THE FUNDING OF THE MORTGAGE LOANS IN SPAIN BY THE ISSUE OF MORTGAGE SECURITIES. THEIR LEGAL STRUCTURE Dr. Sergio Nasarre-Aznar sna@fcj.urv.es (Article publised in “Housing construction. An interdisciplinary task”, Vol. I, XXX IAHS World Congress on Housing, pp. 347-354) Key words: mortgages, mortgage funding, securitisation, mortgage securities, mortgage bonds Abstract This paper studies how the mortgage loans are funded by the credit institutions in Spain by the issue of mortgage bonds and mortgage-backed securities, which have some important particularities in their structure and security when compared with the German and the Anglo-Saxon models. 1 Introduction The need for the mortgage funding is specially important in countries like Spain in which huge quantities of mortgage loans are given, as people rather prefer acquiring a dwelling in property than renting it. Banks and other credit institutions, then, have a risk not to have enough cash for lending in each moment. In consequence they must have an effective process of mortgage funding, in order to have always enough cash to lend. The Spanish mortgage market law (Ley del Mercado Hipotecario 1981, LMH) serves the legal frame for the creation of this market according to the article (art.) 47 Spanish Constitution of 1978, which establishes the constitutional obligation of facilitating to everybody the access to a dwelling. The more effective the mortgage funding is, the cheaper the mortgage loans for the mortgage debtors are. The process of mortgage funding differs from one country to another. Normally the retail deposits are used for this purpose (also in Spain), but if what the credit institutions want (or need) is a medium or a long term sure cash, the better way to achieve this is to structure some kind of passive operations of the lenders, based in a mortgage securities market. There are two great systems of mortgage securities markets nowadays: the German model (Pfandbrief) and the Anglo-Saxon model (mortgage-backed securities), each one with special characteristics, advantages and disadvantages. Both are available and regulated in Spanish law and may be successfully exported to countries that