SMF’s duties as stipulated in Presidential Decree No. 1/2008 juncto 19/2005, is to promote and develop Secondary Mortgage Market (SMM). The main tool to promote a strong and efficient secondary mortgage market as foundation for the establishment of SMM to be not susceptible to economic and financial turmoil. To promote ‘market’, it requires as follows:

  1. Parties who want to sell mortgage receivable, which is the mortgage lenders such as banks
  2. Parties who are willing to buy mortgage-based securities issued from securitise transactions which is from investors, especially Pension Funds and Insurance Companies
  3. Regulations that supports efficient transaction
  4. Qualified mortgage portfolio volume that is sufficient to guarantee a sustainable future transactions.

A new ‘Market’ will be formed, if the transaction can occur repeatedly in an increasingly large volume and in a shorter time.

These four requirements isn’t fully available at present. Therefore in order to develop a 'market', the first step is knowing in advance the conditions of mortgage financing market/existing primary market and also how far the existing regulations can accommodate the transaction.

It resulted to only a few banks who sell the mortgage receivable, only a small fraction of investors who deign to buy securities regulation required so that the transactions will be more efficient; standards and qualified mortgage volume is required. With these existing conditions, SMF arranged the transaction model which is securitization for banks who are ready to sell mortgage receivables and loans facility to banks who wants to increase the volume of its mortgage portfolio.

SMF continue to encourage and facilitate the four conditions that needs to be fulfilled. It is because both lending and securitization transactions is still relatively new, that is why SMF participate as a party in any transaction, and gradually, in line with the increase of understanding from the benefit of each transaction, then SMF will reduce activity as a transaction and will focus on activities as guarantor. Thus it can be said that SMF role will evolve following the maturity from the market participants.


SMF main activity is to encourage the formation of a strong and efficient primary mortgage market, by encouraging bank mortgage lender to sell mortgage receivable efficiently through a securitization transaction so that they can distribute mortgages with fixed interest and a longer period of time. Thus, it can be the basis of the establishment of secondary mortgage market.

Business activities include:

  1. Facilitate securitization transactions
  2. Provide loan facility
  3. Provide Training Program
  4. Provide a standard mortgage documents
  5. Provide a handbook for consumers
  6. Encourage and facilitate innovation of new mortgage products including mortgages islamic Banking (KPR-iB)
  7. Offers EBA and bonds as an alternative investment that is safe and beneficial
  8. Creating a mortgage-based capital market product that can be an alternative investment.

Download PDF