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Beijing targets fake business loans used by homebuyers

Authorities try to cool real estate speculation and financial risks

People look at a scale model of apartment buildings in Xuchang, in central China: The government is cracking down on illegal business loans used to purchase housing.   © Reuters

Banking regulators in Beijing have cracked down on individual business loans that are illicitly used by borrowers to personally purchase properties, as China increases efforts to rein in housing market speculation and mitigate risks to the financial system.

The move comes after the local government in Beijing found through an investigation that some homebuyers, with the assistance of real estate agencies, illicitly took out individual business loans to fund their purchases. Real estate agencies, for example, registered shell companies, provided fake business contracts, and falsified other documents for homebuyers, which enabled the latter to qualify for individual business loans from banks to buy properties.

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