UPDATE 1-China urges tighter mortgage checks, no fake divorces

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BEIJING, March 24 (Reuters) - China’s central bank, wary of soaring property prices in Beijing, said on Friday that banks must strengthen mortgage risk management, and that includes cracking down on home buyers rushing to get divorced to skirt second-home purchase rules.

Growth in prices of Beijing homes in the resale market was the third-fastest among Chinese cities in February, according to the latest official data, mostly driven by speculators.

Individuals who have been divorced for less than a year should not qualify as first-home buyers, and banks should not extend property loans to such individuals under first-home policies, the People’s Bank of China (PBOC) said.

Last week, the Beijing municipal government imposed an unprecedented series of curbs, including hiking the minimum down payment ratio on second-home purchases to 60-80 percent. It kept the rule on first-home buyers unchanged. First-home buyers need only pay a minimum of 35 percent.

“Recently there have been more households that use divorces to enjoy first-home mortgage policies,” the Beijing operations office of the PBOC said in a notice posted on its website.

“This has not only affected policy effectiveness, but will also lead to problems such as financial disputes and add to credit risks borne by commercial banks.”

Under the PBOC guidelines for Beijing, effective immediately, banks were also told to strictly check the source of down payments by individuals purchasing property, carefully assess the ability of borrowers to repay loans, and improve on their residential property valuations.

The PBOC and the Beijing branch of the banking regulator will conduct regular inspections and spot checks on how the measures are implemented by banks, the notice said, stressing that lenders that break the rules will be “dealt with seriously”. (Reporting by Ryan Woo and Yawen Chen; Editing by Michael Perry)