Balance-in mode

・ Convenient to raise money and don’t need complicated programs.

・ Because mortgages do not achieve “true sale” and needn’t to set up the SPV, so it can avoid the obstacles on the relevant laws.

・ It can reduce the cost of securitization because of the high credit rating of mortgage Banks.

・ Loans do not removed from the bank’s balance sheet and the risk has not been transferred so that it can’t achieve “bankruptcy isolation”.

・ The financing capacity limited by the banks.

・ It is not a strictly mortgage-backed securitization and is bad for the establishment of secondary market of mortgage loan.

Balance-out mode

・ It makes the risk of securitization transaction has nothing to do with the originators what only related with the assets themselves, and disperse the management risk of banks.

・ It optimizes the assets structure and improves the initiative of assets and liabilities management effectively.

・ Convenient to the formation of secondary market of mortgage loan and the perfection of the primary market.

・ Conditioned by the current institutional framework in China.

・ It is a kind of complicated operating mode, the demand for legal environment and the dependence on government support are high.

Off-shore mode

Can take advantage of the advanced experience, the perfect institutional environment and relatively mature investment group of developed countries, spend low-cost to raising foreign funds for land reserve development from abroad.

This mode has a relatively complex structure and often involve many problems. Except withholding tax, the biggest obstacle lies in how to turn the cash flows from the RMB to foreign currency. In addition, the fluctuations of the exchange rate has important effect on stability and predictability of cash flow.