Japan's First Mortgage Monitoring System Has Started Operation
June 30, 2006
Kansai Urban Banking Corporation
The Japan Research Institute, Limited
The Mortgage Monitoring System that was co-developed by the Kansai Urban Banking Corporation (Headquarters in Osaka, President is Mr. Tadahiko Ito) and The Japan Research Institute, Limited (JRI, Headquarters in Chiyoda-ku, Tokyo, President is Mr. Yasuyuki Kimoto) has started operation. JRI will soon start the sale of the System to financial institutions including regional banks.
The System is the first mortgage monitoring system to be developed in Japan. Various monitoring systems have been used for managing unsecured loans in the credit industry. The new System was developed by the two companies on the basis of such systems. JRI applied for a patent for the System in July 2005.
Utilizing the Mortgage Monitoring System, the Kansai Urban Banking Corp. will offer to its mortgage customers proposals for monthly cash flow improvement (including refinancing for high-interest rate loans and the reduction of premium payments) and consultation on repayment to meet customer requests.
1. Overview of the Mortgage Monitoring Systems
(1) Monitoring is an important part of credit management. By monitoring individual borrowers’ track records of repayment and borrowing from other institutions, the financial institution will be able to deal with new loan needs positively and to detect potential bad loans at an early stage and take the necessary measures to prevent their worsening.
(2) In firm banking, customers’ borrowing and business conditions are steadily monitored on the basis of accounting documents and regular visits and hearings. On the other hand, once a mortgage is offered to a consumer, his credit is hardly ever monitored unless he gets in arrears. Recently, banks have been expanding and competing for home mortgages. In order to increase the mortgage loan portfolio and to reduce non-performing loans, monitoring mortgages is most important. IT must be utilized to make such monitoring more efficient.
(3) The Mortgage Monitoring System co-developed by the Kansai Urban Banking Corp. and JRI selects more than 100 items of customer information on the basis of the bank’s information and external information. By means of functional analyses on the basis of such information items, ratings can be given to individual mortgages, which will be classified according to importance and urgency. Mortgage experts will provide consultation to customers on their basis.
2. Future Efforts
(1) Consultants of the JRI Research Division will collect feedback data on the operation of the System, conduct statistical analyses on the correlation between triggers and risks and improve the accuracy of the rating logic.
(2) The operation start of the new System has provided Kansai Urban Banking Corp. with a seamlessly systematized procedure for mortgage application, qualification, grant, monitoring and arrears control. The Mortgage Total System, the Mortgage Monitoring System and the Arrears Control System that cover all processes will be integrated into one and will contribute to the improvement in customer services and higher efficiency and labor saving.
For more information on the content of this report, please contact:
·Watabe, Sales division of Kansai Urban Banking Corporation
·Yasushi Kobayashi , the Japan Research Institute, Limited.
·Maekawa, PR, Kansai Urban Banking Corporation
·Yoshiteru Muto, PR Division, the Japan Research Institute, Limited