Abstract: Recently, forest tenure rights mortgage loan has achieved preliminary development as the supporting system of collective forest tenure rights system reform. Meanwhile, factors such as the high risk have restricted its promotion throughout the country and forest tenure rights has not become a widely- accepted collateral yet. Based on the loan process and survey data of risk status in Yunnan, this paper analyzes three main risks of forest tenure rights mortgage loan, namely the legal risk, the credit risk and the risk of taking forestr property rights as the collateral, and proposes corresponding solutions and policy recommendations. The paper argues that by optimizing the design of the system and financial innovation, defining the scope of forest tenure rights mortgage appropriately, establishing a prudent and effective risk management mechanism, and improving the system of forest tenure rights mortgage assessment, post-loan management, information sharing and transaction as well as the system of forest insurance and risk compensation mechanism, we can effectively control the credit risk, and achieve sustained and coordinated development of forestry and finance.