The trend of rising fake mortgages in the housing sector should alert the authorities to the need of protecting banks from defaulters, says an article in International Finance. Excerpts:

Of late, sections of the media have been reporting about the "fake sale" of property by estate agents in Beijing. Such sales are attributed to the high rate of what is called house rejection. The situation is more serious than it is reported to be because a "fake sale" is actually a "fake mortgage" and the market is being flooded with these.

In reality, fake mortgage has long existed throughout the country. The practice of "zero down payment", which prevailed in many big cities, is indeed a form of fake mortgage. It is a tricky business. The agents make out fake invoices certifying down payments to enable a prospective house buyer to apply for a bank loan to meet the capital requirement over and above their own funds.