Study of Residential Mortgage Based on Group Lending

摘要

In this paper, we mainly discuss how to evade or decrease default risk of residential mortgage by designing a special group lending mechanism. In some situation, the borrowers of mortgage can be divided into many groups (usually this is a self-selecting process). In a group, borrowers have joint liability that if one of them fails to repay his loan, the others have obligations to repay it, which makes each borrower mutually liable for the entire group's repayment obligations. We set up and analyze the repayment game of group lending. Our analysis suggests that such mechanism have a positive effect on repayment rates of residential mortgage.