China: Fake Divorce to Get Around Mortgage Rules

May 3, 2010 No Comments »

divorce

Married couples in China have reportedly been divorcing each other to circumvent strict mortgage lending rules, according to Radio Free Asia.

New regulations require first-time homebuyers to come up with a 30 percent down payment, while those looking to buy a second home need to come in with at least 50 percent of the purchase price.

That’s up from 40 percent at the beginning of the year, and comes as a response to the unhealthy run-up in home prices in some parts of the country.

Stateside, we have difficulty raising minimum down payments beyond 3.5 percent on popular FHA loans.

Mortgage rates are also higher on second homes, so that’s another incentive to part ways for the sake of prosperity.

But Chinese lawyers have warned that the cost of divorce would likely outweigh any financial gains realized via a so-called “fake divorce.”

There’s also the red tape involved with who owns what after a divorce.

Meanwhile, relationship experts have cautioned that the fake divorces could be a sign all is not right in the marriage.

They’re apparently telling women not to play along, as it might be an indication the husband is no longer committed.

Moves to cool the white-hot housing market seem to be working, as evidenced by a 45 percent decline in home sales in Beijing and a 38 percent drop in Shanghai during the week ending April 25, according to the government-backed China Index Research Institute.

But property prices still increased 11.7 percent in March, prompting increased fears of a growing housing bubble.

(photo: kevindooley)

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