Mortgage bank

An institution whose main activity is to lend on real estate (lending business, creditor-creating business) and to reissue the claims acquired in this way as bonds (mortgage-backed covered bonds, bonds issues from mortgage banks) (deposit-taking business). – The term mortgage bank is derived from the Mortgage Bank Act – Reichsgesetz über das Faustpfandrecht für Pfandbücher und ähnliche Schuldverschreibungen, Hypothekenbankgesetz von 1878 – which was replaced in Germany in 2005 by the Pfandbrief Act. – In the case of these institutions, it must be ensured for regulatory purposes that timely interest and redemption payments remain guaranteed even in the event of insolvency. – See soil credit institution, coverage test, first installment default clause, mortgage bond, reflux pieces. – Cf. Annual Report 2003 when BaFin, pp. 82 f. (concerning amendment of the Mortgage Bank Act) as well as pp. 97 f. (cover audits), Annual Report 2004 of BaFin, pp. 119 f. (application of the Mortgage Pfandbrief Net Present Value Regulation) as well as the respective Annual Report of BaFin, Monthly Report of the ECB of August 2009, pp. 18 ff. (legal differences between the mortgage markets in the euro area and the U.S.).

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