3 MIK Asset Three 324.60 274.28 32.46 12.61 3.37 15.98 23.79 296.53
4 MIK Asset Four 452.28 391.69 45.22 13.34 3.53 16.87 23.11 423.19
5 MIK Asset Five 294.34 260.06 29.43 5.86 1.53 7.39 9.36 283.09
6 MIK Asset Six 261.70 235.53 26.17 2.64 0.69 3.33 4.21 255.76
7 MIK Asset Seven 293.86 264.48 29.39 0.00 0.00 0.00 0.00 292.47
TOTAL 2,171.73 1,843.15 217.17 68.64 18.78 87.42 145.13 2,006.13
Page 13
COVER Pool MORTGAGE Portfolio
Characteristics /as of 2015.12.31/
MIK Asset
One SPC
MIK Asset
Two SPC
MIK Asset
Three SPC
MIK Asset
Four SPC
MIK Asset
Five SPC
MIK Asset
Six SPC
MIK Asset
Seven SPC
Cover Pool Mortgage Portfolio
Outstanding /Bln.MNT/: 261.84 193.25 296.53 423.19 283.09 255.76 292.47
Number of Mortgages: 6,896 5,433 6,747 9,684 5,904 5,244 5,450
Average loan size (Mln. MNT): 37.97 35.57 43.95 43.70 47.95 48.77 53.66
Interest rate (Fixed, % p.a): 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Remaining life to maturity (Weighted
average) (Years): 13.39 13.59 14.31 14.69 14.96 15.49 15.93
Loan-to-Value Ratio (Weighted average): 68.04% 61.40% 62.36% 62.71% 62.61% 64.16% 63.73%
Loan seasoning (Weighted average)
(Months): 36.23 34.17 28.02 27.07 22.90 18.16 13.93
Monthly Installment (Weighted average): 454,260 419,031 485,375 470,563 503,946 499,131 536,257
Geographical Concentration: 6,896 5,433 6,747 9,684 5,904 5,244 5,450
- Ulaanbaatar city : 5,754 3,812 5,130 6,588 4,687 3,988 3,970
- Rural area: 1,142 1,621 1,617 3,096 1,217 1,256 1,480
RMBS1-7 Aggregate Portfolio Characteristics (2015.12.31)
Aggregate Portfolio Characteristics Aggregate Portfolio Information
Type of Mortgage Loan asset: Residential Apartment Mortgage Loan Assets
Loan Portfolio Amount (Bln.MNT): 2,006.13
Number of Loans: 45,358
Average Loan Size (Mln.MNT): 44.23
W.A.Interest Rate (%): 8.00%
W.A.Loan Remaining Life to Maturity
(Years): 14.68
W.A.Loan-to-Value Ratio (%): 63.55%
W.A.Loan Seasoning (Months): 25.37
Average Monthly Instalment (MNT): 479,664
W.A.Debt-to-Income Ratio (%): 32.60%
Eligible Mortgage Asset Portfolio Description and Characteristics:
Page 14
“MIK HFC” LLC. Total COVER MORTGAGE Portfolio Indicators
(2015.12.31)
Source of
funding
Loan
Outstanding
/Bln., MNT/
Loan
Outstanding,
percent
Number of
Loans
MIK Equity 6.96 0.34% 285
KFW loan 4.33 0.21% 171
RMBS I-VII 2,006.13 99.44% 45,358
MIK Cover Pool Total Mortgage Loan Outstanding
and number of Borrowers by source, 2015.12
Page 15
2.1 7.9 5.8 8.4 16.6
322.9
826.1
2,017.4
211 540 454 528 868
7776
20,177
45,814
0
500
1,000
1,500
2,000
2,500
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2008 2009 2010 2011 2012 2013 2014 2015
Bill
ion M
NT
MIK Mortgage Cover Pool Outstanding and Number of Borrowers 2008-2015
MIK Mortgage Cover Pool Outstanding Number of borrowers
0.52% 3.05%
0.47%
0.19%
29.44%
22.69%
0.17%
7.99%
23.26%
3.46%
8.75%
Cover Pool Originators/Servicers’ Structure (2015.12.31)
Arig Bank Capital Bank Capitron Bank
CK Bank Golomt Bank Khan Bank
NIBank State Bank TDBank
UBC Bank XacBank
Sustainable Mortgage Financing Program for Middle-and-Low Income Group Affordable Housing
4 1
Middle-Income Housing
Mortgage Loans
2 3 •
On 22 October 2012, the GOM and the BOM signed a MOU on Cooperation to Create
Sustainable Mortgage Financing System to address Mongolia’s social housing agenda in the
rapidly growing Mongolian mortgage market.
Support by MIK MIK (as the national mortgage corporation and in support of B initiatives) shall purchase the mortgages for its residential.
Origination of Mortgages
Mortgage characteristics:
- Fixed interest rate of 8% p.a.
- Loan tenor of up to 240 months
- Loan to value ratio < 70% - Residential unit < 80m2
Issuance of RMBS Issuance of Senior (90%) and Junior (10%) RMBS to the Originators where the Senior RMBS shall be used to part repay BOM for the seed money.
Short-term Liquidity to
Originators
BOM has provided banks/ financial
institutions (“Originators”) with
Seed Money to originate residential
mortgage loans to the middle-
income housing sector
(“Mortgages”).
Mongolian Mortgage Corporation LLC (“MIK”) Support to Middle-Income Housing Mortgage
Page 16
Banking Sector Mortgage Lending Market Data ( including Middle-Income Affordable Housing Mortgage Loans)
Market indicators end of periods 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015.11
Households Residential Mortgage
Loans (Bln., MNT) 30.84 74.32 164.63 217.98 226.04 333.78 656.49 845.20 1,938.95 2,844.61 3,412.93
Share of Mortgage lending market
of total bank loans outstanding, (%) 2.3% 3.3% 8.0% 8.3% 8.6% 10.7% 11.6% 12.1% 18.0% 22.8% 28.70%
Share of Mortgage lending market
outstanding at GDP (%) 0.01% 1.85% 3.32% 3.33% 3.43% 3.42% 4.98% 5.06% 10.11% 12.94% 20.31%*
Banking sector total loan
outstanding (Bln, MNT) 1,334.08 2,230.51 2,056.06 2,635.55 2,632.03 3,112.50 5,641.23 6,990.55 10,764.17 12,502.53 11,889.31
Average size of single mortgage
loan (Mln, MNT) 6.46 8.27 10.01 13.19 13.59 16.94 24.78 28.28 40.13 42.88 44.57
Total number of mortgage loans 4,774 8,984 16,444 16,522 16,628 19,700 26,491 29,887 48,320 66,334 76,583
Mortgage Market weighted
average Interest rate (%, pa.) 14.7% 17.8% 16.0% 18.7% 17.7% 16.0% 14.8% 15.3% 10.6% 10.1% 10.0%
As of November of 2015, total mortgage
loan outstanding at commercial banks
amounted MNT3,413 Billion, Number of
total mortgage borrowers was 76,583
middle-income housing mortgages with 8%
p.a interest rate reached MNT 2,570.2
Billion, constituting 75.31% of total
mortgages outstanding in the banking
sector.
Source: Mortgage Loan Report, www.mongolbank.mn
National Statistic Report, Page 17
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0Mortgage market trend : 2005-2015.11
Mortgage market debt outstanding (billion MNT)
Mortgage market share of Systemic Loan market , %
* - as of third quarter of 2015
Mortgage Market Data
Page 18
Source: Mortgage Loan Report, www.mongolbank.mn
24.69% 22.18%
2.61%
50.52% 75.31%
Mortgage Loan Outstanding, by types
With market interest rate Newly origninated with 8% interest
Refinanced to 8% interest MIK Purchased
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Mortgage Loan Portfolio Quality: 2013.6-2015.11
Past Due Loan (8%) Past Due Loan (Other)
Nonperforming Loan (Other) Nonperforming Loan 8%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Numbers of Total Borrowers: 2005-2015.11
Housing Price Index as of 2015.IVQ
Source: “Tenkhleg zuuch” LLC - Realtor and Research Company Page 19
1.00 1.01 1.02 1.02 1.02 1.05
1.06
1.12 1.13
1.18 1.19 1.20
1.21
1.24 1.26 1.25
1.23 1.25 1.25 1.24
1.23 1.21
1.20 1.19 1.18 1.17 1.17 1.17 1.17
1.14 1.12 1.12
1.09 1.07 1.06 1.06
1.00
1.05
1.10
1.15
1.20
1.25
1.30
HPI (pricing index commenced, as of January 2013)
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
1/1
/20
14
2/1
/20
14
3/1
/20
14
4/1
/20
14
5/1
/20
14
6/1
/20
14
7/1
/20
14
8/1
/20
14
9/1
/20
14
10/1
/20
14
11/1
/20
14
12/1
/20
14
1/1
/20
15
2/1
/20
15
3/1
/20
15
4/1
/20
15
5/1
/20
15
6/1
/20
15
7/1
/20
15
8/1
/20
15
9/1
/20
15
10/1
/20
15
11/1
/20
15
12/1
/20
15
Annual changes of UB-HPI (%)
Economic and Social Impact of Affordable Housing Program
Page 20
Middle-and low-income households’ mortgage monthly debt obligation pressure eased,
households consumption pattern and behavior modified
Banking sector’s asset and liabilities duration mismatch and gap risks reduced and
partly mitigated
Banks’ capital requirement compliance pressure eased
Banks’ traditionally offered services and products income sources enhanced through
diversification of off balance contingent asset management products
Banks’ short term liabilities structure diversified and local currency deposit average cost
of funding decreased, compared with conventional retail time deposit cost of funding
Private labeled debt instrument, RMBS newly developed and introduced in securities
market, supporting the diversification and availability of capital market tradable
products
Construction developers market and urban areas real estate market development
supported leading to urban households better quality of life in Ulaanbaatar city and
provincial centers
Households personal wealth accumulation supported, construction and infrastructure
sectors employment and productivity maintained sustainably in adverse cycle of
commodity driven economic growth slowdown period
Key Transaction Parties, Scope of work of
Securitization, RMBS Issuance Transaction Structure,
Mortgage Lending and Eligibility Criteria
Financial Securities Regulator
Key Transaction Parties & Scope of Work of Securitization Regulators & Banks
Key roles and responsibilities of transaction parties include, without limitation, the following:
Pre RMBS Issuances Post RMBS Issuance
Financial Regulatory Commission
Bank of Mongolia
Banks
Originators
Servicers & Junior RMBS Holder
Junior RMBS Holder.
Collection and transfer of amounts
collected from the Mortgages to a
Collection Account for a Servicer Fee (2%
of collected amount).
Recovery of defaulted Mortgages.
Provision of periodic Servicer Reports.
Keeping of records, books, accounts, etc.
Originators of Mortgages
Origination of Mortgages meeting
BOM’s Residential Mortgage Loan
Financing Procedure 2013.
Sale of identified Mortgage Pools
(meeting Eligibility Criteria) to MIK-SPC.
Sale on a “willing buyer willing seller”
basis to achieve accounting true sale.
Part repayment of soft loans via RMBS.
Senior RMBS Holder
Senior RMBS holder (Senior RMBS shall be
transferred to BOM as part repayment of the
soft loans).
Regulation of capital treatment framework
for the RMBS investors.
Regulator & Seed Money Provider
Regulates Mongolia’s banking system.
Key driver in the provision of middle-
income housing via soft loans to banks for
the origination of Mortgages.
Refer to BOM Residential Mortgage
Loan Financing Procedure 2013.
Formulating proposals to improve the legal environment of the Securities Market
Developing rules, criteria, procedures, regulation, methodology, and recommendations
within the aim of providing stability of the securities market). Regulatory approval for issuance of securities, including RMBS.
Page 22
Key Transaction Parties & Scope of Works of Securitization– MIK
Key roles and responsibilities of transaction parties include, without limitation, the following:
Key Roles Key Benefits & Considerations
Financial Agent / Security Trustee
Responsible for the administrative aspects
of the security.
Making distributions to the secured lenders
on enforcement.
Ensures the beneficial rights of the security
package to existing and/or new investors.
Potential Conflict & Mitigating Factors
Potential conflict of interest given that MIK
is responsible for the investments of cash
flows and acts in a fiduciary role in the
interest of the bondholders.
Mitigated by appointment of two (2)
independent directors (2 out of 3).
MIK-SPC as Issuer
Wholly owned subsidiary to purchase the
Mortgage Pools from multiple Originators
(banks).
Approval from FRC for RMBS issuance.
Issuance of Senior and Junior RMBS as
purchase consideration.
Ring Fencing of Mortgage Pool
Issuance from a special purpose vehicle
will ensure the segregation of mortgage
pool from MIK’s other assets.
No cross default between issuances.
Potential consolidation under IAS 39.
Administrator & Transaction Administrator
Periodic analysis of the Mortgage Pool’s performance e.g. default analysis.
Preparation and reconciliation of collections with the Servicer Reports.
Verification of amounts due to the various parties.
Source of Income / Information
Fixed annual fee on the outstanding
mortgage pool.
Historical analysis to enable assessment
of pool for future issuances.
Monthly reporting requires robust tracking
system
MIK SPC
MIK
Page 23
RMBS Issuance Transaction Structure
BOM provides 6 to 9 months’ unconventional below the market rate priced loans at 4% p.a. to eligible Banks.
1
Borrowers (Obligors)
2 Middle income mortgages
(Founder) Originators to provide middle income housing mortgages at 8%
p.a. to eligible borrowers based on
pre-determined eligibility criteria.
@ 8% 2
Banks shall sell their respective pools of mortgages to MIK-SPC.
3
Banks 1
MIK-SPC to issue RMBS in Senior
and Junior tranches as purchase
consideration to respective Banks.
4
Soft loans
@ 4%
Placement
of Senior
tranche The Junior
return of
subscribed
tranche with a target
10.5% p.a. will be
by respective Banks
Subscribed by the Originators
5 Investors
5a whilst the Senior tranche with a
target return of 4.5% p.a. shall be
sold to BOM. Bank of Mongolia Subscribed by
the Originators
90% Senior
10% Junior
Banks / Financial Inst. (Originator / Servicer)
3
MIK-SPC (RMBS Issuer)
Commingled
Mortgage Pool Sale of
Mortgage Pool 4
5b
Issuance
of RMBS
Page 24
RMBS Issuance Targeted Planning and Execution
Due
Diligence
• Data collation of pool analysis by economic parameters;
• To conduct secondary analysis on each loan account;
• To illustrate financial model and cash flow assumptions;
• Financial and legal Due Diligence.
Pre
Issuance process
• Establishment of the Issuer;
• Submission of RMBS documents to FRC for approval;
• Review over transaction documents;
• Opinion on legal & accounting true sale.
RMBS Issuance
• Regulatory approval for issuance;
• Review and finalization of transaction docs;
• Legal opinion on meeting pre issuance terms and conditions;
• Issuance of Senior RMBS and Junior RMBS as purchase consideration.
Transfer of Senior RMBS to BoM;
Execution of purchase contract for Mortgage pool (Transaction
Administrator Agreement, Trust Deed Agreement, Security Agent
Agreement package, Servicing agreement, etc);
Page 25
Performance
and Reporting (post RMBS)
Legal Documentation and Parties to RMBS Issuances
26
Clearing
House
Originator/
Servicer
(banks)
SPC
(Issuer)
MIK
SPA Servicing
agreement Subscription
agreement
Clearing
House
agreement Transaction
Administration
agreement
Trust
Deed
Agreement
Security
Documents
Page 26
Legal Contacts, Agreements, Documents and Fee Structure
# Types of Agreements Parties Servicing Fee
1 Sale and Purchase
Agreement
“MIK ASSET SPC ” LLC
and Banks
A purchase price equal to the principal amount
outstanding on such Mortgage Asset. No
purchasing fee.
2 Servicing Agreement,
Trust Account Agreement
“MIK ASSET SPC ” LLC
and Banks
Equal to 2.5% of the quarterly total collections
(interest, principal and recovery) and is
payable quarterly.
3 Transaction Administration
Agreement
“MIK ASSET SPC ” LLC
and MIK
Equal to 0.5% of beginning balance of the
Mortgage Pool every quarter is payable
quarterly.
4 Trust Deed “MIK ASSET SPC ” LLC
and MIK
Quarterly payable fee included in Transaction
Administrator’s fee of 0.5% p.a.
5 Security Agent Documents “MIK ASSET SPC ” LLC
and MIK
Quarterly payable fees included in Transaction
Administrator’s fee of 0.5% p.a.
6 Clearing house agreement “MIK ASSET SPC ” LLC
and SCHCD
SCHCD accounting and ownership registration
fee is equal to 0.045% (0.05%).
7 External auditor, legal
advisor and other financial
institutions
“MIK ASSET SPC ” LLC
and other institutions
It’s included in Transaction Administration
agreement on actual contracted amount,
subject approval by SPC’s BOD and
Shareholders annually.
Page 27
Newly originated Residential mortgage loans shall comply to the following:
Mortgage Lending Criteria of the Originators (1)
The Originators disburse mortgage loans in compliance with lending criteria to borrowers defined in “Mortgage
Loan Financing Procedure” approved by the Bank of Mongolia procedure dated 14.06.2013.
the Obligor should be a Mongolian citizen, at least 18 years old and has full legal capacity;
Obligor must not have any delinquent loans, unpaid balances, or any other outstanding obligations to banking
and financial organizations under the court’s decision.
None of the obligor’s family member has any outstanding loan under the Government of Mongolia’s “Civil
Servant Mortgage Loan Program” or “100,000 Housing Program” (which is publicly referred to the Mortgage Loan
Program with the interest rate of 6%);
The Obligor has to be covered with Life Insurance during the loan term
If the applicant is an employee of a company which has co-operation contract with State bank or a self-employed
good customer.
The applicant must currently be in employment for more than twelve (12) months or must provide information
about previous employment if the current employment is less than 12 months.
The prepayment should be placed in State bank’s account or escrow account of the bank.
Debt to income ratio of Obligors is not greater than 45% of the income before tax;
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Refinanced, repriced mortgage loans shall meet the following requirements:
Refinancing amount is not greater than outstanding loan of the previous mortgage
The applicant for refinancing should be paid pre-originated residential loans at the rate of not less than 2 by credit
history rating;
Refinancing mortgage loan shall be fully amortizing with a fixed interest rate;
Not less than 30% of the prepayment must be paid by the applicant for refinancing and the amount refinancing will
be determined at 30% of the prepayment amount which had been fully paid. The property price will be considered
as the current price of purchased apartment.
If there is no pledge certificate in pre-originated loan, the pledge certificate must be replaced.
If there is no coverage of obligor’s life insurance and property insurance in pre-originated loan, life and property
insurance must be recovered.
Income source of the applicant for refinancing must not be less than in the level of origination and the applicant
must have fixed monetary income.
Requirement for Collateral
Mortgage Lending Criteria of the Originators (2)
The collateral must be a residential apartment located in Mongolia.
Newly built apartment 100% completed or old apartment commissioned earlier.
The total size of residential apartment shall not exceed 80 sq. meters according to the
MNS 6058:2009 standard “Methodology of measuring built up area size in residential
apartment”.
Second collateral pledged for the 30% down payment of an mortgage loan should be
borrower’s entitled property.
Collateral(s) must be insured during the lifetime of the mortgage against property damage
No outstanding claims, property ownership should be free from third party encumbrances,
collateral property’s lien must be registered in real estate registration organization.
Pledged collateral must be certified by real estate registration issued certificate of title.
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Property
insurance
Personal
accident
insurance
Mortgage Insurance Coverage Details (3)
Any damages cause from fire, electric power, plumbing, natural disaster, household, and third party’s intentional or unintentional act.
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Obligor and co-obligor’s death in any cause. Occupational diseases and industrial accidents and
conditions. Obligor or co-obligor lost 70% or more of his capability due
to natural disaster, third party’s intentional act or other accidents.
Insurance
type
Insurance coverage /Risk/
Insurance fee
0.11-0.13%
0.12-0.18%
Extension of
insurance
duration
Insurance duration is one year. Insurance officer and bank officer have a
responsibility to renew the obligor’s insurance duration.
Amount
estimating
insurance fee
Outstanding loan principal+ Annual interest payment
Eligibility
Criteria
(Financial 9)
Eligibility
Criteria
(Legal 9)
Mortgage Pools’ Securitization Legal /Financial Eligibility Criteria
MIK proposes the following eligibility criteria for the Mortgage Pools for its inaugural RMBS transaction,
subject to further discussion with BOM and the Originators:
MIK-SPC shall purchase the Mortgage Pools on a “willing buyer willing seller” basis (fair value) to be settled via the issuance of RMBS to the Originators (and BOM).
All amounts required to be paid for the purchase of the mortgage property have been paid.
Advanced and repayable in Mongolian Togrogs (“MNT”).
Amount of the financing has been fully disbursed.
Settlement of amounts due from obligors via monthly installments.
Obligors be in employment for more than 12 months with proof of income at origination.
No outstanding obligation to MIK at point of sale.
Not classified as non performing loan (> 91 days in arrears) within the last 24 months.
At least 4 months since date of full disbursement (“Seasoning”).
Paid up to date (current) at point of sale and for the past 4 months.
Legally owned by the Originators free from encumbrances.
Registered at the State Registry with registration certificate under Mongolian law.
Legal, valid and binding obligation of the obligors and enforceable.
Originators not prohibited by law from effecting a transfer of the mortgage transactions.
First ranking pledge having priority to all secured, guaranteed and unsecured claims.
Created in accordance with the Guidelines of BOM on mortgage lending and procedure.
Originator has not granted any additional facilities against the mortgage property.
Obligor must be Mongolians citizen
Obligor has not exercised or indicated an intention to exercise the option for prepayment
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RMBS issued performance
№ Issue Months Issuer Issue size
(bill. MNT)
1 2013.12 MIK SPC 1 322.90
2 2014.07 MIK SPC 2 222.05
3 2014.11 MIK SPC 3 324.60
4 2015.01 MIK SPC 4 452.28
5 2015.05 MIK SPC 5 294.34
6 2015.08 MIK SPC 6 261.70
7 2015.12 MIK SPC 7 293.86
TOTAL AMOUNT 2,171.73
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