The main focus of this chapter is on the mortgage origination process. As part of the examination, this chapter extends its discussion towards capital adequacy guidelines set by the Australian Prudential Regulation Authority and the consequences of such guidelines on originators (banks and Independent Mortgage Originators), initial borrowers, providers of credit enhancement, investors of residential mortgage-backed security (RMBS), and in general, their effects on asset securitisation in an Australian context. The latter part of the chapter looks into capital adequacy guidelines provided by Basel II. Finally, an international comparison of capital adequacy requirements is made towards the end of the discussion.
KeywordsMortgage origination Capital adequacy Prudential regulation Basel II
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