Beijing Residents Use Consumer Credit to Speculate on Baoding Real Estate; Yet Another Source of Bad Debt

A reporter goes to a credit company to find out what the current situation is, posing as someone looking for a loan against their home.

"For a loan amount of 50 million yuan, you should have a Beijing home as collateral, unsecured credit loans require the has a Beijing companies registered for more than one year......I need to evaluate your information, choose the right products and bank, and package the information, and we only charge 2% of the bank loan amount as service charges, the bank lending rate is about 7% to 8%, applicants with good credit can be reduced to 7%, if the loan is not successful, our company does not charge any fees, you do not face any risk."

"Why do you want a mortgage loan" When the reporter answers, buy a house, the employee blurts out, "You're going to Baoding to buy a house?"

"Recently I have several customers borrowing money to buy homes in Baoding. They are Beijing residents, they're not moving to Baoding, just buying for investment, you can borrow 1 million yuan in consumer credit, with 1 million you can buy a nice house in Baoding."

"The customers borrow the money and plan to pay it back over three or four years, when the price of the house doubles, or doubles several times over, they will sell it."

It is illegal for consumer credit to enter the stock market and housing market and the Beijing bureau of CBRC recently put out a notice on consumer credit demanding banks tighten lending standards.

The above employee goes on to tell the reporter that they work with some antique, jewelry and furniture stops. Customers can obtain loans of 10 million or more because they can say the loan for business purposes, and the company doesn't monitor how the funds are spent. It works like this: a customer needs to spend 0.5% of an items cost, and then the credit company agrees to pay the rest. The shop creates a real invoice to give to the bank, and the credit guaranty company is responsible for transferring the money from the dealer to the customer.

Customers can receive loans for up to 9 years, but they need to be able to repay the loan during each loan period, usually 1 year. If they cannot pay the loan back, the credit guaranty firm charges 3.5% monthly interest. The customer borrows again from the bank, but they have to pay back the credit guaranty firm.

Of course, this way of doing business threatens the quality of loans on the bank's books. In 2013, the NPL ratio for consumer credit was not only on the high side, but it is increasing rapidly. Since these consumer loans can go for as long as 10 years, the extent of bad debt has yet to be fully exposed.

So popular in recent years, consumer loans of "deformation" seems to be enhanced.

"With consumer credit Minato paying back", has long been the industry's unspoken rules, and not surprising, however, "Securities Times" reporter noted that this unspoken rule even now evolved into the "use of consumer credit to Baoding real estate."

"We are not the whereabouts of your loan funds regulation, I recently had several customers Baoding loans is to buy a house, these customers are Beijing, Baoding not go live, the house is used for investment," a Beijing security Company Credit Commissioner Adger (a pseudonym) recently told this reporter.

Guarantee Corporation: "We are responsible for packaging"

"Our company has a relationship in the bank, so we can package your materials in order to ensure the amount of the loan in accordance with the requirements of your loan, and the loan more quickly, which is why you do not personal loan from a bank, we can apply reason, "Adger said.

Adger, speaking in a northeastern accent, claiming they ranked in the forefront of the industry guarantees in Beijing, its "business" also seemed more skilled, pretending to need the loan correspondent for throwing over the issue be resolved without panic dissatisfaction.

"Loan amount of 50 million yuan basically should have a Beijing local premises as collateral, unsecured credit loans require the customer name has registered more than one year's Beijing local companies," Adger introduction from the "business" rules "I need to evaluate your data, give you choose the right products and banking, and information on packaging, and we only charge 2% of the bank loan amount as service charges, bank lending rate at 7% -8 about%, the applicant good condition can be reduced to less than 7 percent even if the loan operation is not successful, our company does not charge any fees, you do not risk. "

Loan officer "Occupation sensitive": loans to Baoding buy it?

"Why do you think is the purpose of the mortgage," Adger asked the reporter.

When informed reporters are ready to buy a house, Adger asked blurted out, "You're going to Baoding buy you?"

Adger's "occupation sensitive" attracted the interest of newspaper reporters. Adger further explained that, "I recently had several clients to do is to go to Baoding consumer loans to buy a house, these customers are Beijing, Baoding not go live, the house is used for investment, consumer credit can borrow close to 100 million, and one million yuan can buy a nice house in Baoding of. "

Prior to March 19, the media exposed Baoding will become the capital of the administrative sub-center, Baoding property thus rapidly warming. But did not last long, crazy property market speculation led to the government's strong intervention, Baoding real estate market turnover is also becoming more and more light. Newspaper reporters in Baoding Real Estate Trading Center official website found as of May 17, the day the number of properties available for sale to 271, the total salable units for 46,942 sets of salable area of ​​5,222,300 square meters, signed copy of the day 97 sets. Reporters noted Baoding currently sold online quote most from the new disc projects 4,000 yuan / square meter to 10,000 yuan / square meter, but the actual transaction price is not so high. In Baoding new urban example, most projects offer has more than 6000 yuan / square meter, but the May 17 online publication of the average transaction price of 4481 yuan / square meter.

"Unlike Yanjiao, Hebei Baoding prices so expensive, I think that a few customers for loans from the bank to buy a house, and then slowly still, over three or four years and so prices doubled or even turned several times and then sell" , Adger property market is expected to Baoding clearly more optimistic. And this optimism is perhaps to convince new customers for loans, but also perhaps because it has been taking money from banks to invest in Baoding customers infection.

Regulators Sword: Term limits "dual control"

In fact, in order to prevent illegal consumption of loanable funds into the stock market and property market, since frequent Sword regulators for some time.

May 6, Beijing Banking Regulatory Bureau released its official website "Beijing Banking Regulatory Bureau on the field of personal comprehensive consumer loans Risk Warning notice" (the "Notice"), suggesting that the banks within its jurisdiction to prevent the risk of consumer loans, in principle, Comprehensive consumer personal loan amount does not exceed 100 million within the period of 10 years.

Beijing Banking Regulatory Bureau in the "notice" clearly said, "I am in regular supervision bureau found that individual banks personal comprehensive system of consumer loans exist cautious enough content requirements, larger loan amounts, longer term, obviously not with the daily consumption Properties matches; Lending Survey dereliction of duty, the approval too lenient loan management failure, poor management and employee behavior problems, making the loan was diverted to stock market investments, the purchase of housing, production management and other aspects. " "Notice" also demanded that the banks "should be through field surveys, account monitoring, associate interviews ways to strengthen the credit check. Evidence shall not use the loan receipt or transaction contract (agreement) etc. alternatives."

Consumer credit Metamorphosis: luxury jewelry invoice indispensable

Sword of regulatory authorities, to a certain extent, deter violations of consumer credit lending. Li (pseudonym) was a clerk a Beijing real estate agency chain Guarantee Corporation group of companies, which earlier handled the difficulty of handling consumer loans is relatively low, but recently he has not actively Recommend this financing to customers, and is more to recommend its real estate brokerage group's "loan products" to customers. Li said the reporter, "The recent bank to handle consumer credit files and require frequent adjustment invoice requirements, we often do not know how to prepare." However, Mike is now recommended "loan products" actually belongs to private lending, the annual interest rate of up to 18% of its funds. Li also admitted that "the success rate of communication with customers far less consumer loans high."

However, today there are still security companies continue to choose adventure. Adger where the security company is claiming to be one of the main consumer loans, reporters on Baidu inquiry into the company's more than 3,700 jobs, the vast majority of these recruitment point of the "Credit Commissioner," the job name, known as "monthly income Easily over ten thousand. "

According to Adger introduction, the company can successfully handle the core consumer loans because with a lot of jewelry, antiques, mahogany furniture and other luxury jewelry retailer cooperated, if it is business loans, the amount can be made very large, even is ten million yuan level, and we do not regulatory capital whereabouts.

Accordance with the requirements of regulatory authorities, "to take a loan to pay the trustee, should the sales invoice as proof of the authenticity of trade background material; take a loan to pay for independent, should be sales invoices, delivery receipts trading market, merchants of electronic bills, bank card credit card documents and other consumer certificate of authenticity to prove as a trade background material. "

Luxury jewelry dealer accounts reporter learned that, as long as customers pay 0.5 percent of the purchase invoice costs, guarantees the company can be paid by way of entrusted funds to import consumer credit lending their cooperation, real invoice issued by the dealer (but no real loan review transaction background) to deal with banks, security companies are responsible for transferring funds to loan customers from the dealer.

Adger said, because the total term of the loan secured by the company to the customer application packaging materials relatively long (generally up to 9 years), the end of the loan if the customer in each period (usually one year) can not repay the principal, security companies Loaning can also provide one-stop service, but its 3.5% monthly interest rate to be charged until the customer into the next loan cycle and then returned with the bank's loan guarantee companies.

But this way, the asset quality of bank loans is likely to deteriorate, the bank for the repayment ability of people to judge the performance also lost value. If the credit funds as Adger said speculation involved in the property market, the risk should not be underestimated.

From the 2013 Annual Report of listed banks, the NPL ratio of consumer credit is not only high, rise faster. Even more worrisome, because the consumer credit product term can be close to 10 years, the amount of non-performing loans is quite likely the body is still not fully exposed.

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