Implementation of the Saudi Mortgage Law Developing an Effective Research Paper

Implementation of the Saudi Mortgage Law Developing an Effective Mortgage Market in the KSA - Research Paper Example It was also gathered that the main purpose of envisaging the law was to develop secured financing in secondary market and to protect interest of borrowers as well as that of financiers regarding mortgages (Bloomberg â€Å"Saudi Mortgage Law Opens Kingdom to Home Lending Surge†). In the following sections, an overview of the law is discussed along with its impact on the KSA economy (Kingdom of Saudi Arabia). Additionally, role of Freddie Mac and Fannie Mae in the mortgage market of USA has been discussed along with an outline of importance of creating liquid secondary mortgage market in an economy. Lastly, recommendations have been provided regarding development of mortgage market in the KSA economy. The Saudi mortgage law is also known as the real estate mortgage law which is a union of five different laws regarding financing of real estate and control of finance companies. It was gathered that the enactment of the law was on hold for a very long time period considering the crisis in global real estate market that initiated with development and burst of housing bubble in the USA. These laws are being considered as of paramount importance for the KSA finance sector and real estate market because they are expected to ensure balance while incorporating innovation in the sector. Furthermore, these measures are expected to minimize growing gap in the financing market and emphasize on structured financing in the country’s secondary market. Fundamentally, these laws have been instated to ensure that investment in real estate sector is encouraged without deviating from the Shariah compliances. Basically, the mortgage law will make certain that both parties to a financing transaction will maintain transparency and adopt fair practices. The laws established that financiers should be honest, qualified, and have fair motives while borrowers must agree to various commercial terms and have strong credit rating that reflect