IIDA GROUP HOLDINGS

MORTGAGE AND SECURITIZATION BUSINESS

IN JAPAN

July 2018
Executive Summary

is the 2nd largest mortgage bank*1 in Japan

➢ No.2 share of Flat 35*2

➢ Highly Experienced Originator/Servicer

➢ Stable Asset Performance

*1 Mortgage bank is a financial institution that specializes in originating and servicing mortgage loans.
In Japan Mortgage bank is registered by the Prime Minister/Prefectural governor under the Money Lending Business Act.
*2 Based on number of transactions in FY2017 (FLS survey)
Flat 35 is a fixed-rate mortgage loan offered by private financial institutions in partnership with Japan Housing Finance
Agency (JHF).

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1. Company Overview

3
Group Structure

Family Life Service is a strategic mortgage bank of Iida Group

Iida Group Holdings

100% 100% 100% 100% 100%

HAJIME
Iida Sangyo TACT
HOME
TOUEI
HOUSING
ARNEST
ONE
CONSTRU
CTION

70% 7.5% 7.5% 7.5% 7.5%

Mortgage loans

4
Company Summary

Company Name ◼ Family Life Service Co., Ltd.

Head Office Address ◼ 2-12-13 Sakai, Musashino-shi, Tokyo, Japan
Date of Establishment ◼ October 2000
Paid-in Capital ◼ ¥1 billion
Total Assets ◼ ¥39.6 billion
Representative ◼ Kazuhiko Mori (Chairman)
Representative Chairman of Iida Group Holdings
◼ Yujiro Chiba (President)
Representative Director & Vice President of Iida Sangyo
Number of Employees ◼ 160
Number of Sales Offices ◼ 29
Sales Channel ◼ HAJIME CONSTRUCTION: 8.5%
◼ Iida Sangyo : 8.1% ( Total share of Iida Group Holdings 33.8%)
◼ Other : 66.2%
Corporate Website ◼ http://www.familyls.jp
（AS of March 31 2018）

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Company History

2015 Launched Assist 35

2013 Launched 1st private RMBS

2012 Launched Flat 35(Guarantee)

2010 Over 100billion of origination volume per year

2005 Launched Flat 35

2000 Established

6
Sales Channel Network

29 sales offices throughout the country

Hokuriku
Tokai Hokkaido
Kyushu 4 Tohoku
Okinawa 2
Chugoku
5
Shikoku
2

Kanto
14

Kinki
2
（AS of March 31 2018）

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Operating Revenue Growth

Growth from 2013 to 2017 was 12.2%(CAGR)

* CAGA stands for Compound Annual Growth Rate

8
Net Income Growth

Growth from 2013 to 2017 was 28.8%(CAGR)

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2. Mortgage Origination and Securitization

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 FLS mortgage business with JHF

FLS leverage a strong relationship with JHF

JHF

One of 335 private financial

Purchasing institutions Financing
Securitization (Purchase Program
support /GSE model)
business
Customers
One of 5 private financial (users of
Insurance and Guarantee institutions* Financing housing
(Guarantee Program
loans)
/GNMA model)

Housing loan
Insurance One of 135 private financial
service institutions
Insurance Financing
(Insurance Program)

* FLS and other 2 institutions have stopped new application acceptance (as of March 31 2018)

（Source: Japan Housing Finance Agency）

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 FLS Main Products
▪ Applicants are required to provide legal documents to prove their household income and FLS/JHF shall confirm their credit
history using the credit bureau
▪ “Flat 35” mortgage loan is a recourse loan that FLS/JHF can duly recover not only from the collateral but other properties held
by the borrower

Flat 35 Flat 35(Guarantee)* Assist 35

Loan Type A first mortgage loans originated A first mortgage loans originated A second mortgage loans originated
under JHF Purchase Program under JHF Guarantee Program under JHF Insurance Program in
combination with Flat 35

Eligible house Construction cost or purchase price must be 100 million yen or lower

Eligible borrower age Less than age of 70 at the time of loan application

Repayment capability Debt to income (DTI) ratio is limited to;

30% or less, if annual income is below 4 million yen
35% or less, if annual income is 4 million yen or more

Purpose of the loan For construction/purchase of a new house or purchase of an existing house for occupation by the applicant or relatives
For construction/purchase of a house for weekends (a second house) to be used by the applicant

Loan amount 80 million yen or less, and within 100% or less of construction cost and/or purchase cost
Loan term 15 ~ 35 years

Rates offered Fixed rate only Floating rate

Collateral JHF has a first-line mortgage on the FLS has a first-line mortgage on the FLS has a second-line mortgage on
house and land house and land the house and land

Group life insurance JHF life insurance is recommended FLS life insurance is recommended

* FLS has stopped new application acceptance (as of March 31 2018)

（Source: Japan Housing Finance Agency & Family Life Service)

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 Origination Track Record

FLS increased transaction volume around 15x despite stagnant market

11,404

Great East
Japan Earthquake
Consumption tax
increase

Financial
Crisis

774

（Source: Japan Housing Finance Agency & Family Life Service)

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 Market Share

FLS increased market share around 3.6x (FY2008 ⇒ FY2017) *1

FLS got 2nd market share in FY2017*2

*1 Based on number of transactions from FY2018 to FY2017

*2 Based on number of transactions in FY2017(FLS survey)

（Source: Japan Housing Finance Agency & Family Life Service)

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FLS securitization structure 1 Purchase Program

FLS sell fixed-rate mortgage loans “Flat 35” to JHF which will securitize
MBS

Investors

Proceed P&I
MBS
for MBS payment

Mortgage loan receivables

JHF
Payments
Loan
payment
Entrustment of mortgage loan
Mortgage loan Loan
as collateral
“Flat 35” payment

Trust Bank
Obligors

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FLS securitization structure 2 Guarantee Program

FLS originate fixed-rate mortgage loans “Flat 35(Guarantee)” insured

by JHF and will issue private RMBS which is guaranteed by JHF
Mortgage Beneficial Interests
Investors
Proceed
for MBI
Mortgage
Proceed P&I
Beneficial
for MBI payment
Interests
Entrustment of mortgage loan receivables
and cash

Mortgage Beneficial Interests Trust Bank

and Reserve Beneficial Interests
Loan
payment
Mortgage loan Loan Guarantee
Mortgage loan
“Flat 35(Guarantee)” payment (Credit/Liquidity
Insurance
Support)

Obligors JHF

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FLS securitization structure 3 Insurance Program

FLS originate floating rate mortgage loans “Assist 35” insured by JHF
and will issue private RMBS
Mortgage Beneficial Interests
Investors
Proceed
for MBI
Mortgage
Beneficial Proceed P&I
Interests for MBI payment
Entrustment of mortgage loan receivables
and cash

Mortgage Beneficial Interests Trust Bank

and Reserve Beneficial Interests
Loan
payment
Mortgage loan Loan Mortgage loan
“Assist 35” payment Insurance

Obligors JHF

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 Securitization Program Comparison
Purchase Program Guarantee Program Insurance Program

Eligible institution 335 5 135

FLS*1
MUFG Bank*1 (Mega Bank)
Chiba Kogyo Bank*1 (Regional Bank)
Aruhi (Mortgage bank)
MCJ (Mortgage bank)
Current MBS issuer JHF only 2 4*2
Aruhi (Mortgage bank) FLS
MCJ (Mortgage bank) Aruhi (Mortgage bank)
Yuryo loan (Mortgage bank)
J Mortgage Bank (Mortgage bank)
Format Zaito agency bond *3 Mortgage Beneficial Interests Mortgage Beneficial Interests
Issue timing Monthly Any time Any time
Coupon Fixed rate (10yr JGB + around 40bps) Fixed rate Floating rate
Credit enhancement Over-collateralization Mortgage loan Insurance Mortgage loan Insurance
Credit/Liquidity Support
Cash reserve Not applicable Applicable Applicable
Credit ratings Required Required Not Required
AAA(sf)/AAA (S&P/R&I) A1(sf)/AA+ (Moody’s/R&I)
Linked to the JHF rating
Origination volume 2.5 trillion yen in FY2017 0.1 trillion yen in FY2017 Undisclosed
*1 FLS and 2 Banks have stopped new application acceptance (as of March 31 2018)
*2 BNPParibs survey(as of March 31 2018)
*3 A Zaito agency is a government agency that carries out public policies by receiving loans, investments, and/or loan guarantees from the Fiscal
Investment and Loan Program(FILP)" managed by the Ministry of Finance (MoF). Zaito Agency bonds are debt securities issued by such agencies.
（Source: Japan Housing Finance Agency & Family Life Service)
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 FLS securitization record excluding Purchase Program
▪ FLS launched 1st private label RMBS according to the JHF Guarantee Program in 2013
▪ FLS developed the floating rate mortgage to meet rising demand in 2015 and continues to issue private RMBS quarterly

Name Program Issuance date Notional Rating Coupon WAL Final Maturity
(JPY bio) (Moody’s) (Years)
FLS RMBS(JHF guarantee) 1 Guarantee 4/10/2013 3.4 Aa3(sf) 1.78% FXD 10 21/5/2049
FLS RMBS(JHF guarantee) 2 Guarantee 30/4/2014 2.0 Aa3(sf) 1.72% FXD 10 21/1/2050
FLS RMBS(JHF insurance) 1 Insurance 16/3/2016 0.9 Unrated *
STPR-0.525% 11 16/3/2051
FLS RMBS(JHF insurance) 2 Insurance 24/5/2016 0.8 Unrated STPR-0.525% 11 24/5/2051
FLS RMBS(JHF insurance) 3 Insurance 27/7/2016 0.8 Unrated STPR-0.525% 11 27/7/2051
FLS RMBS(JHF insurance) 4 Insurance 23/9/2016 1.2 Unrated STPR-0.525% 11 23/9/2051
FLS RMBS(JHF insurance) 5 Insurance 16/11/2016 1.3 Unrated STPR-0.525% 11 16/11/2051
FLS RMBS(JHF insurance) 6 Insurance 20/2/2017 2.0 Unrated STPR-0.525% 11 20/2/2052
FLS RMBS(JHF insurance) 7 Insurance 24/5/2017 2.3 Unrated STPR-0.525% 11 24/5/2052
FLS RMBS(JHF insurance) 8 Insurance 30/6/2017 0.7 Unrated STPR-0.525% 11 30/6/2052
FLS RMBS(JHF insurance) 9 Insurance 26/9/2017 2.8 Unrated STPR-0.825% 11 26/9/2052
FLS RMBS(JHF insurance)10 Insurance 25/12/2017 2.8 Unrated STPR-0.825% 11 25/12/2052
FLS RMBS(JHF insurance)11 Insurance 26/3/2018 2.4 Unrated STPR-0.825% 11 26/3/2053
FLS RMBS(JHF insurance)12 Insurance 28/6/2018 3.2 Unrated STPR-0.825% 11 28/6/2053

* STPR stands for Short-term Prime Lending Rate which is a benchmark for many personal, housing and
corporate loans in Japan. It is adopted and released by Mizuho Corporate Bank. Current STPR is set at 1.475%.

（Source: Family Life Service)

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3. Performance and Market Data

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 Portfolio Performance

Default rate of FLS and JHF Mother pool

（Source: Japan Housing Finance Agency & Family Life Service)

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 Securitization Market in Japan

RMBS has around 70 share % of the securitization market

Great East
Japan Earthquake

Financial
Crisis

（Source: Japan Securities Dealers Association)

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 RMBS Market in Japan

JHF has around 70 share % of the RMBS market

Implementation
of Basel II

Great East
Japan Earthquake

Financial
Crisis

（Source: Japan Securities Dealers Association)

23
 Mortgage Origination Market in Japan

JHF has around 12 share % of the origination market

（Source: Japan Housing Finance Agency )

24
 JHF monthly MBS

JHF has established itself as the anchor of the RMBS market

Great East
Japan Earthquake

Financial
Crisis

（Source: Japan Housing Finance Agency )

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Appendix

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 Japan Housing Finance Agency – What is JHF?
What is Japan Housing Finance Agency (JHF)?
◼ JHF was established in April 2007 as the successor to the Government Housing Loan Corporation (GHLC). JHF is wholly
owned by the government and the only government-owned financial institution specialized in securitizing housing
loans.
◼ JHF is the largest mortgage loan administrator in Japan.
◼ After JHF’s replacement of GHLC, its main business has become securitization, purchasing housing loans from private
financial institutions and issuing a mortgage-backed securities using it as a collateral.
◼ JHF has played an important role in recent years in encouraging the development of the country’s capital market in
general, and more particularly of securitization.
◼ This was introduced with Fannie Mae as a model.

There are some fundamental differences between JHF and Fannie Mae.
JHF FNMA
Purchase /Guarantee Both Mainly Purchase
(mostly purchase) (GNMA does the guarantee)
Government Funding Yes No (GSE)

Capital and other data in March 2017

Capital Total Assets Purchased Loan Originated Loan Ratings
JPY 708,642 mm JPY 26,320,216 mm JPY 13,661,582 mm JPY 9,673,015 mm A+(S&P)
(US$ 6,442 mm ) (US$ 239,275 mm ) (US$ 124,196 mm ) (US$ 87,937 mm) AA+(R&I)

（Source: Japan Housing Finance Agency )

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