Delinquents Sell Homes to KAMCO to Repay Debts... Reside Up to 11 Years

Rent frozen for first 5 years, then 3 extensions over 2 years
Right to repurchase within 11 years granted

[Asia Economy Reporter Kim Min-young] From the 2nd, debtors who have defaulted on mortgage loans and whose debt adjustment has been rejected by the Credit Recovery Committee will have the opportunity to repay their debts by selling the relevant house to the Korea Asset Management Corporation (KAMCO).

The Credit Recovery Committee and KAMCO announced on the 1st that they will implement the so-called ‘Sales and Lease Back’ tenant residence support program starting from the 2nd.

This program is characterized by mortgage loan defaulters selling their house to KAMCO and then settling their debts. The debtor can live in the same house for up to 11 years at a rent level comparable to the surrounding area and also has the right to repurchase the house later (buy-back option).

The support target is those who find repayment difficult even with debt adjustment; if the delinquency period is over 3 months, the debtor can apply for tenant residence support after selling the house. It applies to low-income single-homeowners with an annual income of 70 million KRW or less (combined for couples) who own a house valued at 600 million KRW or less. The house must be the debtor’s actual residence.

Under this contract, ownership of the house is transferred to KAMCO, and the difference between the sale price and the debt amount (at least 10% of the house price) is set as the rental deposit. The debtor can live for up to 11 years at a rent level similar to the surrounding monthly rent. The initial lease contract is for 5 years (with rent frozen), and it can be extended three times in 2-year increments thereafter.

Program users must repurchase the house at market price if the lease contract ends within 11 years and the house price has fallen; if the house price has risen, they can repurchase at a 50% discount on the increased price.

The Credit Recovery Committee guides debtors rejected for debt adjustment to KAMCO’s debt adjustment program according to the debtor’s intention, and KAMCO verifies the rejection of debt adjustment through the ‘KAMCO Mortgage Loan Debt Adjustment Application Recommendation Letter’ issued by the Credit Recovery Committee. Debtors can consult or apply for the debt adjustment program online (OnCredit) or by visiting one of the 12 KAMCO regional headquarters.

The Credit Recovery Committee stated, "The process from debtor application to negotiation by creditor, price assessment, purchase, and final debt adjustment support takes about three months."

This content was produced with the assistance of AI translation services.